* Edit, some of those guys appeared in countries with no history of democracy, but I think the point stands.
The current narrative is to blame Venezuela's fuck up on the left, but for me it was the fault of the entire political elite through the 20-30 years that preceded Chavez (and I'm anything but leftist btw)
Hmmm, it seems we've seen at least the initial stages of this scenario play out in some other oil-rich nation of the Americas recently... It's on the tip of my tongue...
They're both essentially populists.
Venezuela was uniquely mismanaged even with high oil prices, but the billions raining from the sky covered up things enough to keep things on a regular third world level.
I upvoted because it's a legit point of view that doesn't deserve to be silenced.
BUT...
Suggesting the debacle main cause is low oil prices and justifying evil with previous evil... is not quite right. My tocayo is printing money as if there is no tomorrow. Actually, at this pace, there will be no tomorrow, almost there is no today.
Printing unlimited money, supporting cuban dictatorship with oil billions, digging deeper in social division and looting public treasure... you can believe in whatever society model you want, but persistence in error to the point of leading the country to misery is irresponsible.
My point is, from the perspective of an average voter, replacing a corrupt bunch with another corrupt bunch is a pointless exercise, so might as well send in the strongman. That's pretty much the standard scenario in which democracy dies (Weimar, fascist Italy, II French Republic, all the way back to Julius Caesar).
If the new one just don't destroy the economy, or recover from inflation / unemployment, it has done more good than the previous one.
For a lot of people, Chávez was a measurable improvement over his predecessors.
Where on the world did price control ever work?
Prices must be set somehow, and there are many markets where setting them via regulation is a good thing. Taxis are a perfect example: since they're often used by travellers who are unfamiliar with a city, having a clear system determining the price is beneficial.
I think it's important to keep those examples of (mostly) beneficial price controls in mind, since obviously the examples where price controls fail spectacularly are more salient, and hence there may be a misleading bias in how price controls are perceived.
For example, in many countries, professional lobbies (lawyers, doctors) influence their set price to what they deem "fair" which means it's in their interest as providers.
This is different from the government setting a maximum price on soap and milk, which is in the interest of the buyer but not the seller.
Taxis are special again, as they often exist in a state of government-controlled monopoly (i.e. taxi licenses are restricted).
Was it ever applied isolated from other factors?
There are a lot of things economists don't know, but price controls -> shortages is one of the things that is well established (the exception is when the price limit is higher than the price of the object, and thus has no effect).
I'm actually liquidating all my California assets, as the INCENTIVE to operate rentals has been destroyed.
Have a read of this:
"Due to Rent Control, S.F. Has 31,000 Vacant Housing Units As Frustrated Landlords Give Up"
The Bay Citizen -- "In San Francisco, one of the toughest places in the country to find a place to live, more than 31,000 housing units — one of every 12 — now sit vacant, according to recently released census data. That’s the highest vacancy rate in the region, and a 70 percent increase from a decade ago."
The reason? The city's pro-tenant, outdated rent control laws that make it difficult to raise rents or evict a tenant.
"Increasingly, small-time landlords are just giving up, like one who has left two large apartments on the second and third floors of her building vacant for more than a decade, after a series of tenant difficulties. It’s just not worth the bother, or the risk, of being legally tied to a tenant for decades.
“Vacancy rates are going up because owners have decided to take their units off the market,” said Ross Mirkarimi, a progressive member of the Board of Supervisors. He attributes that response to “peaking frustrations in dealing with the range of laws that protect tenants in San Francisco that make it difficult for small property owners to thrive.”
Perversely, that is hurting the city’s renters as well, as a large percentage of the city’s housing stock is allowed to just sit vacant, driving up rents that newcomers pay for market-rate housing."
MP: As we know from basic economic theory, rent control laws are doomed to fail with many predictable unintended consequences in the long run: fewer new rental units are built or made available, many apartments are removed from the market, a decline in the quality of housing, lower rental rates for long-term tenants but much higher rents for new tenants, inefficient use of housing space, etc. In other words, rent control laws guarantee that there will be less affordable housing in the long run, not more.
PRICE CONTROLS CAUSE SHORTAGES.
When there is no incentive to produce a good or a service, 2 things happen:
1) the SUPPLY of the good or service will drop (no incentive to produce)
2) if the DEMAND stays the same or goes HIGHER (San Francisco demand for rental units) -- the price will go up for the reduced SUPPLY of the good or service.
That's why SF has high rents.
Huge demand. No investment in affordable rentals. ZERO.
Thus, SUPER HIGH rents.
Same in NYC.
- See more at: http://mjperry.blogspot.com/2011/05/because-of-rent-control-...
Without price control, your local utilities could extract monopoly rent. Pay up, or you can't take a shower. Shortages happen only when the price control is extreme enough to push the price below the cost of supplying/rationing the product.
If water costs $x per acre-foot to supply, and demand will cause the lake/river/well to run dry when the price drops below $y per acre-foot, but the monopoly makes the most profit selling at some much greater price $z, then the monopoly rent is $z-max($x,$y) and there will be no shortage if a cap greater than max($x,$y) is set.
Maybe this can be fixed by introducing the radical idea that artificial shortages created by greedy owners who want to drive prices up but can't is wrong and should be punished.
Something has to limit demand, as there is not unlimited supply. If prices are not allowed to rise to where demand slows (to a fair and equal exchange of value), and nothing else increase the cost of acquisition (awaiting queues, covenants/agreements, paperwork, background checks, etc), then the only way to limit demand on a limited supply is simply running out of supply.
Price controls don't work. They may not completely destroy the supply, but they will at least debilitate it, functioning in a way many come to accept as normal - not realizing the resulting damage.
The upvote/downvote buttons are obviously some kind of in-joke at YC, because otherwise this problem would have been fixed a long time ago.
Before Chavez, Venezuela was nominally a democracy, with two parties, AD and Copei, but in practice, for 2–3 generations, both parties colluded to keep state power in the hands of party officials, see https://en.wikipedia.org/wiki/Punto_Fijo_Pact – several of the presidents immediately preceding Chavez were hugely corrupt (even doing prison time for it), and the Venezuelan people were entirely fed up with the longstanding political order, which was why Chavez as an outsider was so popular. The general economic problems throughout Latin America in the 1980s – cf. https://en.wikipedia.org/wiki/Latin_American_debt_crisis – and the https://en.wikipedia.org/wiki/Venezuelan_banking_crisis_of_1... didn’t help.
I find Chavez’s particular brand of populism deeply problematic, but he doesn’t exist in a vacuum, and Venezuela’s main challenge at the moment isn’t lack of “high school economics” understanding.