Price setting always ends this way, doesn\’t it?

Venezuela running out of toilet paper
First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities – toilet paper.

In the Bolivarian revolution loo roll is simply a bourgeois affectation. That certainly seemed to be the way the Soviet Union operated.

Economists say Venezuela\’s shortages stem from price controls meant to make basic goods available to the poorest parts of society and the government\’s controls on foreign currency.

\”State-controlled prices – prices that are set below market-clearing price – always result in shortages. The shortage problem will only get worse, as it did over the years in the Soviet Union,\” said Steve Hanke, professor of economics at Johns Hopkins University.

President Nicolas Maduro, who was selected by the dying Hugo Chavez to carry on his \”Bolivarian revolution,\” claims that anti-government forces, including the private sector, are causing the shortages in an effort to destabilise the country.

Aye up. The CIA has millions of agents deliberately using two sheets where one would do.

13 thoughts on “Price setting always ends this way, doesn\’t it?”

  1. One of the most erroneous assumptions about price controls is that there are somehow modern. In fact, the first codified body of law, the Babylonian Code of Hammurabi contained a constellation of price floors and fixed prices, such as “If a man hires a sailor, he shall pay him eight gur of corn per year.”
    Like Tim says, it always has the same effect. Milton Friedman once said: “We economists don

  2. My wife sometimes travels to Russia on business. She always travels with a few rolls of soft tissue, and leaves them (unused) with Russian colleagues. This act of kindness does much to establish and maintain cordial russo-british relations.

  3. I didn’t expect my comment to be cut off like that. The full quote is: “We economists don’t know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly, you’ll have a tomato shortage.”

  4. *My wife sometimes travels to Russia on business. She always travels with a few rolls of soft tissue, and leaves them (unused) with Russian colleagues. This act of kindness does much to establish and maintain cordial russo-british relations.*

    Interested to know if this is a recent story or one from 30 years ago. My wife is Russian and, when we go to Russia (I concede this is a big city of 2m people), there is no difficulty in obtaining soft toilet rolls there – admittedly maybe not branded Andrex. Indeed when I visit Russia, I quite often bring back superior everday products (including toiletries) available there that are unavailable in the UK.

  5. So Much For Subtlety

    How long do you think it will take for them to start shooting wreckers?

    As the dead hippy once said, history always repeats itself. The first time as tragedy, the second as farce.

  6. didn’t this happen with beef in Cuba? I seem to recall Castro decreed that everyone should be able to afford good beef, and mandated the price. Naturally the good beef all sold out in minutes / hours and reappeared a couple of hours / days later on the black market where it turned out to cost about the price of beef with a bit added on for risk and hassle. I think P J O’Rourke uses it as an example of “why things cost what they cost” in Eat The Rich

  7. I remember arguing many years ago that a fixed price above the market price would also create a shortage in a command economy. Would anyone care to remind me what the basis of that argument might have been?

  8. @JamesV

    some things that fixing a price above the market price might do, thinking about it, are presumably:

    1. as with fixing below ensure that the majority of trade happens on the black market, only with smuggled imports. The example here being, say, cigarettes in the UK, which retail for c.

  9. … retail for c. £8-9 a pack but will be sold to you for £3-4 from the friendly turkish gentleman down the pub. Because it is still worth his while to import them and still worth yours to buy from him. Where border controls prevent smuggling, they would presumably be simply stolen, then sold on the black market with the same effect. I don’t know that this would cause a shortage, but over the longer term it might as legal production was either undercut to the point that it wasn’t worth it, or (in the theft case) gained added expense for security and insurance, making it not worth it.

    2. simply halt production. If people can’t or won’t buy at that price then it won’t really be worth anyone’s while making whatever it is.

  10. The article appears to be a late April fool:

    ‘The revolution will bring the equivalent of 50 million rolls of Toilet Paper’

    You couldn’t script that – one wonders what Britain’s leading useful idiot and Chavez patsy, neo-Bennite Owen Jones makes of it all?

  11. Hmm, is the word “sheets” meant to be pronounced in a South American accent?

    If so, it runs counter to your argument…

  12. @John Miller, you must have heard the one about the Italian in a hotel, who wanna two pees (of toast) onna plate, wanna sheet onna bed, and wanna waitress to give him fock onna table.

  13. Pingback: A Link to the Past 12/06/2013 | In Defence of Liberty

Leave a Reply

Your email address will not be published. Required fields are marked *