Tuesday, July 12, 2016

Venezuela's Government Is Now In The Toilet Paper And Diaper Business

Forbes: Congratulations To Bolivarian Socialism: Venezuela Now Owns A Toilet Paper Plant

I suppose this does have a form of economic logic to it. If your economic policy is so fearsomely cack-handed that toilet paper is worth more than the actual currency itself (those 100 Bolivar bills are just too small for that use) then the solution is to have the government take over the toilet paper plant. The only slight problem with this pleasing piece of economic logic is that the Kimberly Clark plant the government of Venezuela has taken over makes diapers and baby wipes but still, close enough don’t you think?

Not that this will solve the problem because while there is some logic there there’s not enough. The answer is to free the price system to do what price systems do – indicate to people what people want to be made and who is willing to make it. Without that price system this now taken over factory is still going to fail to produce what people actually desire to be produced. That the government, or the workers, now control the plant will make no difference at all to the fact that it just won’t be producing.

Read more ....

Update #1: Venezuela seizes Kimberly-Clark plant as country plunges deeper into crisis (The Guardian/AP)
Update #2: Life on the line in Venezuela as economic crisis worsens (AP)

WNU Editor: A heads-up to those who are cheering this Venezuelan government move .... what they are going to produce is not Huggies and Kleenex .... far from it. They are going to produce what I had to deal with in the former Soviet Union .... a type of toilet paper that is more cardboard than toilet paper. And as for diapers .... I shudder when I think about that .... and even then I am willing to bet there will still be shortages of this.

Update #3: This is going to make the situation worse .... Citibank to close key Venezuela payment account: Maduro (AFP).

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