News & Politics

Venezuelan Government Orders Hyperinflation To Stop, or Something

Venezuela's President Nicolas Maduro gestures as he speaks during a march, at Miraflores Presidential Palace in Caracas, Venezuela, Thursday, April 7, 2016. (AP Photo/Ariana Cubillos)

No one’s ever accused the socialist Venezuelan government of being overly bright. Well, no one outside of Hollywood, anyway.

However, the South American nation has taken stupid to a whole new level. You see, in the midst of hyperinflation and shortages, the government has ordered all prices to be fixed at what they were last month. In a hyperinflationary economy, these are massive price cuts, which immediately must cause further shortages.

Venezuelan citizens have been lined up outside of grocery stores. Reuters reports that they have been yelling: “We’re hungry! We want food!”

Venezuelan President Nicolas Maduro had already raised the minimum wage, a useless gesture when the currency is worthless, and price-fixing eliminates profits and leads to layoffs. Reuters reports that the black market minimum wage exchange rate is at $2 per hour, about the same as it was before.

Like all socialists, Maduro failed to understand that the Law of Supply and Demand cannot be tinkered with without consequences. If prices are artificially cut, the massive demand will lead to shortages. Well, more shortages. One former supporter of Hugo Chavez noted: “This doesn’t help us. If they supply something, it’ll be gone in a few days and they won’t supply more.”

That’s because products are scarce, not limitless. People have to work to provide them. But they will simply refuse to work if work leads to a net loss because prices are fixed. Because the workers starve then, too.

Somehow, socialists are never held responsible for the inevitable collapse. Every free market hiccup is seen as proof of capitalism’s failures, but starvation and societal collapse are never the fault of socialism. Don’t believe me? Ask a socialist. They’ll engage in mental gymnastics about how Venezuela isn’t real socialism.

It’s just a matter of time before Venezuela becomes a permanent hell like North Korea, or chooses freedom again. Let’s hope for the latter.