Venezuela’s Law of Fair Prices Goes into Effect

[Peace Patriot]

Venezuela’s Law of Fair Prices Goes into Effect

By TAMARA PEARSON - VENEZUELANALYSIS.COM

Mérida, November 22nd 2011 (Venezuelanalysis.com) – The Law for Fair Costs and Prices, which aims to stabilise prices, guarantee access to goods, and to attack inflation, currently at near 26% per year, came into effect today.

The law allows the government to limit the prices charged for goods and services across broad sectors of the economy. Chavez passed the law by decree in July using an authority that the National Assembly granted him last year for 18 months under an Enabling Law.

Representatives of the ministries of food, commerce, basic industries and mining, planning and financing, and the Venezuelan Central Bank (BCV) were involved in the elaboration of the law, which creates a National Superintendency of Fair Costs and Prices. The new institution will regulate, administer, supervise, inspect, and control prices charged to consumers. It will also be responsible for sanctioning those in violation of the law when necessary.

Legislator Ramon Lobo, speaking on VTV today, said the national executive decided to implement the law because of “certain practices, such as monopolies, where in the process of buying and selling products and services... certain economic groups dictate the standard prices in the market”.

Today the government will begin the first phase of implementing the law, which involves inter-institutional auditing of companies’ internal pricing structures of personal hygiene, food, and household products. It will set a maximum selling price for those products on 15 December, and companies will have one month to print the price on the products.

The government is freezing prices- that is, prohibiting increases on a list of eighteen bathroom and cleaning products, such as toothpaste, toilet paper, and dish detergent, while they are being audited.

President Hugo Chavez called on the lawyers and public servants doing the auditing to not let themselves be "bribed" by the companies. "Be careful of corruption," he said.

The second phase of applying the law will begin in January next year, and will involve the revision of pricing structures for a list of medical products, according to Minister for Science, Technology, and Intermediate Industries, Ricardo Menendez.

As stated in the law, companies can be punished for charging more than the designated prices, including a prohibition to sell the product, or inspectors can stamp or confiscate products.

Lobo responded to the criticisms of some business people that the law will generate more inflation and scarcity, saying that the law will be applied “at all stages of the chain, that is, in production, distribution, and marketing”.

Private companies in Venezuela continue to hoard certain regulated basic food goods such as milk and oil, which are now impossible to find at the regulated price, and are sold on the black market at higher prices. The companies do this not only to obtain greater profits, but also to put pressure on the government. However, in some cases, there is also corruption within the state production and distribution sector.

Lobo said that the National Superintendency of Fair Costs and Prices would set prices according to the characteristics of the goods. Companies are obliged to present their financial records, which will then be used to calculate costs and price ranges for individual products.

“It’s a flexible mechanism which will adapt to the specific circumstances in the national economy. We request that the population trusts in the social and economic policies that the national government is implementing, as they are in favour of the vast majority,” Lobo concluded.

http://venezuelanalysis.com/news/6649
(Creative Commons License)
(my emphases)

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

Interesting conundrum. Does the government allow "free market" savagery, whereby the poor majority is looted every which way--as here--not only with senseless steep rises in gas and food costs, but with all other costs (medical costs, tuition, debit card fees, usurious credit rates and so on), as the profiteers clean up...or...

Does the government step in and try to regulate prices on behalf of the poor majority--at the risk of additional kinds of corruption and too much government power or bureaucracy?

It is a difficult problem. I'm reminded of the strict regulation of prices and commodities, here, during WW II. Venezuela, as the pioneer of the leftist democracy movement in Latin America, is not exactly at war, but under siege in many ways, starting with the U.S.-backed fascist coup attempt in 2002 and continuing to this day with numerous other destabilization tactics and dirty ops, including multi-millions of our tax dollars going to rightwing groups in Venezuela. U.S. policy has not changed since the days of Kissinger wanting to "make the economy scream" to topple Chile's leftist government. The same M.O.'s. The same purposes.

