Saturday, February 10, 2007

The law of demand and supply

It's no different than trying to suspend the law of gravity.

Price controls in Venezuela:
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.
...
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.

"Shortages have increased significantly as well as violations of price controls," Central Bank director Domingo Maza Zavala told the Venezuelan broadcaster Union Radio on Thursday. "The difference between real market prices and controlled prices is very high."
...
Mr. Mugabe, who blames a Western plot against him for Zimbabwe’s problems, has rejected all calls for economic reform. The government refuses to devalue Zimbabwe’s dollar, which fetches only 5 to 10 percent of its official value on the thriving black market. As a result, foreign exchange to buy crucial imported goods like spare parts and fertilizer has effectively dried up.
To discover the root of these problems, Mugabe and Chavez need to take a look in the mirror.

UDATE: Be careful what you wish for. A commenter reports an unintended consequence of the "Dubai's laudable rent cap." Landlords are going condo and selling units out from under the feet of renters. (Giving the renters first option, of course.) I have not seen confirmation of this report in the mainstream. media.

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4 Comments:

Blogger Cappy said...

Er, isn't it time for Chavez to start blaming the Jews?

7:19 PM  
Anonymous Anonymous said...

Cappy, His links to Iran put him on that path.

4:14 AM  
Anonymous Anonymous said...

You might be interested in the plight of some Dubai residents, who have been given just two weeks to buy the properties they are currently leasing, or facing 50-60% rent rises or eviction as the properties will be sold on the open market.

So much for the government's laudable rent cap law. Emaar (30%) owned by the Dubai government too....

Two weeks to buy or we'll sell your

11:53 PM  
Anonymous Anwalt said...

It is a great article and info so for.Supply and demand is perhaps one of the most fundamental concepts of economics
Supply and demand is an economic model based on price, utility and quantity in a market. It concludes that in a competitive market

8:31 AM  

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