Uruguay institutes price controls

Posted: October 26, 2012 in Ancient wisdom, News, Stupidity
Tags: , , , , , ,

According to this announcement, the Ministry of Economy and Finance and the Association of Uruguayan Supermarkets are putting a freeze on prices for over 200 supermarket products, in more than 300 stores, “in order to fight inflation.” Not only will the prices be frozen but they will be discounted 10%.

Our old friend Lorenzo, who scared off just about all the big fish from investing in Uruguay with his proposal and subsequent law to tax foreign holdings of UY residents, now thinks he can fix the problem with price controls. Well, it’s not just his idea; it’s the Association of Uruguayan Supermarkets too. They are “volunteering” to the price freeze. Why, who knows. Probably a political stunt. If they can afford to freeze prices *and* discount them, maybe they’ve been doing a bit of scalping. I’ve suspected this for a while.

Let’s see… every single time, ever, in all of recorded history, whenever price controls are enacted, that creates shortages of those goods and hoarding by those who have them. Why sell when the government forces you to do it at a loss? Those products then suddenly find themselves missing and/or not produced in the first place.

I have a prediction, based on this evidence from all of recorded history: those 200+ items will simply vanish from supermarket shelves and not be replaced. Meanwhile whoever actually produces them will either fill warehouses with unsold merchandise, or just stop production.

I also have a better suggestion to fight inflation: stop inflating the currency supply. All it takes is to do nothing, which Uruguayans are experts at. Doing nothing requires no employees, no printing press, no ledger entries.

I have been wondering for a long time how Uruguayans can afford to feed themselves as these crazy inflated prices. Now we see firsthand. And I don’t think it’s lack of material– there have been absurd prices on things that are sourced and made in-country. My opinion as to the price absurdity: Uruguayan greed. Really there’s no need to charge US$5 for 100 grams of cheese when it’s made in your backyard. Or $5 for a bag of potato chips which contains maybe 5 potatoes which cost a whopping 10 cents apiece from field to fryer?

Thanks to GermanBob for the link.

Comments
  1. Sara says:

    Those prices explain why Uruguayans tend to be on the skinny side.

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