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Apparent explanation here, in more depth than "price controls => shortage": "This Is Why There Is No Toilet Paper in Venezuela" http://transitions.foreignpoli

Apparent explanation here, in more depth than "price controls => shortage": "This Is Why There Is No Toilet Paper in Venezuela" http://transitions.foreignpolicy.com/posts/2013/06/17/this_is_why_there_is_no_toilet_paper_in_venezuela http://transitions.foreignpolicy.com/posts/2013/06/17/this_i... The problems of the local toilet paper industry are illustrative. Typical of the global supply chain, many inputs that manufacturers need to produce toilet paper are also imported. But since Venezuela has extensive currency exchange controls to regulate the flow of foreign currency (which can either be bought/sold or obtained through trade), the government must approve all imports -- and the red tape involved is legendary. In theory, the way the Venezuelan system should work is the following: The government authorizes imports by selling dollars that businesses buy to make international purchases at a heavily-subsidized price -- discounted at a much lower price than what the black market sells it for. After the imports have arrived and have cleared customs (lines at ill-equipped Venezuelan ports can last weeks), local manufacturers produce their goods, and then sell their products at tightly-controlled prices. [...] In reality, the government's ineffective regulation not only discourages investment, but creates incentives for people in the chain of production to take advantage of access to cheap dollars and sell them in the highly profitable black market. With "import dollars" reallocated to currency arbitrage, there is little money left to import the raw materials needed to make things that Venezuelans need.

dnautics 13y ago
>In reality, the government's ineffective regulation not only discourages investment, but creates incentives for people in the chain of production to take advantage of access to cheap dollars and sell them in the highly profitable black market. With "import dollars" reallocated to currency arbitrage, there is little money left to import the raw materials needed to make things that Venezuelans need. The irony is, substitute "wall street" for "black market" and this is exactly what the US is doing, albeit on a slower, less aggressive timescale, and with marginally less ineffective regulation.
- _Adam 13y ago
  I don't quite understand. Can you explain in detail?
  - deleted 13y ago
    [deleted]
  - glesica 13y ago
    US has set interest rates at basically zero for awhile now, so banks can borrow from the government more or less for free. They can then take the money and engage in various profitable activities other than lending to individuals who wish to borrow money (which is what the money is supposed to be for).
    - toomuchtodo 13y ago
      It's almost like the US government should just lend the money out directly. But they'd never do that, right? Socialism! Oh right: http://www.sfgate.com/business/networth/article/Feds-take-over-student-loan-program-from-banks-3193888.php http://www.sfgate.com/business/networth/article/Feds-take-ov...
calibraxis 13y ago
Venezuela is the happiest country in South America, according to the World Happiness Index published last week by the U.N. Sustainable Development Solutions Network. (http://www.cepr.net/index.php/blogs/the-americas-blog/you-probably-didnt-hear-that-venezuela-was-again-ranked-the-happiest-country-in-south-america http://www.cepr.net/index.php/blogs/the-americas-blog/you-pr...) The BBC article portrays a country reacting quickly and aggressively to "avoid any scarcity of the product". And US critics (who view Venezuela as an enemy for disobeying their ideology) are reduced to writing articles about toilet paper. BTW, Krugman and even Greenspan actually advocated nationalizing US banks as a condition of the bailout. (They advocated selling the banks to private investors after cleaning them up. But we could imagine the US public owning the banks rather than wealthy elites.) A bit bigger than toilet paper. (http://www.nytimes.com/2009/02/23/opinion/23krugman.html http://www.nytimes.com/2009/02/23/opinion/23krugman.html)
- lemma 13y ago
  Paragraph 1 is a non sequitur in the purest sense of the term. Paragraph 2 mentions US critics, but unless the link changed, the article is a link to the BBC which: 1. is British and 2. a reporting of fact with no judgement expressed. In any case, your comment reveals more than any op-ed ever could. Paragraph 3 is again bizarre assuming we're reading the same article (I double checked as I've read this story before- the news here seems to be the nationalization part). So I'll conclude with this: there's a lot of criticism of the US sharedand discussed on this site, but I never notice anyone get so defensive about it, whether they agree with it or not. Why is this article so troubling to you? Especially if it's something you claim is so insignificant.
  - deleted 13y ago
    [deleted]
    - lemma 13y ago
      My point is not to argue- my parents are both from (different) Spanish-speaking countries, one born under an extreme right wing government, the other an extreme left wing government. One country improved while the other languishes near the bottom of all countries by any measure. The one that improved did so not by blaming others (even if others were to blame! and they were!) or by defending a clearly terrible government, which Venezuela clearly has.

