Thursday, May 16, 2013

Venezuela Is Running out of Toilet Paper and other Supplies

So besides butter, milk and cornmeal, Venezuela is also running out of toilet paper among other basic everyday life staples.  Like food, soap and general toiletries, TP is something that you’re going to use anyway so it’s a good idea to have plenty if you’ve got the room for it.

How did this happen you ask? Well, when commie authoritarian governments take over, these kind of problems are unavoidable. Like the government did in Argentina, the Chavista government decided to fight inflation by controlling and freezing prices. If you only have a hammer, you tend to see every problem as a nail. It’s the same way with dictators and authoritarian governments, they think they can force things to be the way they want and completely deny the root causes that provoked the events in the first place.  What do importers and distributors do when dealing with mandatory minimum prices? They stop selling, producing and importing until the prices reflect the reality of inflation once again.

So, two things to keep in mind here people. First, have enough supplies for a few months. When you use up half of it, rotate and restock. Food, yes, but also cleaning and personal hygiene supplies and other toiletries.  Second, communism doesn’t work. Never has, never will. If you ever hear even a hint of prices being forced or controlled in any way, expect trouble and empty shelves soon.


Mr Galt said...

When Hugo "el Jefe" was alive, he decimated Venezuela's energy industry. First by giving away or heavily subsidizing petroleum; second by stealing profits; and third by refusing to roll money back into the production infrastructure. As the infrastructure crumbled and production fell, he used contractors to do the repairs. When he wouldn't or couldn't pay the bill, he decided to nationalize/seize their equipment. This drove-off the petroleum service companies.

Then he did pretty much the same thing to the country's Bauxite (aluminum) industry. Having killed or severely hampered both of Venezuela's most valuable exports, he started to run short on foreign currency.

And as the economic situation deteriorated and prices began to rise, he tried to price control grocery stores, and ultimately nationalized those as well. Now the price controlled, nationalized stores have no products to sell.

This is essentially the same tactic being used in the U.S. today. The only difference is the process is not as far along. But rest assured, we will catch up.

Anonymous said...

It's almost an economic axiom that stabilized prices lead to unstable markets.

The reason is simple: prices reflect supply and demand, rising with low supply or with high demand and vice-versa. In other words, prices inform both consumers and producers when to save and when to invest. For if supply is low and the price is high, there's an incentive for producers to invest in correcting a short supply; likewise, if demand is high, there's an incentive for consumers to save and correct a large demand.

Of course, this only works in a truly free market. Any attempt to tamper with the price information mechanism will disrupt both supply and demand, for neither consumers nor producers can know what is the best course of action, neither them nor bureaucrats in plushy offices with the power of force. This is the plain explanation why communism and socialism not only have ever worked, but can never work, even with an unfathomable body count, as history proves.

Don Williams said...

1) It is a fallacy to think that price manipulation is only done in communist or socialist countries -- it is done in many allegedly "free market" economies, including the USA.

Our two major political parties do not get $2 Billion in campaign donations every two years because the donors want the joy of seeing their profits eroded by competition.

2) For example, the American people pay roughly $39 per gallon for auto gasoline-- $3.70 at the pump and roughly $35 per gallon when they file their income tax return to pay for massive US military operations in the Middle East.

It has been 32 years since President Jimmy Carter told the USA we needed to deal with our energy problem --but little has been done because Big Oil's prostitutes go to great lengths to conceal the massive amount of Welfare Big Oil gets from the tax payers.

It is just as idiotic and ruinous a system as Venezuela but no alternatives to gasoline will arise so long as the true cost of gasoline is concealed from the market and an artificially low market price is posted at the pump.

So our federal debt soars ever higher -- $10 Trillion in just the last 12 years --but that will continue as well so long as people don't feel the right cost of the debt. Idiotic price manipulations can run for a long time so long as the Rich get richer and the real costs are dumped off onto the common herd.

351wsl said...

