Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

Skip to comments.

Argentina just set price controls on food Ė letís see what happens as a result
wordpress ^ | February 4, 2013 | Dan from Squirrel Hill

Posted on 02/04/2013 1:47:51 PM PST by grundle

Argentina just set price controls on food – let’s see what happens as a result

Prices are not just random numbers that get picked out of thin air. Instead, prices communicate information about supply and demand. So when the supply and/or demand situation changes, it makes perfect sense that the price would change accordingly.

Economic theory predicts that when the government sets the price of something lower than the supply/demand equilibrium, the demand will exceed the supply, which is the definition of a shortage. More than 4,000 years of various examples of price controls from all over the world show this to be the case.

Today, the BBC reported:

Argentina pegs supermarket price rises for two months

February 4, 2013

The Argentine government has put a temporary price freeze on all products sold in the country’s main supermarket chains to try to fight inflation.

Argentina’s commerce ministry has asked consumers to monitor prices in the chains.

It wants them to keep receipts and has set up a hotline for shoppers to call if they spot any price rises.

The inflation that’s referred to in that article is caused by the government increasing the supply of money with nothing of real value to back it up. This makes the money worth less, and causes prices to rise. But that’s not a real price increase. So, as inflation devalues the currency, the government’s price freeze will actually force food sellers to lower their (real) prices.

If it really is a “temporary” measure for only two months, it’s possible that inflation might not be severe enough for the price controls to result in a substantial drop in (real) food prices.

But I am skeptical about these price controls being “temporary.” My guess is that the price controls will last a lot longer than two months, and as time goes on, inflation will devalue the real value of the currency enough so that the (real) prices will fall significantly, which will cause shortages. And then the government will wrongly blame the shortages on the supermarkets and farmers, and instead of getting rid of the price controls, the government will take action against the supermarkets and farmers, which will cause the situation to get even worse.

Of course, I could be wrong about all of this.

Anyway, let’s see what happens in Argentina as a result of these price controls.

For the record, here’s what happened after Venezuela set price caps on food a decade ago:

Since 2003, Hugo Chavez has been setting strict price controls on food, and these price controls have been causing shortages and hoarding.

In January 2008, Chavez ordered the military to seize 750 tons of food that sellers were illegally trying to smuggle across the border to sell for higher prices than what was legal in Venezuela.

In February 2009, Chavez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which they had been avoiding in response to the price caps.

In May 2010, Chavez ordered the military to seize 120 tons of food from Empresas Polar.

In March 2009, Chavez set minimum production quotas for 12 basic foods that were subject to price controls, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce. Business leaders and food producers claimed that the government was forcing them to produce this food at a loss.

Chavez has nationalized many large farms. Chavez said of the farmland, “The land is not private. It is the property of the state.” Some of the farmland that had been productive while under private ownership is now idle under government ownership, and some of the farm equipment sits gathering dust. As a result, food production has fallen substantially. One farmer, referring to the government officials overseeing the land redistribution, stated, “These people know nothing about agriculture.”

Chavez has seized many supermarkets from their owners. Under government ownership, the shelves in these supermarkets are often empty.

In 2010, after the government nationalized the port at Puerto Cabello, more than 120,000 tons of food sat rotting at the port.

In May 2010, after price controls caused shortages of beef, at least 40 butchers were arrested, and some of them were held at a military base and later strip searched by police.



TOPICS: Miscellaneous
KEYWORDS:

1 posted on 02/04/2013 1:48:03 PM PST by grundle
[ Post Reply | Private Reply | View Replies]

To: grundle

The stores will be emptied by tonight....


2 posted on 02/04/2013 1:55:45 PM PST by Youngman542012
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

You don’t need to be Milton Friedman to predict food shortages just around the corner.


3 posted on 02/04/2013 1:55:53 PM PST by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

I do believe that Einstein has liberals in mind when he uttered his famous quote about idiots doing the same thing over and over and expecting different results.

(Acknowledged that the same idea has been attributed to others...none of them, of course, were liberals/progressives.)


4 posted on 02/04/2013 1:58:22 PM PST by Da Coyote
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

Socialists are about the most ignorant people around.


5 posted on 02/04/2013 1:59:33 PM PST by 353FMG ( I refuse to specify whether I am serious or sarcastic -- I respect FReepers too much.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Da Coyote

And yes, I acknowledge that Nixon did much the same thing with regard to price controls. But then again, it was Nixon.


6 posted on 02/04/2013 1:59:52 PM PST by Da Coyote
[ Post Reply | Private Reply | To 4 | View Replies]

To: grundle

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

“Gods of the Copybook Headings” — R. Kipling

/johnny


7 posted on 02/04/2013 2:02:07 PM PST by JRandomFreeper (Gone Galt)
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

They never learn.


8 posted on 02/04/2013 2:04:33 PM PST by ThePatriotsFlag (...and to the Republic for which it STOOD...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

Utopia is just around the corner.


9 posted on 02/04/2013 2:05:20 PM PST by EEGator
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

That’s always gone well, hasn’t it?


10 posted on 02/04/2013 2:11:39 PM PST by Noumenon (One individual with courage, determination and a rifle can change the course of history.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: EEGator

It has to be just around the corner...because they do not have any in this store anymore...


