Friday, May 17, 2013

The Big Wipe Out

How to Create a shortage in 6 easy steps.

1. Impose a price control, that reduces cost of item significantly below going market rate.
2. Publicize
3. Watch demand increase (people jumping to buy the bargain rate item)

4. Watch store shelves empty.
5. Watch retailers choose not to replenish supply (insufficient (or no) profit to motivate)

6. Watch lines form anyway.

Or in short form from Uncle Milty:

 "We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage.”

Case in point: Venezuela and the Big Wipe Out. (with apologies to Jack Webb)
From the story:
"State-controlled prices — prices that are set below market-clearing price — always result in shortages. The shortage problem will only get worse, as it did over the years in the Soviet Union," said Steve Hanke, professor of economics at Johns Hopkins University."

Very sad state of affairs. As Hugo’s…picked successor scrambles to replenish the supply, may we suggest this supplier:

The Good people at Cuban Food Market

Only $8.95 USD a roll. Get 'em while supplies last!