dnautics 13y ago

>In reality, the government's ineffective regulation not only discourages investment, but creates incentives for people in the chain of production to take advantage of access to cheap dollars and sell them in the highly profitable black market. With "import dollars" reallocated to currency arbitrage, there is little money left to import the raw materials needed to make things that Venezuelans need. The irony is, substitute "wall street" for "black market" and this is exactly what the US is doing, albeit on a slower, less aggressive timescale, and with marginally less ineffective regulation.

_Adam 13y ago
I don't quite understand. Can you explain in detail?
- deleted 13y ago
  [deleted]
- glesica 13y ago
  US has set interest rates at basically zero for awhile now, so banks can borrow from the government more or less for free. They can then take the money and engage in various profitable activities other than lending to individuals who wish to borrow money (which is what the money is supposed to be for).
  - toomuchtodo 13y ago
    It's almost like the US government should just lend the money out directly. But they'd never do that, right? Socialism! Oh right: http://www.sfgate.com/business/networth/article/Feds-take-over-student-loan-program-from-banks-3193888.php http://www.sfgate.com/business/networth/article/Feds-take-ov...

calibraxis 13y ago

Venezuela is the happiest country in South America, according to the World Happiness Index published last week by the U.N. Sustainable Development Solutions Network. (http://www.cepr.net/index.php/blogs/the-americas-blog/you-probably-didnt-hear-that-venezuela-was-again-ranked-the-happiest-country-in-south-america http://www.cepr.net/index.php/blogs/the-americas-blog/you-pr...) The BBC article portrays a country reacting quickly and aggressively to "avoid any scarcity of the product". And US critics (who view Venezuela as an enemy for disobeying their ideology) are reduced to writing articles about toilet paper. BTW, Krugman and even Greenspan actually advocated nationalizing US banks as a condition of the bailout. (They advocated selling the banks to private investors after cleaning them up. But we could imagine the US public owning the banks rather than wealthy elites.) A bit bigger than toilet paper. (http://www.nytimes.com/2009/02/23/opinion/23krugman.html http://www.nytimes.com/2009/02/23/opinion/23krugman.html)

lemma 13y ago
Paragraph 1 is a non sequitur in the purest sense of the term. Paragraph 2 mentions US critics, but unless the link changed, the article is a link to the BBC which: 1. is British and 2. a reporting of fact with no judgement expressed. In any case, your comment reveals more than any op-ed ever could. Paragraph 3 is again bizarre assuming we're reading the same article (I double checked as I've read this story before- the news here seems to be the nationalization part). So I'll conclude with this: there's a lot of criticism of the US sharedand discussed on this site, but I never notice anyone get so defensive about it, whether they agree with it or not. Why is this article so troubling to you? Especially if it's something you claim is so insignificant.
- deleted 13y ago
  [deleted]
  - lemma 13y ago
    My point is not to argue- my parents are both from (different) Spanish-speaking countries, one born under an extreme right wing government, the other an extreme left wing government. One country improved while the other languishes near the bottom of all countries by any measure. The one that improved did so not by blaming others (even if others were to blame! and they were!) or by defending a clearly terrible government, which Venezuela clearly has.