http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/4938993/Venezuelas-Hugo-Chavez-tightens-state-control-of-food-amid-rocketing-inflation-and-food-shortages.html

 

 

Venezuela's public finances are unravelling, with oil prices at $40 a barrel, while the national budget is calculated at $60 a barrel. Inflation is running at over 30 per cent, yet with the new measures Mr Chavez is seeking to ensure that his core support, the poor, can still fill their shopping baskets with food.

 

"If any industry wants to ride roughshod over the consumers, with a view to getting better dividends, we are going to act," said Carlos Osorio, the national superintendent of silos and storage. "For the government, access to food is a matter of national security."

 

Production quotas and prices have now been set for cooking oil, white rice, sugar, coffee, flour, margarine, pasta, cheeses and tomato sauce.

 

White rice, the staple for many Venezuelans, can now only be sold at a price of 2.15 bolivares (71p) per kilo. Private companies insist that production of that kilo costs 4.41 bolivares (£1.46) and that government regulations are impossible to fulfil and companies will quickly go broke. Companies that are dedicated to rice production must ensure that 80 per cent of their efforts are dedicated to white rice. The new regulations set production percentages, as companies were rebranding their products to avoid the government controls, like flavouring the rice, as the price restrictions apply only to white rice.

 

"Forcing companies to produce rice at a loss will not resolve the situation, simply make it worse," said Luis Carmona of Polar, a rice company that has been singled out by the government for trying to sidestep restrictions.

 

Government price controls on basic goods have been in place, in various forms, since 2003. But the restrictions have forced Venezuela to become increasingly reliant on imports of these products as local farmers will not supply the selected food staples at government prices.

 

Mr Chavez last month won a referendum allowing him to stand indefinitely for re-election. With that now achieved the Venezuelan leader, who has vowed to turn his South American nation into a model Socialist state, is now taking some unpopular decisions needed to stabilise his floundering economy.

 

The differences between imposing price controls on food and on homes aren't that big. Except here in America the government is trying to keep home prices high at the expense of the rest of the economy (because voters perceive their homes to be investments). This policy causes homebuilders to overestimate demand and build more houses than we need (malinvestment - money is wasted that is needed in another sector of the economy). In Venezuela, the policy of forcing farmers to sell their food for less than it costs them to produce it makes them produce less.

 

In any economy, prices are signals. They send a message about what society demands, and in what quantities. Governments, as long as they have the ability to print money and tax (read: steal), skew the price signals and cause recessions and shortages.

Jay don't worry Helicopter Ben said it'll work and Mugabe said were doing the right thing and if anyone knows about monetary policy it's Zimbabwe!

I'll post a link to the story once Drudge does, but I thought this was funny:

 

CHAVEZ CALLS ON OBAMA TO FOLLOW PATH OF SOCIALISM

Fri Mar 06 2009 17:13:48 ET

 

Caracas - Venezuelan President Hugo Chavez on Friday called upon US President Barack Obama to follow the path to socialism, which he termed as the "only" way out of the global recession. "Come with us, align yourself, come with us on the road to socialism. This is the only path. Imagine a socialist revolution in the United States," Chavez told a group of workers in the southern Venezuelan state of Bolivar.

 

The controversial Venezuelan leader, who taunted the United States as a source of capitalistic evil under former president George W Bush, added that the United States needs a leader who can take it to a "higher" destiny and bring it out of "the sad role that it has been given, as a murderous, attacking power that is hated all around the world."

 

Chavez said that people are calling Obama a "socialist" for the measures of state intervention he is taking to counter the crisis, so it would not be too far-fetched to suggest that he might join the project of "21st century socialism" that the Venezuelan leader is heading.

 

"Nothing is impossible. Who would have thought in the 1980s that the Soviet Union would disappear? No one," he said.

 

"That murderous, genocidal empire has to end, and some day there has to come a leader ... who interprets the best of a people who also include human beings who suffer, endure, weep and laugh," the outspoken Chavez said.

viva la vida snr chavez

well apparently all countries control the cost of basic food... i think is not happening in my country, now when a lot of people is lossing their jobs :confused:

as a government you can sure a food is cheap, but you can't impose it. :\

 

and is related to those proposes of the first post the fact he keep nationalizing a lot of foreign enterprises and business?