When inflation is high, prices are high—or, rather, the
money buys less. President Nicolas Maduro (successor to Chavez) doesn’t like
the high prices. So he has declared that certain items—such as appliances—must cut
their prices in half.
Venezuelan President Nicolas Maduro photo from here |
Some of the chaos is from crowds forming outside appliance
stores, waiting to get in to make the lower cost purchases. But in addition,
there has been a fair amount of looting. Crowds think, “The pries are too high;
that means the store owner is trying to gouge us; since the store owner is
evil, we have a right to take from him.” So they break in and walk off with
flat screen TVs—in a country where toilet paper and one in four food items are
considered scarce.
The thought of the chaotic mobs is not a far stretch from
what government thinks—what we want, we take. These store owners had to
purchase the goods ahead, with pre-inflated Bolivars (the currency). If they sell
at pre-inflated prices, they cannot replace their costs, let alone purchase
more goods for future sale.
Is it possible that some store owners are price gouging?
Possibly. But in a free market, if a seller asks a price too high, demand
drops, so he has to lower prices in order to make sales. It’s not a problem
requiring the incarceration of the “bourgeois” businessmen.
Let’s put it in simple numbers, as an example. Suppose it
costs the store owner $100 to purchase a TV wholesale. Between the time of his
order and the time he puts it out for sale in his store, inflation has kicked
in. The $100 he spent is now equivalent to $154. He has to take in at least $154
to cover his wholesale purchase, to be able to buy another TV to sell in the
future. That’s without profit. He also needs enough to cover overhead: cost of
his building, cost of his employees, cost of transportation of the goods, and
other basics business costs (including taxes on everything sold). But when he
puts $154 on the price tag, that looks
so high. The president doesn’t like the look of high prices—caused by his
inflation-inducing monetary policies—so he blames the store owner and mandates
a 50% price cut. That means the price is $77. That’s
only going to cover half the cost of the item to the store owner. The
government has just taken $77 from the store owner, and demonized him, adding
insult to injury.
The store owner has just had his business destroyed,
permanently. And crowds are suspicious that the evil store owner might be
holding back goods in some back room, so they’re prowling to make sure that can’t
happen.
Farida sent me links to videos of the looting. Here’s one, and here’s another. (One more was immediately deleted; I don’t
know how paranoid to be about that.) She also said she had been essentially
under house arrest for a week (that was her term, but I think she meant the
company she works for was insisting she stay inside her home for her safety).
She’s trying to get a Christmas break trip to meet family in Europe, but she
keeps getting told there are no airline tickets available. However, she was able to spend a recent
weekend in the nearby Caribbean, which is better than house arrest with no
toilet paper or food. She was scheduled to work in Venezuela for 18 months;
this coming February will be the one-year mark. But she says conditions are so
bad, she’s going to be relieved from that contract and will be transferred in
January. Living in socialist Venezuela has been rough for a young single female
engineer; I hope the next opportunity is opposite of tyranny. Farida is a
person made for living in civilization.
I am looking at the connection between respecting property
rights and civilization. Does government’s disrespect of property lead to the
people’s disrespect of property—the looting? Or does a people who fail to live
the rules of civilization naturally end up with a life-controlling government?
It may be a chicken/egg question. But my guess is that imposition of tyranny—taking
away God-given rights—demoralizes a people, quite literally.
On the other hand, the way out of tyranny, and the accompanying
savagery and economic desperation, is people choosing to live the laws of civilization, which include respect for property, life, and truth. It’s one of
those life problems with a simple but not easy solution.
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