So these government actions--to control prices, for instance--are defensive, in many important respects. If rightwing entities were not hoarding goods and committing other acts to destabilize the country's economy, these strong measures might not be needed. There will always be tensions between the have's and the have-not's but U.S. policy and USAID-tutored rightwing elements in Venezuela add significantly to those tensions, with the government then having to act to prevent destabilization.

So the question about "free market" vs government regulation is not occurring--and almost never occurs--in a pristine situation, wherein different principles of the "marketplace" and government policy can be tested out--as to short and long term benefits to society.

Should the "free market" determine prices or should society, collectively, determine prices? Should the U.S. government subsidize Big Agriculture, as it does, or let it fall by the wayside, the victim of "market forces"? --to mention one example of how the U.S. manipulates markets to benefit the rich and the corporate. The "free market" doesn't really exist. But say that it did--a truly free, fair marketplace. Should society intervene--in the form of government regulation--when the marketplace does NOT benefit society and/or produces harm?

I approve of "the marketplace" because I think it's in human DNA to love a "marketplace." If fulfills a human need for variety, color, cultural mingling, excitement, and the fun of new and wondrous products. But I also approve of society acting with strength to curtail monopolies, profiteering, powermongering and other abuses of the greedy and of acting, collectively, on behalf of the poor--to ensure food/nutrition, shelter, employment, education and other human and civil rights.

There is a delicate balance between unleashing human creativity (which the "marketplace" tends to do, or rather which a "fair market" tends to do--"free markets" tend to do the opposite; they are actually exclusionary) and ensuring that all human beings have access to that opportunity. If the poor do not have access to education and credit, cannot afford a decent home, get stuck in slave labor status, etc., then society MUST intervene and balance things out.

Exclusion and abuse of the poor has been endemic in Latin America. Its "marketplace" has been severely distorted by U.S. policy. The Chavez government's socialism is an anti-dote to decades and centuries of oppression. Will that balancing go awry, as "Wall Street" propagandists are forever predicting? Thus far, it hasn't. Venezuelans are doing very well, not only on objective indicators but in their own estimation (in numerous polls). They have "THE most equal society in Latin America" according to the recent report of the UN Commission on Latin America and the Caribbean. Venezuelans routinely rate their own democracy and society, and personal well-being, very high, indeed (some of the highest such ratings in the world). And they furthermore have honest, transparent elections (unlike here) and that is the best guarantee that the government is acting on their behalf with their consent.

Since the corporate-run U.S. government is against it, and most Venezuelans are for it, I tend to view the Chavez government as doing the will of the people, when the National Assembly, for instance, passed this Enabling Law (a rather common practice in Latin America--Brazil, for instance, has had several Enabling Laws) and when Chavez takes the initiative on something like prices. Whether it suits any theoretical model of social balance, or whether i'm comfortable with it, or whether "Wall Street"'s smartasses are comfortable with it, is largely irrelevant. These polices are not being imposed on the Venezuelan people; they are a product OF the Venezuelan people. It is THEIR reaction to relentless historical exploitation. THEY are creating a "New Deal" for themselves. They have a right to do that, and the U.S. government's efforts to stop them are wrong, as is the non-stop slander against the Chavez government that we see in the Corporate Press.

We could use such "balancing" here, I'd say. How about the government taking on the oil corporations (as Chavez did) and demanding a better deal for the people of the U.S.? Or the insurance corporations? Or the banksters? Or the food giants? Or--for heavens' sake--the war profiteers?

We are way, way too far tilted in the other direction--toward "free market" savagery. We DON'T have a problem of strong government. We have the problem of very WEAK government, which has acquiesced to the most mind-boggling theft of public resources in human history. Venezuelans are experimenting with the opposite kind of government--one that has aimed quite successfully at reducing the rich/poor income discrepancy and at improving society with free education and health care. It has also aimed at recreating the notion of "the commons"--lands, infrastructure and wealth that is owned by everyone and maintained in the public interest. And it is now trying to preserve these gains, with policies such as price controls and nationalization of strategic industries and of companies that defy the law. We should be studying the Venezuelan model--to get inspiration from their goals and successes and to learn from their mistakes. If we ever restore democracy here, we shall need such models to guide us.

