Venezuela: Sanitary Napkins to Powedered Milk Shortage

[social_critic]

Store shelves are getting a little bare. Women can't find sanitary napkins, and powdered milk is scarce. It's starting to look a little bit like Cuba.

[naaman fletcher]

1. currency controls

the importers can't get the dollars to buy them. But then again, anyone with a basic understanding of economics saw this coming.

[social_critic]

3. Add medicines to the list of shortages now

The government froze medicine prices. With inflation as high as it is, medicines are starting to run short. I guess it'll be like it was in Cuba, where medicines became very scarce.

[Wilms]

4. How about a link?

I searched and only found gripes from drug dealers, er, companies, who want more access to the VZ market. Seems domestic and Cuban pharms are cutting into "their" profits. :cry:

Here's one:

http://www.articlesbase.com/medicine-articles/venezuela-pharmaceuticals-and-healthcare-report-q4-2010-3676738.html

[social_critic]

5. Why don't you call Locatel in Caracas?

I wouldn't know about a link. I just go to the farmacy here in Caracas. It's called Locatel. I guess you could come down and check it out. The shortages just started recently, because the devaluation is just starting to hit. I don't think "drug dealers" really want more access to the Venezuela market because it's so hard to get paid anyway. Cuba lacks its own medicine supplies, I have relatives in Cuba who are always asking for medicines. Domestic medicine production is based on imported feedstocks - and those are having trouble getting paid for under the old pre-devaluation rate.

I think a lot of this is way over your head anyway. The first sign of shortages anybody will report in the media will be in the local press, in Spanish, and that's just starting. And many papers here are now auto censoriing or muzzling their coverage ever since the Assembly passed the new press muzzle law.

By the way, Polar just had layoffs this morning. And I bet you won't read that in the media either. A couple of close friends got laid off. The economy is hurting, private industry is under attack - it's the usual pattern when communists take over. This place is being ruined.

[Wilms]

6. When the communists takeover? Haven't seen what capitalists do?

When you have a link, put it up. Not interested in twittering about.

[social_critic]

14. Communism brings ruin to the economy

Sometimes I teach in the former soviet union and eastern europe, short seminars where we teach professionals and managers how to overcome the handicaps caused by Communism and cover the gaps caused by their flawed education under a communist system. I explain to them communism is based on flawed economic principles, and it's contrary to human nature. One example I give them is the Marxist belief that value should be assigned according to the amount of work put into something.

So let's say I ask 10 men to dig a large hole using shovels. According to Marx, if they spend 100 days and dig a monstrous hole, the hole must be worth a lot because they put so much work into it. According to von Hajek or Friedman, the hole is only worth what somebody is willing to pay for it.

Regarding the need to post references for you, I'm sorry if I'm lacking due to the freshness of my information. I'm not twittering, I'm advising you there are increasing shortages in Venezuela, and I suspect if this continues there will be unrest once the weather warms up and we have calima (dirty air) in the city. This is a time when people get edgy, and the problem is likely going to be worsened because the metro is having more and more failures, and people are starting to have problems getting to work.

You see, I don't spend the time reading blogs and news to post here. I just tell you what I see or hear from friends.

[joshcryer]

15. Philosophical tangent regarding the Labor Theory of Value.

There are essentially two camps on the Labor Theory of Value.

Labor has intrinsic value that can be codified by some system in place to do so.

Or.

The fruits of ones labor should be dictated by the laborer.

The former camp is capitalistic, the latter camp is socialistic.

While capitalism has ventured into the subjective theory of value, labor still does have "intrinsic value" that can be "codified." Minimum wages, market rates for a given specialty, and so on. The labor theory of value therefore in a capitalist system is still alive and quite well. My job on a daily basis can be seen as "digging a hole in the ground as worth" even if that hole serves no purpose. For example, I spent an entire summer quite literally throwing cement into a truck, by hand. We had access to machinery that could've rendered this job meaningless in a matter of a week at most, but we opted not to use it, simply on the basis that if we got the job done in a short period of time, there would be other jobs (potentially harder) that we would have to do, and the cost of renting the machinery was to be taken into account. Of course, I work for the government so this is particularly common, and I don't really have an issue with it.

Socialism, actual socialism, does not codify the value of labor, but it recognizes that that value exists simply because the laborer is the forbearer of it. You can see this labor more explicitly in the act of one person acting for themselves to achieve some goal, such as taking out the garbage, or vacuuming their home. There is value expressed in those behaviors (the value of not living in filth, the value of having clean flooring, etc). When it comes to more collective tasks, such as several people working together to build something, that labor is expressed differently. Socialistically speaking all who work on a given thing logically would benefit equally from their contributions, even if in the end ones contributions are hardly significant. So say I'm welding together parts to make a roadster, so I help those working on their own roadster to achieve the same for them.

