Caracas Chronicles

A FAQ about the new “Law of Fair Prices and Costs,” using chavismo’s own words.

Q: So I hear there is a new Law of Fair Costs and Prices. What’s it about?

A: The Law of Fair Costs and Prices is a tool to deepen socialism. It was written because the exercise of monopoly power and the unceasing accumulation of capital has resulted in high profit margins that cause the constant rise in prices and the exploitation of the people. Business people have decided to set whatever price they want, with no regard for international parameters or for costs.

With this in mind, the President, with the highest commitment to revolutionary ethics and with the sole purpose of re-founding our fatherland, wrote this Law by-passing the National Assembly. It clearly states that every company that sells a good or service in Venezuela has to register their prices and their costs with the Superintendent for Costs and Prices. The Superintendent will then determine the fair price for these goods and services, based on the cost information provided.

Q: Wait, the government is going to set the prices of all goods and services?

A: The law applies to people and companies, foreign and domestic, public and private, who produce, import or sell goods and services within Venezuela. If your company does not qualify under that very specific criteria, this law does not apply to you.

Q: So … you’re going to estimate the fair price? How do you do that?

A: Affirmative, Comrade. We will do so by applying the latest statistical economic models that we have not informed the public about, and by using the data provided to the Cost and Prices System.

Q: What if my costs change or increase?

A: As Article 19 of the law clearly states, costs are not allowed to be higher than what is reported to the Superintendent. We will enforce this by using the Army and the National Bolivarian Police, which to this date only operates in certain parts of Caracas.

Q: What if the Superintendent sets a price that is too low? Can I appeal?

A: Yes, you can appeal. We have yet not worked out the details of how that appeals process works.

Q: What kinds of costs can I include?

A: You can include direct and indirect costs, as well as distribution and sales costs, general and overhead expenses, as well as a modest earning that takes into account expectations and risk.

Q: What happens if I get caught selling at the wrong price?

A: If you get audited, you have to give the auditors everything they want. If you get caught, you can be fined, you can be stripped of your right to engage in commerce, or your store can be shut down. If you get shut down temporarily, you must continue paying your workers’ salaries. We will base the fines to any infraction on the principles of equity, proportionality, and above all, rationality. If you don’t register you will be fined 15 minimum wages. If you get caught a second time, you will be shut down for 90 days. If you get caught a third time, your rights to engage in the trade of your choice will be temporarily suspended for a period of ten years.

At any rate, read the law, which devotes about 80% of its text to the many horrible things that will happen to you if you don’t do what we say. We really thought this through.

Q: Who is the new Superintendent?

A: The brilliant economist, Karlin Granadillo.

Q: Wait, won’t this cause scarcity?

A: No. There is no scarcity. When this happens, it’s a mode of pressuring the government. It’s just that businessmen are keeping their products in their warehouses. There is no scarcity in Venezuela, there is hoarding. As the superb economists of the Centro Internacional Miranda have told us, this law will not repeat the mistakes of the Soviet Union or Cuba because, you see, now we have computers.

Q: How is the Superintendent going to possibly monitor all prices of all goods and services?

A: We are counting on the assistance of the people, organized under their Communal Councils. They will let us know when a particular price does not match what is in the registry. Besides, our acronym is SUNDECOP, which is kind of like Robocop, only badder, and more socialist.

Q: How do we add the information to the system?

A: Through the Superintendency’s simple-to-use web page, which everyone in Venezuela, no matter how remote or no matter how small the business, should be able to access and use.

Q: What costs are not allowed?

A: Costs from having a third-party produce your goods, or costs stemming from changes in the presentation of a product or other artificial costs.