Venezuelan Government Takes Over Toilet Paper Factory

I guess we can wipe visiting Venezuela off our list…

The government of Venezuela ordered a temporary takeover of a toilet paper factory due to shortages that have been widespread. The socialist government’s rigid price and currency controls have created disequilibrium in the marketplace and distorted the ability for companies to deliver goods and services.

CNN reported that Vice President Jorge Arreaza announced the “temporary occupation” of the company to review the “production, marketing and distribution of toilet paper.”

“The … People’s Defense from the Economy will not allow hoarding or failures in the production and distribution of essential commodities,” the vice president said.

The failures of central planning to be able to deliver goods to the marketplace in Venezuela are a reminder of the old Soviet bread lines. The problem with socialism of course is that it is impossible for governments to calculate the price of goods and services. The pricing system allocates goods and services according to the laws of supply and demand. When the government intervenes, there is disequilibrium and you will get shortages or surpluses.

WATCH: Libertarianism Vs. Socialism Debate 

With capitalism, the plan for production is composed of many individual plans from many different capitalists in large and small enterprises. Since they are acting on scarcity, they will economize in order to provide the best product for the lowest cost. The price system tells the markets what the economic situation is and allows entrepreneurs to adjust their strategy based on that information. Since governments are immune to pricing signals, they are unable to effectively coordinate the efficient allocation of goods and services to the marketplace. This is how you get shortages of products as simple and essential as toilet paper.

Think toilet paper is easy to make? How about a pencil?

Nobel Prize Winning Economist F.A. Hayek on Socialism and Central Planning