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Shortages are the natural result of price controls. If someone asked me what Venezuela should do, I would say "get rid of price controls and stop the inflation
by ktRolster 11y ago
Shortages are the natural result of price controls.
If someone asked me what Venezuela should do, I would say "get rid of price controls and stop the inflation." The inflation would be a little painful because it would mean the government would have to stop printing money to pay its bills, but the pain will continue to deepen until they fix the economics.
- utternerd 11y agoSadly, the concept that capital controls are deleterious is foreign to entirely too many people, and not just in Venezuela.
- crdoconnor 11y agoThe high fixed overvalued exchange rates were the main problem, not price controls. It exacerbated Venezuela's Dutch disease, killing off all export industries apart from oil. Essentially the opposite approach was taken in China (fixed undervalued exchange rates), which led to staggering levels of growth.
- Retric 11y agoChina peak growth was far slower than several other Asian countries post WWII. That was intended as steady growth was intended to reduce political instability. But, it also slowed down there overall growth significantly. EX: Japan went from 2T to 3T in just 2 years. That's completly unsustainable.
- crdoconnor 11y agoAll the Asian tigers suppressed the value of their currencies by loading up on US treasuries. Venezuela instead tried to fix the value of its currency at a far too high level.
- WalterBright 11y agoFixed exchange rates are just another form of price controls.