The Venezuela death spiral

The Washington Post reports:

Venezuela is stuck in a doom loop that’s become a death spiral.

Its stores are empty, its people are starving, and its government is to blame. It has tried to repeal the law of supply and demand, and, in the process, eliminated any incentive for businesses to actually sell things. The result is that the country with the largest oil reserves in the world now has to resort to forced labor just to try to feed itself.

Their problems:

Now, at first, the regime was just spending more than it had, but eventually, after oil’s vertiginous drop, this became more than it could borrow as well. So it did what every bankrupt government does: It printed the money it needed. Which is why inflation went from 19 percent in 2012 to, the IMF estimates, 720 percent this year, and a projected 2,200 percent the next.

This is what the Greens call quantitative easing, as advocated by Russel Norman.

Venezuela, for is part, has resorted to a tried-and-untrue strategy for dealing with all these price increases. That’s pretending they haven’t happened. The government tells businesses what they’re allowed to charge

A popular socialist idea.

Something Venezuela’s government hasn’t quite managed to figure out, though, is that trying to force companies to sell at a loss means they won’t sell anything at all. It’s better to make nothing than to lose something.

But they have succeeded at stopping businesses make horrible profits.

That’s why Venezuela has had shortages of everything from food to beer tomedical supplies and even toilet paper. About the only thing it is well-supplied with are lines, to the point that it’s had to limit how many of them people areallowed to join.

So you have to queue to join the queue!

So what do you do when businesses refuse to sell things at a loss? Easy. You blame them, and then do so yourself. That, at least, is what Venezuela’s government did when it took over toilet paper factories in 2013, and what it’s threatened to do with the country’s top food and beer brewing company today.

Nationalisation – another popular socialist policy.

Now, there are two things you need to remember about Venezuela. The first is that if it can get worse, it will get worse. And the second is that it can always get worse. In this case, that means that it might not be long until we look back at all of this as the good old days. How in the name of five-hour long grocery lines is that possible? Well, Venezuela’s government might be reaching the point where it can’t coerce people economically, but only physically. After all, itbarely has enough money to even be able to print money anymore. So it can’t buy people off anymore. It has to bully them instead. Indeed, the army has started forcing butchers to sell food at a 90 percent loss, and the government has said it can force anyone to, um, take a break from their job and work for at least two months growing food instead. Amnesty International has said this is tantamount to “forced labor,” which is just a polite way of describing what’s very close to modern-day slavery.

The socialist revolution is complete.