And we could start restoring democracy here by adopting Venezuela's vote counting system, which is electronic but run on OPEN SOURCE code--anyone may review the code by which the votes are tabulated--and has real audits, as opposed to our closed system of corporate-run 'TRADE SECRET' code with virtually no audit controls. Our corporate-run vote counting system is our most serious obstacle to reform.

[bemildred]

1. Chavez is going to get himself invaded for sure.

All the corporatists are going to freak out about this.

[ChangoLoa]

2. The invasion is imminent, remember

Let's keep on making "emergency" laws.

[bemildred]

3. It's happened before, many times.

I don't know that it's immiment, could be years, even decades yet, or we might just not be able to afford it any more, but I have no doubt that the subject is "on the table" somewhere in DC.

[ChangoLoa]

5. USA invading Venezuela because of the law of prices? C'mon kiddo

We've had fair prices laws and price controls for 9/10 of our history.

How're you doing by the way?
:hi:

[bemildred]

6. I'm OK, other than being older than I once was.

I confess that I think it unlikly we will invade anywhere in LA while Obama remains in office. But it's not like it is a ridiculous idea, and there are, at least, large parts of the US political establishment that think very poorly of being told how much they can charge.

[ChangoLoa]

9. It was an affective and reciprocal "kiddo"

The US political establishment is quite scary indeed. But a bit broken nowadays. Though, as you say, we never now...

But if we go a bit further, the US' interests in our country are limited to buying 1 to 1.5 million of barrels of our oil. I don't think we're too important to them besides that point.

[bemildred]

12. I am sort of optimistic, because they have screwed the pooch so badly.

Such times often allow progesssive change, though it never seems to be easy. Still when I look at social conditions now and when I was young, there is a lot of good with the bad in the USA, and the prospects for political reform are better than at any time in our history (IMHO).

I must disagree that you are not important however, I think how one views that question depends on how real you think "peak oil" is. In a hydrocarbon poor world, Venezuela will be very important, oil is a curse as well as a blessing. There are other countries besides the USA that matter in that regard too. Aside from that issue, I can agree, and it is quite true that our ruling elites do not really care. However Chavez has offended them, and they are not above acting out over that sort of thing, but it is much easier with smaller countries, like Panama or Nicaragua.

[ChangoLoa]

17. Right but we keep on selling oil to the US in similar quantities with or without Chavez

Venezuela has around 1.4 trillion of barrels in the Orinoco belt. From that quantity, +/- 30% is recoverable with current technologies (US Geological Survey*). But those techs evolve and the 30% threshold will slowly change. At the current rhythm of production and with a 50% threshold, we'd have enough oil for 700 years.

If we go to the arabian peninsula, we see a similar situation even if the rate of depletion is a bit faster. KSA, Iran, Iraq, Kuwait are full of oil.

All in all, I tend to distrust the idea of the peak oil. I think the more efficient/hybrid/electric engine for transportation and the development of green energies will kill the market for oil exporting countries before their oil is extracted.

We could argue motor and oil corps lobbies will offset the pace of change. And they'd probably be able to do so for a while, thanks to the US private-money-fueled 'democratic' system between other factors. But we're talking about a scale of many centuries here. Eventually, technological advance will become more profitable to the very same financial capital. So even if there's no radical transformation of the political system, I don't see the world depending on oil in say.. 2 centuries.

I think sheikh Yamani said something interesting once. I found the exact quote: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”

I believe this could be correct.


*http://pubs.usgs.gov/fs/2009/3028/pdf/FS09-3028.pdf
(it's been discussed before in this forum)

[bemildred]

20. Probably about right.

I am not a peak oil believer, although it seems clear that what you might call "peak cheap oil" is real, the easy-cheap-light-sweet-crude is becoming depleted. But that is good for Venezuela. For hydrocarbons in general, things are much less clear, could be a long time yet before real scarcity is a problem, and I think global warming is likely to be the critical factor, and various of the other resource singularities that we are approaching for water, food, fisheries, arable land, etc. But there, Latin America is well placed too, if I were a young man I'd be thinking about moving.

