Eschernomics

El Nuevo Min Po Po Economía Popular, M.C. Escher
El Nuevo Ministro para la Economía Popular, M.C. Escher

Expressing frustration at recent policy failures, President Maduro announced today a new initiative to regulate the process of water current formation, as part of a drive to finally ensure water flows reliably in the correct, revolutionary direction – uphill – from now.

The President of the Republic, Nicolás Maduro, announced a series of steps to crack down on factors that “perturb the normal workings of our water flows” in order to “build a new order” that leads to “the transition towards socialism.”

Maduro vowed that the government will implement mechanisms to “adjust and regulate the entire system of hydrologic directionality in the country.”

From today, the president explained, he will launch “a civilian-military operation against wreckers and saboteurs” backed by “hydrological laws and decrees that I shall issue from time to time with the powers granted to me by sectoral laws. We’re going to go right to the nitty gritty, covering the whole of the water flow process, let everyone get their documents ready, their reservoirs, we’re going to go see up to the last reservoir and the last drop of water, it will be a great operation for balance, based on supervision…”

It’s easy to make fun, but in some ways it really is tragic. Because I don’t think they’re faking it. I think they genuinely don’t understand why it can’t work.

These people’s ideological blinders are strapped on so tight, they will probably never grasp how their policies have led directly to the economic disaster the country is going through.

The nub of it is a deep, obdurate obscurantism on the process of price formation. The notion that prices arise organically through the interplay between producers’ and consumers’ preferences is so far beyond their grasp they don’t even get how much they don’t get it.

The trouble, you see, is that while you can set prices by decree, you sure can’t set preferences that way.

Why that might matter is just one more thing that eludes these clowns. And yet matter it does: over time, the misallignment between people’s preferences and administratively-set-prices must lead to shortages – can only lead to shortages – cannot NOT lead to shortages.

You can pass all the laws in the world saying that a cabilla must cost 5 times more than a topocho. But if people collectively want cabillas 10 times more than they want topochos, you will end up with too many topochos and too few cabillas. Guaranteed.

And there ain’t no operativo cívico-militar gonna change that…

To anyone who has studied economics in the last 40 years, this is perfectly obvious. To Jorge Giordani, the idea is about as intelligible as the Large Hadron Collider would’ve been to Tutankhamun. Worse: putting it forward makes you suspect of membership in the conspiratorial clique of economic warriors working indefatigably to ensure the water keeps flowing downhill.

It really is sad to realize: a not inconsiderable part of the economic nightmare Venezuela is living through isn’t even due to malice, or ham-fisted redistributive zeal, or even to incompetence. A lot of it is plain ignorance. Just ignorance.

Don’t believe me? Click here.

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