11 posted on 02/04/2013 2:22:19 PM PST by Youngman542012
[ Post Reply | Private Reply | To 9 | View Replies]

To: grundle

Does that mean we will be getting more of their beef?


12 posted on 02/04/2013 2:26:49 PM PST by BykrBayb (Somewhere, my flower is there. ~ √ě)
[ Post Reply | Private Reply | To 1 | View Replies]

To: grundle

The result will be completely predictable (to everyone who has even taken a cursory look at what happens when price controls are implemented) except liberal tools, to whom it will be “unexpected”.


13 posted on 02/04/2013 2:42:09 PM PST by rlmorel (1793 French Jacobins and 2012 American Liberals have a lot in common.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Youngman542012
These people don't learn anything. But as I do on all Argentina threads:
14 posted on 02/04/2013 2:50:17 PM PST by EEGator
[ Post Reply | Private Reply | To 11 | View Replies]

To: JRandomFreeper

And that after this is accomplished, and the Brave New World begins,
When all men are paid for existing, and no man must pay for his sins,
As surely as water will wet us, as surely as fire will burn
The Gods of the Copybook Headings...


15 posted on 02/04/2013 2:59:22 PM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: muir_redwoods

Argentina and food shortages just don’t go together. Argentina is a massive agricultural producer.
It would take an amazing failure of policy to create food shortages in Argentina.
But I am sure the crew in charge over there can do amazing things.


16 posted on 02/04/2013 3:08:51 PM PST by buwaya
[ Post Reply | Private Reply | To 3 | View Replies]

To: grundle

There’s been a drought problem in Argentina. From the looks of the political news, it looks like the drought here in the USA is going continue for some time into the future, too.

http://www.cpc.ncep.noaa.gov/products/expert_assessment/seasonal_drought.html


17 posted on 02/04/2013 3:15:21 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: buwaya

Supply is one issue but if costs exceed the governmentally imposed price limit, no one is going to work at a loss.


18 posted on 02/04/2013 3:43:32 PM PST by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 16 | View Replies]

To: familyop

Where is Ferfal when you need him?


19 posted on 02/04/2013 3:50:24 PM PST by CPT Clay (Follow me on Twitter @Clay N TX)
[ Post Reply | Private Reply | To 17 | View Replies]

To: CPT Clay

The producers will stop supplying the official stores, which will become empty, and a black market will instantly appear where you can buy want you want for the real price. You could always buy bread at the official price, in the government stores, if you were prepared to wait in line all day and you didn’t care about quality.


20 posted on 02/04/2013 4:12:19 PM PST by littleharbour ("All men having power ought to be distrusted to a certain degree. ~ James Madison)
[ Post Reply | Private Reply | To 19 | View Replies]

To: Da Coyote
And yes, I acknowledge that Nixon did much the same thing with regard to price controls. But then again, it was Nixon.

Yes. And the whole country was behind him.

As they will be in Argentina behind whats-her-name.

21 posted on 02/04/2013 4:43:08 PM PST by BfloGuy (Money, like chocolate on a hot oven, was melting in the pockets of the people.)
[ Post Reply | Private Reply | To 6 | View Replies]

To: CPT Clay
"Where is Ferfal when you need him?"

Here's a quote from "Thoughts on Urban Survival", thanks to Fernando "FerFAL" Aguirre, the author. [My emphases in bold, though.]

Just after WWII Argentina practically fed Europe, Argentina was known in Europe as “the world’s granary”. Cattle and wheat was enough to feed our own country and another continent. So, what happened? Why are there so many that have little or no food and end up eating out of dumpsters? I mean, the land is still there, isn’t it? Well, the country is the same country that used to be called the “world’s granary” but some things changed. Several big, multinational corporations, such as Benetton, bought hundreds of thousands of acres of natural resources. I don’t know the exact number, but I do remember that the media started talking about the integrity of the sovereignty of the country being at risk because of these massive purchases of land, so you can imagine how many acres were bought. Mysteriously, the media suddenly dropped the subject.

Another important factor is that now, with our new economy, it’s not good business to sell Argentine food to Argentina. Why sell a kg of meat to the local market for 17 pesos when they can now sell it to Spain for 17 Euros when 1 Euro = 3, 5 pesos? [Editors note: The Irish Potato Famine was not the result of not enough food being in Ireland…but rather the Irish peasants were too poor to purchase anything and English land owners selling their goods to the highest payer] All this combined with high unemployment, salaries that are not enough to buy the minimal amount of calories for a typical family, and the high prices resulted in a country that slowly started to suffer hunger.



22 posted on 02/04/2013 5:17:11 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
[ Post Reply | Private Reply | To 19 | View Replies]

To: grundle

I don’t want to hear about how children are starving and it’s up to us to feed them.


23 posted on 02/05/2013 1:33:22 AM PST by SWAMPSNIPER (The Second Amendment, a Matter of Fact, Not a Matter of Opinion)
[ Post Reply | Private Reply | To 1 | View Replies]

To: buwaya

You could say the same thing about Rhodesia.


24 posted on 02/05/2013 4:51:11 AM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
[ Post Reply | Private Reply | To 16 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson