It’s the rainy season in Venezuela and Pedro Rodríguez has had to battle upturned manhole lids, flooded avenues and infernal traffic jams in his quest for sugar, oil and milk in Caracas.
In Avenida Victoria, a low-income sector of Caracas, Zeneida Caballero complains about waiting in endless queues for a sack of low-quality rice. “It fills me with rage to have to spend the one free day I have wasting my time for a bag of rice,” she says. “I end up paying more at the re-sellers. In the end, all these price controls proved useless.”
In 2008, when there was another serious wave of food scarcity, most people blamed shop owners for hoarding food as a mechanism to exert pressure on the government’s price controls, a measure that former president Hugo Chávez adopted as part of his self-styled socialist revolution.
This time, however, food shortages have gone on for almost a year and certain items long gone from the shelves are hitting a particular nerve with Venezuelans. Toilet paper, rice, coffee, and cornflour, used to make arepas, Venezuela’s national dish, have become emblematic of more than just an economic crisis.
Although people often use the phrase merely for rhetorical points, this episode really is Econ 101. The price controls instituted under former president Chavez are the ultimate source of the shortages. Naturally, Chavez’s successor, Nicolás Maduro, blames everything on a “wider plan concocted by the CIA to destabilize his government,” according to the Guardian piece.
As any intro economics textbook explains, when the government sets the price of a good below the market-clearing level, you get a shortage. That is, buyers want more units of the good than sellers want to provide. This is playing out in literal textbook fashion in Venezuela.
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