07/15/08

Meat shortage is due to price controls

by Larry Email  312 words

Meat went on holidays is the headline of the latest story from daily Últimas Noticias about the cronic meat shortages Venezuelans have to endure these days.

According to Últimas Noticias, what you can find in supermarkets is non-regulated meat, which is more expensive.

After five years of price controls and shortages of assorted products, one would tend to think that people would have learned the lesson: Price controls produce chronic shortages. But somehow this bit of knowledge has cleverly evaded the grasp of most of the people.

And I say this because if at least a critical mass of public opinion had learned that meat shortages are produced by price controls and not by the mythical "hoarders" they would be demonstrating on the streets in favor of liberalization of the internal food markets and not loosing their time demonstrating in favor of the blacklisted political candidates.

Of course, there's an explanation for this: the political elite directing these protests and the mainstream media promoting them are also socialist, and therefore incapable of understanding economic reasoning.

That's the crux of the matter.

On the other hand, we have the governing political class, which always and everywhere is keen on using people's fears and ignorance of elementary economic principles in order to increase its power at the expense of individual liberty. In this case, politicians use ignorance of the basic price mechanism and function in order to increase controls over economic activity. The irony is that those same controls are precisely the cause of high prices and shortages in the first place.

As you can imagine, when the people don't see meat on the counter, the first person they will be likely to blame is the butcher, not the bureaucrat in Caracas, who is the source of the problem, with all his regulations and edicts that stifle production and the natural market adjustment mechanism.

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