This is where things get tricky. You can help me build my roadster, but I have an idea, I use my roadster to achieve some other economic activity, such as using it to traffic drugs from one town to another, and I pay you to complete your own roadster. To be able to determine the worth of my labor we must then go back to the codified systems that say what it is worth, the markets. But then we're back to capitalism, aren't we? There's no substantiative difference between me paying you to build your roadster in either situation, except that actual socialism would recognize my labor regardless, whereas the capitalist approach would recognize only the labor that I contribute as the system defines. I might be a poor welder, and you might have been doing most of the work, but we both built the roadster.

Let's look at it another way, in socialism that is actually practiced every day, and part in parcel to the very means of communication you are using to write on these very forums. For instance, this website is running Linux (according to netcraft), an operating system made by tens of thousands of people, contributing their labor, which has value, and asking for no monetary recompense in return. This is the latter camp of LTV, because those who write the code are deciding what it is worth to them. For them the worth is not necessarily monetary (though contributions to Linux may come from people who work for companies that have monetary goals), it is social.

Eben Moglen makes the case much more eloquently than me: http://en.wikisource.org/wiki/Author:Eben_Moglen

As it stands now no state is actually practicing LTV in a socialistic sense. It is intrinsically capitalist.

[social_critic]

18. Very good writing

I was pondering whether I should write a book about this subject, but you are so much better at this, evidently YOU should write it, and I'll quote it.

Market value isn't the only valid measurement, but those who use "social measures" do need to be able to quantify the options numerically, even if all they do is take a poll of citizen satisfaction.

I do want to add my personal observation (I'll use the Soviet Union rather than say Cuba to defuse emotions):
When those who make decisions don't know how to value alternatives or options using a consistent, verifiable and numerically valid system, they tend to make inconsistent decisions, and they make many more poor decisions than those who do have a measurement system.

In the Soviet Union, the state spent incredible sums of money financing a terrific sports machine, orchestras, and ballet. But they lived in very substandard housing. I saw professionals in Siberia, living in metal tanks WITH THEIR FAMILIES. The tanks were lined with cardboard and rags to avoid heat loss, were heated with steam pipes coming in from a comunal steam plant, and lacked bathrooms. So how can a society justify living conditions such as these, while the party oligarchy in Moscow rode from their swank apartments in their limousines in their special lanes to the Bolzhoi? It was gross, reminds me of the inequality in Colombia, Venezuela and Ecuador. And this was the garbage the communists had delivered after 60-70 years in power. What happened? It was human nature all over again.

[joshcryer]

20. From my POV every Cuban should have an annual income of at least $5000.

As it stands now it's closer to $200. This is a clear indicator that the wealth distribution is tightly controlled, yes "rationing" isn't counted in that number, so triple it if you want to be generous ($600).

How I came to the calculation: GDP / population / 50% (assuming gross capital formation eats about 50% of GDP). Yes, it's very simple, but look at the United States:

14 trillion GDP / 307,006,550 population / 50% = $22,800 (actual median income in the US was $25,149)

Cuba: 111 billion GDP / 11,204,180 population / 50% = $4,953.

People will be quick to judge this statement because it's so out there, telling me how I don't know economics and blah blah, but from my POV Cuba is a monetary based socialist system, if money is involved, the calculation is worth looking at, even if it is very very simple and doesn't take a lot of other factors into consideration, but it's obviously a conservative estimate.

[Wilms]

16. Yes. It often reads like it's anecdotal. Amd it's treated in kind.

I didn't realize Marx would have advocated digging holes no one needs. How about doing what needs to be done and then relaxing? I don't know if your example of "contrary to human nature" is a valid one. I know that even here in free (sic) America, there are a lot of things consistent with human nature that are against the law. And often it's a good thing to outlaw it. People kill themselves and each other doing things consistent with human nature.

So if and when there's a cultural shift in this country what handicaps will Americans need to be taught to recover from?

[CJvR]

17. Digging holes at sea.

Actually digging holes no one wants or needs is in inescapable consequence of Marx theory. If labor effort rather than market value is used to determine the worth of something it will naturally badly disrupt the economy by favoring inefficiency.
The Baltic fishing industry is one live example I have read about. The Soviet fishers pulled up large catches of very valuable fish that they could have sold for big hard currency profits. Unfortunately the fish was processed into near worthless canned food actually decreasing it's value quite badly - but in the economic statistics it still counted as an increased value because of the effort made by canning it. This is a typical hole digging operation in a Marxist economy attempting to disconnect itself from reality.

