Expanding State results in shortage of staples and services

[naaman fletcher]

On April 2, 2009, Venezuelan Minister of Finance and Planning Jorge Giordani said that "socialism has been built from shortage." Two years later, in July 2011, the Venezuelan economy has proven him right, amidst frequent failures in the supply of electricity, construction materials, domestic gas, fertilizers, and basic food items.

Irregular supply of goods and services, which hinders production and promotes inflation, has emerged after a comprehensive government expansion plan in the Venezuelan economy that has granted Hugo Chávez's government full control over the power and cement sectors, the country's main steelmaker, the leading producer of fertilizers and hundreds of expropriated farms, among others.

The change of title in Venezuela has led to an 18 percent increase in the public sector's GDP between 2007 and 2010, while the private sector's GDP has declined 5.8 percent.

Ronald Balza, an economist and professor at the Central University of Venezuela (UCV), said that "a typical feature of the economies in which the authorities try to implement a central planning is the problem of coordination, because too many fronts are opened. The government is now operating steelmakers, farms, assembly plants and there are limits to the capacity of the entrepreneurial state."

http://english.eluniversal.com/2011/07/14/expanding-state-results-in-shortage-of-staples-and-services.shtml

For the people.