Remember when you first learned what socialism was and somebody explained that it was nice in theory, but bad in practice? Here's the sort of thing they were talking about.
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.
While the government prefers to blame shadowy political enemies for the shortages -- according to the AP, Commerce Secretary Alejandro Fleming said the toilet paper crisis was the result of "excessive demand" sparked by "a media campaign that has been generated to disrupt the country" -- the explanation is much more straightforward.
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.
It's tempting make light of this situation, but it's really sort of tragic, yet another self-inflicted wound on an economy rich in natural resources. The shortages are bad enough that Venezuela's central bank has created a scarcity index (shown below in this WSJ graph), which has lately been hovering around a four-year peak. "The revolution will bring the country the equivalent of 50 million rolls of toilet paper," Fleming told a state news agency. It would be much easier to let the free market do it instead.
[My editor has forbidden me from writing puns into this story, but feel free to get them out of your system in the comments.]
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