Thursday, May 9, 2013

Think Argentina's economy is mismanaged? Welcome to Venezuela

Venezuelan leader Nicolas Maduro with Cristina Fernandez

One of the very few nations in the Western Hemisphere that rivals Argentina in mismanaging its economy (see post) is Venezuela. The latest economic results show Venezuela's inflation accelerating to recent highs - while declining in most other countries.

Source: GS
A more troubling economic trend however, often endemic in socialist regimes, is scarcity of products. In an attempt to control prices, such economies eliminate incentives for production. And many products that people in more open economies usually take for granted are simply not always available on Venezuela's "official" markets. Shortages in items from chicken to toilet paper are prevalent - often even in stores for the wealthier customers. Those who spent any time in the old USSR will clearly see the similarities. The nation's "scarcity index" hit a new record recently.

Source: GS

To add to this nation's problems, repeated blackouts across the country remind citizens that being one of the largest energy exporters doesn't help with electricity at home when the economy is so mismanaged. Welcome to Venezuela...
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