Venezuela today looks like Zimbabwe 15 years ago, by The Economist.
VISITING a supermarket in Venezuela is like entering Monty Python’s cheese-shop sketch. “Do you have any milk?” The shop assistant shakes her head. Sugar? No. Coffee? No. Soap? No. Cornflour? No. Cooking oil? No. Do you in fact have any of the products that the government deems so essential that it fixes their prices at less than what it costs to make them? No. …
The Venezuelan government spends like Father Christmas after too much eggnog, subsidising everything from rural homes to rice. It cannot pay its bills, especially since the oil price collapsed, so it prints money.
Cash machines in Caracas spit out crisp new bills with consecutive serial numbers. The last time your correspondent saw such a thing was in Zimbabwe in the early 2000s. The IMF predicts that inflation will be 720% in Venezuela this year, a figure Zimbabwe hit in 2006. By 2008 Zimbabwe was racked by hyperinflation so crippling that beggars who were offered billion-Zimbabwe-dollar bills would frown and reject them …
Mr Mugabe, who like the chavistas professes great concern for the poor, fixed the prices of several staple goods in the early 2000s to make them “affordable.” They promptly vanished from the shelves.
Zimbabwe and Venezuela don’t have much in common, except a disrespect for market forces:
Yet the key similarity between the two regimes is not their thuggishness but their economic ineptitude. Both believe that market forces can be bossed around like soldiers on parade. In both cases, the results are similar: shortages, inflation and tumbling living standards.
Something similar was narrowly avoided in the West in the early 1970s, when US President Nixon implemented a temporary and popular freeze on wages and prices. Fortunately the subsequent debacle had convinced everyone “that wage-price controls are not the answer” and they were not repeated.