[ChangoLoa]

26. Latin America seems to have bright perspectives... but I remember

40 years ago it was the same. Then, Carter and Reagan administrations, the financial revolution AND OURSELVES made us sink for quite a while.

Let's see how we play our cards this time. I just notice the LAmerican economic booms in the 2000's are very much linked with primary commodities' prices (soya, wheat, oil, gas, copper, coffee, etc, etc, etc).

Still no production of technologies (where northern domination comes from as we all understand), I'm sad to say.

I'm glad to hear your enthusiasm though.

[bemildred]

31. True, but things have changed a lot since then.

The folks running US foreighn policy are much the same, but they have not the means at hand they once had, the USA is much weaker than it was in 1960, relative to its peers. Change is in the wind here too, somewhat overdue because we have had so many fat years since WWII. Nothing is more dangerous than great success.

[bemildred]

7. Do you remember WIN?

http://en.wikipedia.org/wiki/Whip_inflation_now

[bemildred]

14. I especially like this quote:

"In his book The Age of Turbulence, Alan Greenspan as the Chairman of the Council of Economic Advisors recalled thinking "This is unbelievably stupid" when Whip Inflation Now was first presented to the White House. According to historian Yanek Mieczkowski, the public campaign was never meant to be the centerpiece of the anti-inflation program.<3>"

[bemildred]

4. It is quite true, IIRC, that we (the USA) have not invaded Venezuela before, one of the few. nt

[ChangoLoa]

8. No one's ever invaded us since we defeated the Spaniards from the Caribbean to the Cuzco.

The oligarchs were expelled in the 1850's and lost their lands to the State (who still owes 90% of our lands)
The Conservative party abolished in the 1860's
The military were thrown out of politics in 1958 (but then came back recently)
...The sword of Bolivar returned to our valleys reincarnated in Chavez's will just before the end of the millennium

Short compendium (with just a zest of ugly patriotism)

[bemildred]

10. Not since the end of Great Colombia IIRC. The only one.

I am not a student of your history, but I have made a habit of reading LA works in translation and trying to learn more about hemispheric history since the Spanish conquest, when I can.

I think you are doing quite well in VZ, and I expect that eventually Chavez will be followed by some new dispensation, like any other politician.

[ChangoLoa]

11. Chavez could have created a real leftist platform to organize the country

and institutionalize a new logic through consensus.

Instead, what I see is an erratic personal definition of power, a prohibition concerning critical points of view and client factions waiting for their time.

We'll see what happens with his (impossible?) succession.

[bemildred]

13. He has his flaws, as all politicians do.

I think being in office tends to grind off their principles after a while, most of them, and in any case it freaks them out, "My God! I'm responsible for everything!, It's all going on my permanent record!".

You are quite right that the succession and what comes after is crucial. If some of the class barriers stay down, and the political process stays opened up, and government is more responsive to the needs of all its citizens, then progress has been made. If his orderly departure at the appropriate time allows everybody to let some things go and back off on the rhetoric, aiming more at that "government by consensus" you mention, that will be good for everyone.

[bemildred]

15. In Chavez defense, I have to say that some of his enemies are nuts too.

One of the most pernicious features of US politics is our scorched earth political culture, and another is the pretense that we are really very civilized..

If the coup had not occurred in 2002, I would be more inclined to criticize Chavez divisive politics, or if he does not allow himself to be constitutionally returned to private life when the time comes. Depending on how his illness goes, we might find out soon how that story goes.

[ChangoLoa]

18. You know, since the 'divisive' politics started affecting ordinary citizens (Lista Tascon)

I started distrusting and disagreeing with his government. Before that, I supported it.

I consider that an ordinary public servant working as scenograph for State-sponsored touristical promotional movies shouldn't be fired without the possibility of being rehired in any company working with the State (all of the companies in his sector) because he voted or signed for an official referendum against Chavez.

Neither a court magistrate should be excluded and banned from higher posts and forced to resign, again without the possibility of being rehired by the Judicial system, for the same reason.

Those cases are not theoretical. In fact, they're as close as they could be from my personal life.

A president who does that will never have my support. Since that day, I consider him de facto as a political adversary and a reactionary leader whatever his rhetoric may sound like. If we tolerate those actions, we'll have no moral criteria for criticizing and opposing right-wing governments for acting in the same way. Moral integrity comes first.

The State is not to be used as a political party and as an instrument of repression for even non political citizens.

"Patria, Socialismo o Muerte" in every speech: think about it for a second.

[bemildred]

19. Well, I do not trust or automatically agree with any government.

And even the best tend to slide downhill once they achieve enough power to misbehave without consequences. So I'm OK with that. That's what democracy is all about. My only comment is that I trust his opponents even less.

I do feel that Chavez would be remiss not to address his succession now, if he fails to do that, he risks all that he set out to do.

Part of the problem with polarized politics is you wind up with only two choices, both of which are bad. That has been the status quo here in the USA for the last 150 years.

In the "Undeveloped World" one also has the constant problem of outside meddling and/or help from the "Developed World", looking for cheap labor, resource extraction, and high profits.

[ChangoLoa]

27. I don't trust his opponents. But they can't rule the country alone. They HAVE to establish consensus

The two situations are difficult to compare.

[bemildred]

32. I sort of agree, I don't think Chavez' changes can just all be undone.

Like that moron tried to do in 2002. What a dip, he could not even wait to make sure he had control first, it was all about ego, letting the peasants know you were back in control.

A lot depends on the military, and I have no idea what the situation is there, other than that relations are not bad.

And I certainly agree that everybody ought to be thinking what they want for post-Chavez Venezuela, the future, not the past.

[joshcryer]

28. "no moral criteria for criticizing and opposing right-wing governments for acting in the same way"

Exactly. It's morally and ethically reprehensible to turn a blind eye when one of "our" guys do it.

[bemildred]

33. But that is our habit.

Tyrannical friends are just peachy if we get what we want from them.

And rules are not rules unless you follow them when it is inconvenient.

And that tell you a great deal about the people who run our country these days.

[joshcryer]

34. Yes, but I disagree with our 'leaders' when our country does it.

And I support our 'leaders' when our country does it right.

[bemildred]

35. Me too.

Trouble is they don't do it right near enough.

[bemildred]

16. Chavez Price Caps Spark Panic Buying of Coffee, Toilet Paper

Venezuelan President Hugo Chavez’s move to expand price controls this week sparked panic purchases by consumers, leading to shortages of everything from coffee to toilet paper.

People are buying more than they need to stock their homes and resell the products at a profit in the black market, Food Minister Carlos Osorio said yesterday on state television. The authorities are visiting stores to ensure the availability of regulated products, he said.

“I’m buying everything that’s on the price control list that’s going to be regulated,” retired schoolteacher Elena Ramirez, 56, said in an interview at a Dulcinea supermarket in Caracas where she bought 12 packages of toilet paper, each with four rolls. “Everyone is in the same game. It’s madness.”

Under regulations that took effect on Nov. 22, the government can fix the price of 15,000 goods in an attempt to slow inflation that reached 26.9 percent in October, the highest in the Western Hemisphere. Chavez immediately ordered a freeze on the price of 18 personal care items ranging from toothpaste to deodorant until mid-January to prevent monopolies from “ransacking the people.”

http://www.bloomberg.com/news/2011-11-25/chavez-price-caps-spark-panic-buying-of-coffee-toilet-paper.html

I know I sure hate having to use my shirt.

