It is characteristic of socialist regimes that their economic policies are self-destructive and betray a lack of understanding with basic laws of supply and demand. Due to its recently discovered oil reserves, Venezuela has become a moderately wealthy country, but its socialist leanings have kept the general public from enjoying any prosperity. During the reign of Hugo Chavez, extensive price controls were enforced that prevented certain goods from being sold above a given price. Even after Chavez’s death, the country continues to pass idiotic controls, such as a 30% ceiling on profits earlier this year.[4] All these regulations and price controls have produced results one might expect—widespread shortage of consumer goods. Some examples of products that are absent from Venezuelan store shelves include flour, sugar, cooking oil, deodorant, milk, butter, beer, coffee, and most desperately, toilet paper. The nation’s Toyota and Chrysler plants recently closed their doors as tires also became increasingly scarce. Many citizens rely on black markets to acquire certain goods, and must deal with the exorbitant prices and endless queues just to purchase a small bag of rice.[5]
If you never bother to consider the long-term consequences of such policies, price-controls and profit ceilings seem like they might be beneficial, especially to the poor. Many people also take the wide selection of consumer goods in American grocery stores for granted. Most don’t bother to think where these goods come from, why they were produced, or how they were transported to the grocery store. Thus, many people don’t stop to consider how price controls will affect the supply of goods and assume that if the state is making things cheaper, then it must be for the better. However, those firms that produce and supply these goods do so to turn a profit. If there is no money to be made by supplying Venezuela with toilet paper or deodorant, then firms will take their business elsewhere. The disastrous effects of price controls in socialist Venezuela demonstrates the disconnect between fluffy socialist rhetoric and the cold facts of reality and human nature. The dictatorship of the proletariat is not a world full of cheap and plentiful goods, but a world in which you wipe your ass with newsprint.
