Friday, November 23, 2007

Fantasy Worlds

There has been much commentary resulting from recent reports about apparently odd differences of availability of luxury goods and basics in Venezuela. John Chilton's post on this at The Emirates Economist emphasizes that there is nothing paradoxical about something with a perfectly simple explanation - the tendency of fantasy in the country's leadership (this fantasy oddly persistent in spite of obvious similar recent experience in Zimbabwe).

It's not a paradox. Paradoxes don't have explanations. This is Venezeula under Hugo Chavez. Price controls create shortages. Milk has become rare only because the price is artificially low.

Interestingly, his post prior to that one describes another distortion, this one in the UAE.

In short, the country is suffering the curse of resource abundance.

There are better ways to share the plenty of high oil prices with its citizens. Write them a check ... Make them owners of the oil that is currently owned by the government. Make it difficult to reverse course -- as happened in Saudi Arabia ...



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