Over the weekend, the Venezuelan government announced that it would be installing approximately 20,000 fingerprint scanners at all supermarkets across the country. The purpose of this initiative is to eviscerate hoarding and panic buying as the nation’s price controls have led to widespread shortages of the most basic needs.
Venezuela has been introducing a rationing system over the past few months at various state-run supermarkets all over the western border it shares with Colombia, a region where price-controlled goods are smuggled in and creating a headache for Caracas.
President Nicolas Maduro noted that seven large private retail chains have voluntarily agreed to implement the scanning machine.
However, it may be a futile endeavor because economists have already concurred that this latest effort will be a complete failure. What Venezuela needs to do instead is to reverse its price controls and allow the market to determine what prices should be. Also, these price controls have significantly eroded the country’s local manufacturing base.
Here is what ZeroHedge wrote on the matter: “Privacy concerns aside (clearly Venezuelans have bigger, well, smaller fish to fry) there was hope that this plunge into insanity would be delayed indefinitely, as the last thing Venezuela’s strained economy would be able to handle is smuggling of the most basic of necessities: something such a dramatic rationing step would surely lead to.”
Despite the supposed gains the country has made in reducing poverty, millions of people have resorted back to being impoverished in the past year and are starving and suffering. The minimum wage has garnered media attention, too, as Bloomberg News opines: “Venezuela’s minimum wage, which many workers receive, has tripled in local currency in the past three years to about 5,600 bolivars today. That hasn’t kept up with a dramatic slump in the bolivar’s value against the U.S. dollar in the same period. The government has devalued its primary exchange rate once and introduced three weaker alternative rates. Using the weakest legal exchange rate, the minimum wage has tumbled from about $360 a month in 2012 to $31 a month today.”
Tumbling oil prices have also greatly hindered any economic salvation for Venezuela. Since the country heavily relied upon high oil prices to keep the country afloat and implement its socialist policies, the country could very well be on the brink of economic collapse and metastasize into the next Greece.
Perhaps the only way for Venezuela to survive is to be bailed out by the Christine Lagarde and the International Monetary Fund (IMF). Remember, any act of monetary sternutation by any country results in a financial bailout by Lagarade and Co.
To add to the woes of Venezuela, the White House announced over the weekend that the United States will impose sanctions against its top officials because it believes the country is a threat to its national security.
“We’ve seen many times that the Venezuelan government tries to distract from its own actions by blaming the United States or other members of the international community for events inside Venezuela,” the White House said in a statement. “These efforts reflect a lack of seriousness on the part of the Venezuelan government to deal with the grave situation it faces.”
Here’s the reality: with Venezuela so indebted, so financially inept and so engulfed with domestic strife, there is no way that Venezuela can prove to be a security threat to any country let alone the U.S.
Nevertheless, this socialist paradise that everyone is clamoring for is front and center in Latin America. Price controls, wage controls and suppression of markets is the dream of liberals, socialists, Marxists and communists. Will they travel to Venezuela and set up a home? Probably not.
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