[Peace Patriot]

21. Funny how panic buying, here, on "Black Friday," with people trampling each other

to get bargains, is viewed as good for our profoundly depressed and failing economy, whereas people stocking up on toilet paper ahead of price controls is treated as the "death knell" for Venezuela's thriving economy--a "bell" that has been uselessly rung by "Wall Street" prognosticators since, oh, 2002-2003.

Did I say "thriving"? Yes, I did--though you will never get this from Bloomberg. Venezuela has overcome its mild recession--brought on by the Bushwhack worldwide depression and plunge in oil prices--and never did feel much of a hurt from it, due to the Chavez government's commitment to social spending, regulation of banks and finance and good planning (for instance, accumulation of large cash reserves during the sizzling growth years of 2003-2008). And there are kudos all around (that we will never hear of, from the Corporate Press)--for instance, the UN Economic Commission on Latin America and the Caribbean recently designated Venezuela 'THE most equitable country in Latin America," on income distribution. Other reports show Venezuela meeting all of its "Millennium Goals" and more--including cutting poverty by half and extreme poverty by over 70%, and big advances in access to education, health care and other progressive programs. Venezuela is also on a growth path again, doubling forecasted growth in 2011. They also raised the minimum wage, again! (When are WE ever going to see that again?)

--

Venezuela’s Economic Growth Doubles 2011 Forecast, Grows 4.2% in Third Quarter
http://venezuelanalysis.com/news/6642

--


Bloomberg, as always, headlines whatever it can construe as negative about Venezuela (including the normal and understandable, though not very patriotic, behavior of Venezuelan consumers in stocking up on products that they think might become scarce). Bloomberg WANTS "panic" in Venezuela. They've been trying to stoke it up for years!

But yet they surely love the "Black Friday" mobs here--however rude or violent they were, or whatever crap U.S. consumers were gorging themselves on, in anticipation of not being able to afford said crap two weeks from now.

And did they ask the "retired schoolteacher" in Venezuela how she has the money to buy 48 rolls of toilet paper? No, they did not. Do they care that the "Black Friday" panic buying in the U.S. likely means more consumer debt? Not at all--as long at it enriches Walmart, Wall Street and the Banksters.

We need to pay attention to what they don't say, and what they don't ask--and all that they ignore. The Chavez government's very significant achievements are NEVER reported in the Corporate Press. Never! Yet every little blip of news they can dig up or invent, that puts the Chavez government in a bad light, gets headlines.

It is beyond the beyond as to bias. Bloomberg happens to be one of the worst (though it's hard to choose), so beware. We need to put on our "black holes in the news" glasses to read these kinds of articles about Venezuela.

[bemildred]

22. I am sure the "panic buying" is very profitable in both instances.

You make a good point about how the propaganda organs work.

[Judi Lynn]

23. Thanks for taking the time to make these points.We do get played by the corporate "news" media. n/t

[Bacchus39]

24. I don't think Venezuelans were looking for bargains, they were stocking

up on supply in anticipation of the shortages of basic needs.

[ChangoLoa]

25. "raised the minimum wage".... really? Then why is it lower than what it was 3 years ago?

I've noticed that you keep on announcing minimum wage increases in Venezuela. But you always (and voluntarily since you've been explained this point many times in this forum) omit to say that you're talking about the nominal and not the real minimum wage (meaning inflation-adjusted).

Do you understand the difference?

Do you understand that with the current levels of inflation in Venezuela, the nominal minimum wage should be raised by 30% every year in order to keep its purchasing power stable?

Do you ask yourself who benefits from the constant devaluation of our workers' money? According to you, who "makes the money" in Venezuela?

And last but not least, how dare you compare people stocking up oil, sugar and toilet paper with super sales friday in one of the richest countries in the world? Are you kidding us?

[joshcryer]

29. No worries, other Venezuelan observer do not have such a low opinion of your country or peoples.

I for one would never consider people in the richest single country in the world trying to get big screen TVs at a discount anything remotely similar to others buying simple things like toilet paper and other necessities.

[CJvR]

30. Another war...

...on the market? Most amusing, as will be it's eventual faliure.