Venezuela may put People before Profits but they have no Toilet Paper

Posted by PITHOCRATES - May 18th, 2013

Week in Review

The American left wants to have the economic system they have in Venezuela.  Where they put people before profits.  To prevent evil corporations from getting rich.  While exploiting their workers.  And overcharging their customers.  You see, that kind of thing just doesn’t happen in Venezuela.  Because they put people before profits (see So, Venezuela Has a Toilet-Paper Shortage (Don’t Laugh. Seriously.) by Jordan Weissmann posted 5/16/2013 on The Atlantic).

Venezuela is now suffering from a government-induced toilet paper shortage. The situation has become politically dire enough that the government has promised to import 50 million rolls to calm shoppers.

For those familiar with the Bolivarian Republic’s less-than-sterling economic record of late, this won’t come as a surprise. The country, while relatively wealthy by developing-world standards, has been suffering through a chronic shortfall of everything from groceries to asthma inhalers, resulting in desperate lines of shoppers and a healthy black market trade in kitchen staples like flour.

In the United States about the only toilet paper shortage people are familiar with is when they drop trou in a public restroom without looking to see if there was toilet paper first.  Why do people do this in the United States?  Because we take toilet paper for granted.  And always expect it to be there.  Because we are not socialists.  We’re capitalists.  And being a capitalist means you never have to see an empty shelf when buying toilet paper.

So why do socialists have such a difficult time buying toilet paper?  Because they put people before profits.  Which sounds good but is only code for dictatorship.  Where the dictator lives well.  As there is always enough for the privileged few.  But to sustain this privileged position a dictator has to steal from his people.

In 2003, then President Hugo Chavez slammed currency controls into place to prevent money from fleeing the country while government seized land and corporate assets. Those rules have made it harder to buy imports. Meanwhile, price caps meant to make basic staples affordable to the poor are so low that, for many products, they don’t pay for the cost of production.

Nobody’s going to make toilet paper if they’ll lose money selling it.

Price caps make things cost less than the prevailing market price.  Which encourages people to over consume.  Just as Nixon’s price controls led to gas shortages in the United States.  While at the same time the price caps force suppliers to sell below the prevailing market price.  Which is often below their costs.  So while people are clearing shelves off suppliers are not replenishing those shelves.  Leading to shortages.

To buy imports you have to first exchange your currency for the currency of the country you’re buying from.  For U.S. companies accept the U.S. dollar for its exports.  Not the bolívar fuerte.  Venezuela’s currency controls prevent Venezuelan businesses from exchanging their currency.  Making it impossible for them to buy the imports they need.  So they have to throttle back production.  Making it more difficult to restock those empty shelves.  Forcing the people to go without toilet paper.  While Hugo Chavez died a billionaire.

This is what happens when you put people before profits.  You make it possible for a charismatic dictator to impoverish the people he champions.  Which is impossible under laissez-faire capitalism.  For businesses can buy the imports they need.  And they can sell at a price that covers their costs.  Which keeps the shelves in capitalist countries overflowing with the goods people want to buy.  While wannabe dictators can’t seize land and corporate assets.  But have to work for a living.  Like everyone else.

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