[Bacchus39]

7. Venezuela's government freezes drug prices

http://english.eluniversal.com/2011/02/15/en_eco_esp_venezuelas-governme_15A5165171.shtml

The government decided to freeze the price of all drugs in the Venezuelan market. Following devaluation of the Venezuelan bolivar, the Executive Office prohibited any adjustment, while pharmaceutical companies fear a shortage of medicines.

------------------------

"This is to suspend temporarily any price increase in the price of medicines for human use, whether they are subject or not to price controls established by the Executive Office," read the letter signed by Rafael Coronado Patiño, the Vice-Minister of Domestic Trade.

A month after the announcement, the Ministry of Trade has not approved a new list of prices, as requested by importers and pharmaceutical companies. The Venezuelan authorities have ruled out a "broad" shortage of drugs, but they have admitted that the market has been hit by "circumstantial difficulties" in the supply of anti-influenza drugs and "best selling" products.

"In an attempt at curbing price increases, the supply of pharmaceutical products is being compromised. Our call is to prevent the shortage of products. Therefore, the prices of drugs must be reviewed," said a source close to the pharmaceutical industry, who asked to remain anonymous.

[Wilms]

8. Glad to hear that. And let the pharms squirm.

The USA could learn a bit from this.

[Bacchus39]

9. are the drugs produced in Venezuela??

if they are not, then its only the local pharmacies that will be impacted economically. drug companies aren't going to export to Ven at a loss. and even if the drugs are produced locally, businesses don't typically operate at a loss, so is the Ven government going to subsidize the industry??, more than likely just expropriate.

[Wilms]

10. I doubt Big Pharm is subsidizing Canada.

Yet Canadian pay a fraction of what Americans do for a given product.

Maybe the Pharms will learn how to provide without gouging. And perhaps alternatives, where appropriate, can be introduced.

[Bacchus39]

11. pharms gouge the American consumer

prices for the same drug are much cheaper elsewhere. its a crime. however, regarding Venezuela, if the government isn't going to subsidize drugs and just declare price controls it just hurts local pharmacies and will exacerbate shortages.

[Wilms]

12. Is Canada subsidizing?

The US won't stand up to Pharma. That's a big problem. As far as Chavez goes, perhaps Pharma has a big problem.

Good.

[joshcryer]

13. We're subsidizing Canada, they wouldn't be able to get discount drugs if they weren't profiting.

As long as the price fix in Venezuela was at the going rate or not too much below, I don't see a reason there could be shortages. But they do seem to be concerned about the potential for shortages, as per the article linked.

[social_critic]

19. Going back to Venezuela from our North American tour....

Venezuela's farmaceutical industry is a mixture of large and small companies. Some medicines are made locally. Most are imported, or the raw material is imported. Because the prices have been frozen, and inflation is running at 30 % per year, the cost to deliver the medicines is increasing but the private delivery mechanism isn't going to have the cash flow from sales (prices are controlled, remember?). And if they don't have the cash flow, then they lack the money to pay for re-stocking at the same rate. Which means shortages. Let me try to explain it again:

The drugstore owner will be forced to sell medicines at the controlled price. But the bolivars he receives buy less dollars. And he/she needs those dollars to buy the imported medicines. Because he/she has less dollars flowing in, then it's clear there will be less medicine orders. Which means the delivery system will begin to empty. Because the real devaluation we saw 6 weeks ago was over 50 %, then one can guess that incoming supply will be about 1/3 less. Which implies a medicine shortage is taking place, and a worse one is looming as stocks dwindle (according to the health minister, stocks average about 90 days for typical medicines).

Right now we're six weeks into the full 12 to 14 week stock volume, and stocks are at best being replaced at 2/3 the needed rate. So you work out the math. And if you can't, don't feel too bad, evidently the Chavez regime lacks the competence to do it, and they're running a country. Which is the reason why they are also ruining the country, when it comes to figures, they can't figure out anything.

What are the implications? Some people are going to suffer from lack of medicine, and some will die from lack of medicine. Lots of people will change from Chavista to opposition. The opposition already has the majority of the population behind them. But the government has the imported Cubans, the repression, and the military machine to shoot demonstrators. So the opposition will need a larger critical mass. Which I doubt it'll have because Chavez is importing more and more Cubans to create the repression machinery, and more and more middle class is leaving - so what we see is Venezuela turning into Cuba, shortages and all.

[joshcryer]

22. 6*8=24

[joshcryer]

2. Take some pictures of these store shelves.

[Lydia Leftcoast]

21. Have to consider the possibility of a capital strike

If you don't know what a capital strike is, well, it's part of what happened before the coup that ousted Salvador Allende from Chile in 1973.