Don Williams,

You might want to recheck your numbers on how much you think the US government is subsidizing gas. The US in 2011 (most recent figures I found) used 134 Billion gallons of gasoline. At a Gov subsidy of $35/gal, that would amount to over $4.6 Trillion. The Obama 2012 budget projected revenues of $2.9 Trillion and spending of $3.8 Trillion. Obviously the Gov is not spending 4.6 on military to subsidize gas. In fact, the 2012 projection for military spending, including overseas contingency operations, is $672.9 Billion. If you counted every dollar of this as a subsidy to gas, it would only amount to a little over $5/gallon.

Your premise of subsidies may be correct, but your figures cannot be correct.


Don Williams said...

0) Response to 351wsl:

Sorry --I was unclear. I was referring to the subsidy we pay to protect Chevron and
Exxon's Middle Eastern investments -- the subsidy per gallon of Persian Gulf gasoline.

Obviously, US military operations in the Middle East does nothing for US oil extraction in the Gulf of Mexico (except possibly as I note in para 7 below).

1) Our total petroleum imports in 2012 were: 3,878 million barrels
Of that:

Persian Gulf: 788 million barrels

Canada: 1081 mil barrels
Mexico: 377 mil barrels
Venezuela: 348 mil barrels

2) one barrel of petroleum yields 19 gallons of gasoline

3) 788 mil barrels (Persian gulf) x 19 gal = 15 billion gallon of gasoline

4) Our true defense budget is closer to $1 Trillion per year if you include
the Intel community, Dept of Homeland Security, Dept of Energy nuclear program,
Veterans Administration (long term medical care costs of Iraq and Afghanistan
crippled vets will be well over $1 Trillion), Annual Interest paid on DOD portion
of federal deficits, military retirement, etc.

5) I think it is fair to allocate $525 billion of that budget to wars in the Middle East --
even during the budget cuts in the Clinton Administration, the Pentagon cited
the need to fight a war in the Middle East concurrently with a holding action
in Asia (North Korea, China etc) as justification for its budget.

6) $525 billion divided by 15 billion gallons of Persian gulf gasoline yields a subsidy of $35 per gallon to protect Exxon and Chevron's Middle Eastern investments.

7) Some supporters of the oil industry argue that oil is fungible -- that keeping the
oil flowing in the Persian Gulf keeps the price down everywhere (including from primary
US sources like Mexico.)

I think that argument is fallacious -- the primary consumers of Middle Eastern oil
(EU, Japan, China) are paying NOTHING for military operations to maintain order in the Middle East.

The USA spends $1 Trillion/year
on the military -- Germany only spends $46 billion and Japan
spends $59 billion. Even the partial official US military budget of $682 billion is
39% of the world's total defense spending.

Don Williams said...

PS to 351wsl: If you want to know who gets the Middle Eastern oil protected by the USA, see

Any guess which country will be the major superpower 30 years hence? -- and which country will be a bankrupt has-been due to the corruption and stupidity of its leadership?

351wsl said...

You still can't claim that we pay $39/gallon. With your figures and logic, you could claim that we pay $39/gallon for oil that comes from the Middle East, but that amounts to only 15 billion out of 130 billion gallons per year.

Too bad you couldn't specify at the pump whether you wanted domestic, Canadian, or ME. It would certainly change how the distributors operate. Remember how the Citgo stations faired when it came out that they were owned by Petróleos de Venezuela. I also wonder how many people realize we import more oil from Canada than the ME? :-)

BTW I'm not defending the Middle Eastern wars.

Don Williams said...

Reply to 351 wsl:

1) But look again at the link in my May 20 9:01pm post. The American taxpayer is not just subsidizing export of ME oil to the USA -- we are also subsidizing
the 90% of ME oil that is exported to Asia --including to CHINA! The oil companies don't care who they sell to.

And our government is borrowing the money from the Chinese to do it-- we owe over $1 Trillion to China.

2) I haven't seen policy this stupid since British companies supported the German chemical cartel in the late 1800s -- a cartel that shortly thereafter was making poison gas and high explosives to destroy a generation of British men in WWI.

3) Although I've actually had a defender of Big Oil argue that we need to keep the oil flowing to Europe and Asia because otherwise the price will soar in America as China starts buying Mexican oil.

Except $500+ Billion per year in ME military operations is not included in the "price".

4) Of course, this issue is not even discussed in the US news media --which focuses on far more important issues such as whether Michael Jackson was a pervert or not.