Chavez can't revoke law of supply and demand

AP/Washington Post:

Meat cuts vanished from Venezuelan supermarkets this week, leaving only unsavory bits like chicken feet, while costly artificial sweeteners have increasingly replaced sugar, and many staples sell far above government-fixed prices.

President Hugo Chavez's administration blames the food supply problems on unscrupulous speculators, but industry officials say government price controls that strangle profits are responsible. Authorities on Wednesday raided a warehouse in Caracas and seized seven tons of sugar hoarded by vendors unwilling to market the inventory at the official price.

Major private supermarkets suspended sales of beef earlier this week after one chain was shut down for 48 hours for pricing meat above government-set levels, but an agreement reached with the government on Wednesday night promises to return meat to empty refrigerator shelves.

Shortages have sporadically appeared with items from milk to coffee since early 2003, when Chavez began regulating prices for 400 basic products as a way to counter inflation and protect the poor.

Yet inflation has soared to an accumulated 78 percent in the last four years in an economy awash in petrodollars, and food prices have increased particularly swiftly, creating a widening discrepancy between official prices and the true cost of getting goods to market in Venezuela.

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Gonzalo Asuaje, president of the meat processors association Afrigo, said that costs and demand have surged but in four years the government has barely raised the price of beef, which now stands at $1.82 per pound. Simply getting beef to retailers now costs $2.41 per pound without including any markup, he said.

"They want to sell it at the same price the cattle breeder gets for his cow," he said. "It's impossible."

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Jorge Alvarado, trade secretary at the Bolivian Embassy in Caracas, told the state news agency that Venezuela's government plans to import 330 tons of Bolivian beef next week, eventually bringing that to 11,000 tons a year. It also plans to import 8,250 tons of beans, chicken, soybeans and cooking oil, Alvarado said.

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That will do wonders for the local economy. Price controls never work and they always create shortages. Price is the most efficient way of rationing products. Remember all those lines for gas when Jimmy Carter restricted the price of gas? Remember how they went a way when Reagan lifted the restrictions? Remember all those people standing in line for a loaf of bread in Moscow before the Soviet Union fell? It is so obvious that the markets works better than a command economy that only a fool like Chavez would even try such a faulty system.