Toilet paper, of all things, is in short supply due to the coronavirus crisis.
This shortage is leading politicians such as New York City Mayor Bill de Blasio to say that the government should take over the supply chain. But these socialists are forgetting that the reason supplies are running low isn’t capitalism, greedy hoarders, or even the coronavirus — government price controls are to blame.
When I went to my local Walmart in Lexington, Kentucky, and could only purchase the last four rolls of toilet paper in stock, it was like deja vu. I was experiencing once again what I went through in Venezuela.
For the first 17 years of my life, I lived in the socialist “paradise” praised by prominent leftists in media and politics — until it became so miserable that they chose to ignore us. I waited in line for hours just to purchase food and necessities. Among the most important items in constant shortage was toilet paper. Most of the time, I could only purchase one or two small packs at a time or each week.
The reason for the shortages?
Like all other rationed goods, toilet paper was subject to a price cap imposed by the government. The late Hugo Chavez, our former dictator, didn’t want companies to profit, and he wanted toilet paper to be cheap, so he imposed low prices on companies instead of letting them negotiate prices with us customers. He thought that profiting from people’s necessities was immoral.
But naturally, when the government didn’t let companies profit, they produced fewer of the items we wanted to purchase — and while at the same time we wanted to purchase even more, because the price was artificially low. This, then, created a massive shortage.
Venezuelans, understandably, were doing everything possible to help their families, including hoarding toilet paper, because they never knew when it would be available again. And they would sometimes resell products at high prices to make extra income.
Chavez and his successor, Nicolas Maduro, called those who buy and resell “bachaqueros” and, unsurprisingly, blamed them and hoarders for shortages. But, of course, they actually should have blamed themselves for imposing price controls.
Unfortunately, I am witnessing the same sad dynamic of blaming “hoarders” or capitalism as the coronavirus crisis spreads in the United States.
Even leaders as ideologically disparate as President Trump and D.C. Mayor Muriel Bowser are encouraging people not to “hoard” in order to avoid shortages. And socialists on social media have lashed out against capitalism for failing to supply stores efficiently, as if that makes any sense.
But the truth is that, just like in Venezuela, shortages in America aren’t caused by hoarders or people who buy thousands of hand sanitizer bottles, but rather by government policy. It is always shortages that lead to hoarding, not the other way around, because people know they might not be able to buy an item later.
Sure, the virus is causing fear about the supply chain, and many customers panic-purchase toilet paper, which can temporarily deplete stores. But if stores can’t restock fast enough, raising their prices would be the normal and correct thing for them to do to encourage factories to produce more and make sure consumers don’t buy what they don’t need — and thus avoid running out of products.
The problem is, they can’t.
That’s because more than 34 state governments ban a practice called “price gouging” and limit the price of basic necessities whenever a state of emergency is declared. Some of these laws are vague, such as Alabama’s statute that prohibits charging an “unreasonable price,” whatever that means. Others are very specific, for example Florida’s state law, which bans charging prices above the 30-day average before the emergency declaration.
The only difference between American price gouging laws and Venezuela’s is that here the laws are only in effect when the governor declares a state of emergency. This is why supplies are normally fine, but things run out exactly at the times we need them most, such as during the coronavirus emergency. Don’t just take it from me: Ample economic studies show that disaster-stricken areas are even worse off because of anti-price gouging laws.
If this coronavirus crisis can teach us something, it’s that socialist policies have the same result both here and in Venezuela.
Daniel Di Martino (@DanielDiMartino) is a research associate at the Institute for the Study of Free Enterprise at the University of Kentucky, a Young Voices contributor, and a Dissident contributor.
Reprinted from Washington Examiner. See original article here.