El Hombre

by Don Boudreaux on September 26, 2010

in Inflation, Other People's Money, Reality Is Not Optional

Here’s a letter to the New York Times:

Your report on Venezuela’s new state-owned cafes overlooks the many ill economic consequences that will be unleashed by these government enterprises and by the below-market prices that they so proudly charge (“Political Flavor Infuses Venezuela’s New Cafes,” Sept. 26).

For example, while it might be true that “The prices are intended to offer a respite from the country’s rampant inflation,” in fact these below-market prices will fuel Venezuela’s inflation even further.  The reason is that Hugo Chavez’s government will almost certainly get the funds it needs to subsidize these cafe sales by using the same method that it increasingly employs to get the funds it uses for its slew of other boondoggles: printing more money (i.e., inflation).

Not even Oliver Stone movie heroes can suspend the laws of economics.

Donald J. Boudreaux


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