Where Is My Charmin?

There is an inevitable cost to government control of industry. From Associated Press: 

CARACAS, Venezuela (AP) — First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities — toilet paper.

Blaming political opponents for the shortfall, as it does for other shortages, the embattled socialist government says it will import 50 million rolls to boost supplies.

Blaming others for your own mistakes sounds vaguely familiar somehow. Why are there shortages? The AP article explains. 

Economists say Venezuela’s shortages stem from price controls meant to make basic goods available to the poorest parts of society and the government’s controls on foreign currency.

“State-controlled prices — prices that are set below market-clearing price — always result in shortages. The shortage problem will only get worse, as it did over the years in the Soviet Union,” said Steve Hanke, professor of economics at Johns Hopkins University.

President Nicolas Maduro, who was selected by the dying Hugo Chavez to carry on his “Bolivarian revolution,” claims that anti-government forces, including the private sector, are causing the shortages in an effort to destabilize the country.

This, of course, could not happen here! I have two blasts from my blogging past on this. Click here for “The Great Toilet Paper Shortage,” and click here for “The Great Toilet Shortage.” Both took place around the time of US price controls.  As the economist mentioned in the AP article, if a product's price is kept artificially low by government, a producer has to stop making it. They have no choice. The "president" of Venezuela's inability to understand this does not bode well for that country. 

In fact the crisis in health care in the US will probably lead to price controls, which always leads to shortages. This is one reason why I have been blogging about health recently. Get in the best health you can, while you can, as the crisis I am expecting may lead in unexpected directions and that might include rationing of health care. It is good to have a spare tire when you drive, it is not good to have a "spare tire" all the time.