Tuesday, June 27, 2017

Venezuela and "Deadweight loss"

In economics, "Deadweight loss" is when the price of a good cannot be achieved (this is typically due to government intervention).  Venezuela is a good example, where the economy is tanking there because producers are forced to sell at a loss and most (enough) of them are simply exiting the marketplace.  As a result, there is no food to be found in the supermarkets, and there is no gasoline to be found at the gas stations (in an OPEC country, no less).

Post World War II this was seen across the continent in Europe, as price controls kept sellers from offering goods for sale at a loss.  When the price controls were eliminated, France saw the "Trent Glorieuses" ("30 Glorious Years" of economic growth that their current (for the last 20 years) socialist government has killed).

There is natural resistance to being forced to work to impoverish yourself.  People who have resisted this in the past have been referred to as "Hoarders" and "Wreckers", standing in the way of the Glorious Revolution.  In the Soviet Union, this led to the Holomodor, where the Ukraine was basically starved to death.  The Kulaks were al but obliterated to achieve the "New Soviet Man".    It's forgotten that the Germans invading the Ukraine were initially greeted as liberators.  If they Nazis had not been, well, the Nazis, they might have recruited a million Ukrainians to take Stalingrad.

There is a renewable tendency among the dimwitted (and the Left, but I repeat myself) to ignore the basic fact that producers are unwilling to be milked into extinction by the consumers.  It doesn't matter whether the Consumers are backed by the full force of the State - as we see in Venezuela: Producers will simply stop producing, and let what befalls to the Consumers befall them.  What we see is that means empty Supermarket shelves and no gas at the pump (in an OPEC country).

The fact that so many "educated" "intelligent" university graduates still believe that government compulsion of Producers will bring about the Revolution is essentially everything you need to know about how "educated" and "intelligent" they are.

And Heinlein's quote is evergreen:
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded - here and there, now and then - are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. 
Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.This is known as "bad luck.


SiGraybeard said...

No, no, no. The Socialists tell me the problem is just that the Right People haven't been in charge. If the Right People run things, the evil food producers suddenly do everything the way they want. And the reason socialism has never worked, ever, anywhere, is always that the wrong people have been running everything.

Seriously, in the last few months, I've heard that from Bernie supporters online, and my wife has heard it in person from an RN she works with. I didn't think anyone who could qualify as an RN could be that stupid.

Glen Filthie said...

I disremember who said it - but arguing with socialists is like arguing with a tapeworm: the parasite will always feel entitled to your wealth and health. You won't be able to reason with it, it is what it is. The only way to deal with them is either control them or kill them. I have no sympathy for Venezuela, they voted for free chit and it serves them right.

I disagree with Heinlein - the market always wins. You can bet the black market in Venezuela is going gangbusters and it is keeping the nation's gov't awake at night. They will need to either find a way to coexist with the black marketeers or they will be destroyed by them.