Caracas Chronicles

As a price control obsessive, I always finding it disappointing when opposition politicians won’t call a spade a spade and demand they end at once. After all, price controls may well win the hotly contested battle for the title of Most Destructive Policy of Bolivarian Socialism.

But yesterday I was left in complete shock when I heard an important opposition politician call for more price controls!

A estas alturas del partido we still have opposition politicians who think if your intention isn’t to destroy something, then a destructive policy won’t destroy it. ¡Por favor!

In a now sadly infamous statement, José Manuel Olivares, the National Assembly member for Primero Justicia who chairs the Health Subcommittee,  said the National Assembly should push for price controls over medical consultations in private health centers, adding: “it is not a regulation meant to destroy, let’s not forget that the private sector, with 8,000 beds, caters to 55% of Venezuelans.”

The coletilla is almost worse than the proposal. A estas alturas del partido we still have opposition politicians who think if your intention isn’t to destroy something, then a destructive policy won’t destroy it. ¡Por favor!

Even more, ¡no se reconstruye un país a punta de buenas intenciones y malas políticas!

Look, price controls have been around for over 4,000 years, dating all the way back to Babylon and the Code of Hammurabi, and we’re pretty sure they’ve been causing shortages for…4,000 years. 325 years ago, when French revolutionaries tried to cap the price of bread, the outcome was…bread shortages. López Contreras was the first Venezuelan President to implement them, back in 1939, though simpler forms go back to Colonial times. Every time they’ve been implemented, here or elsewhere, they’ve given rise to the same thing: shortages.

We’d like to think that the Venezuelan opposition, of all people, is wise to this dynamic. According to the latests industrial survey of Conindustria, private enterprises recognize price controls are one of the most binding constraints on domestic production.

Price controls are always bad and sometimes catastrophic.

And none of this is new. My husband and I have done some research on the matter and the lessons of close to 80 years of Venezuelan experience are unambiguous. Price controls are always bad and sometimes catastrophic. Pushed too hard, as they have been during the so called Socialismo del Siglo XXI, price controls are a central part of the policy mix that has devastated our economy.

This. Isn’t. Hard.

It’s 2017. Venezuelans are living the unintended impact of price controls every single day. We live with them when we can’t find the basic medicines and food we need to live. We’re far beyond the point of classroom discussions of disincentives and misaligned markets. These are people’s lives we’re talking about!

It’s an absolute scandal that people like Olivares, our political representatives, still don’t get this. Or is it a populist thing? Not sure… but it’s profoundly disheartening.

I’m glad to say Olivares did face some pushback. Manuela Bolivar, a National Assembly member for Voluntad Popular, jumped quickly and —among many other things— tweeted:

Todos queremos bajar los precios de las clínicas, pero no se bajan decretando que bajen. Los precios se bajan aumentando la oferta.

— Manuela Bolívar (@manuelabolivar) March 7, 2017

Como colapsó la oferta del sector público, aumentó la demanda al sector privado y eso disparó los precios.

— Manuela Bolívar (@manuelabolivar) March 7, 2017

Para disminuir los precios de las clínicas hay que aumentar la oferta del sector público.

— Manuela Bolívar (@manuelabolivar) March 7, 2017

Regular los precios de las clínicas sólo agravará el problema de la oferta, que es justo lo que tenemos que solucionar

— Manuela Bolívar (@manuelabolivar) March 7, 2017

En un nuevo gobierno queremos buenos hospitales y directores de hospitales. No una direccion del área de salud de la Sundde.

— Manuela Bolívar (@manuelabolivar) March 7, 2017

Some will say our National Assembly members should be supporting each other instead of pointing out one another’s faux pas. God forbid they do anything rash like debate each other!

Count me out. I expect a lot more from the political leaders that keep on talking about Venezuela’s reconstruction and I think we should be even more demanding and critical of them. The road to a strong and efficient economy and a better quality of life for every Venezuelan is a long and hard one. We need coherent politicians to lead the way.

José Manuel Olivares: I, like many, expected better from you.

Give me a call. I’ll talk you through these issues. Any economist would. As a doctor, though, you ought to know your bedrock duty is: first, do no harm.