Here’s a letter to the New York Times:
Regarding your report on the chronic shortages of consumer goods in Venezuela (“With Venezuelan Cupboards Bare, Some Blame Price Controls,” April 21): of course these shortages are caused by price controls. By preventing prices from telling the truth about underlying conditions of supply and demand, such controls spread economic lies. Producers and consumers are thus misled into acting destructively rather than productively.
Price controls, though, are only the most ham-fisted maneuver used by politicians to distort prices in order to mislead the public about market realities. Another favorite ploy is to condemn and threaten “speculators.” Consider Chavez himself. He irresponsibly increases the supply of the Venezuelan bolivar and then, when the inevitable inflation begins, combines overt price controls with a bellicose vow to punish what he sneeringly calls “bourgeoisie speculation.”
Such blame-shifting is very near a constant with politicians.
It’s worth noting that, although the President of the United States hasn’t the power of Generalisimo Chavez, Pres. Obama’s attacks on speculators are just as politically opportunistic and economically ignorant – and potentially as destructive – as are any such attacks issued by Latin American dictators.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030