From Bad to Worse in Venezuela
New Venezuelan President Nicolas Maduro is going further down the populist road of Hugo Chavez, his recently deceased predecessor. Instead of turning off the printing presses in the wake of massive inflation and social unrest, he continues to run them to support spending increases as state-owned oil revenues fall. Unsurprisingly, his approach of sending in the military to force retailers to charge “fair” prices has resulted in empty shelves.
On Monday, long lines of shoppers formed outside a leading electronics retailer named Daka after Mr. Maduro over the weekend ordered the stores to slash prices by half. The National Guard was also sent to arrest five managers of various electronics stores accused of overcharging customers… Executives at Daka, where the latest price-control moves started, couldn’t be reached to comment. Mr. Maduro has since moved on to reduce prices in other appliance stores and said officials this week would target shops with food, textiles, footwear, household appliances, toys, vehicles and hardware stores. A government spokesman said new measures may be announced as soon as Monday night.
Caracas’s move to control prices came after the central bank reported last week that inflation had reached 54%, the highest rate in nearly two decades and, according to Trading Economics, a website that tracks global economic statistics, topping even war-torn Syria with the world’s highest rate. Venezuela’s woes also come in an era of low global inflation, and when most neighbors, such as Colombia enjoy annualized inflation rates of around 2%. The central bank report also signaled the likely culprit for the rise: The amount of bolívares in circulation rose 70% over the past year, a clear sign the government is printing ever larger amounts of money to stoke a slowing economy. Rather than acknowledging increased spending, Mr. Maduro late Sunday blamed businesses that he said were responsible for hoarding and price-gouging as part of a so-called economic war against his administration.
Under Mr. Chávez, who ruled from 1999 to earlier this year, price controls were largely aimed at basics, like food, in order to protect the poor. That has led to embarrassing shortages of subsidized items like toilet paper, forcing the government to ramp up imports and consumers to snap up items when they see them. But the new moves appear to target items like flat-screen televisions and washing machines, ahead of regional elections in December and Christmas, during which government officials have pledged to keep store shelves stocked. Venezuelan state television viewers have been bombarded in recent days with video of government and military officials prowling the aisles of occupied electronic stores, highlighting what they call “scandalous” overpricing of goods.