Street Vendor Arbitrage In Venezuela

The Devil's Excrement (Venezuela) ^ | 30 Sept 2006 | Miguel Octavio

[Kitten Festival]

Market forces can be very powerful indeed. ...

When the Government created its supermarket network Mercal, it was supposed to be a way of delivering cheaper goods to the poor. Mercal ... paid no custom duty, received all the currency it wanted at the official rate of exchange, was handled by military at all levels so it only had to pay labor for a reduced non-military workforce. Finally, it ... would pay no taxes.

... The Government established price controls for certain foodstuffs and they applied to ... products sold by Mercal. As inflation drove prices up, the Government allowed controlled prices to increase only slowly or not at all, creating a huge discrepancy ... Thus, the Government had to start subsidizing many products in order to keep prices down.

... It was or is impossible for local producers to even compete with Mercal subsidized prices. This has basically become a trap; foodstuff prices are up 19.9% since May....

But market forces have now intervened in the form of the huge work force of street vendors, estimated to be 300,000 in Caracas alone. They simply go to Mercal, buy as much as they are allowed to and ... sell the products in the streets at market prices, thus creating what we can call “Street Vendor Arbitrage”.

... A kilo of powdered milk, for example, that sells at Mercal for Bs. 4,700 (US$2.18 at the official rate of exchange) goes for Bs. 15,000 (US$ 6.97) from the street vendors, wheat flour, Bs. 1000 at Mercal goes for Bs. 2,500 in the streets, sugar Bs. 740 at Mercal, Bs. 3,000 in the streets ...

Of course, you can’t always find all the products at either Mercal or informal markets, with sugar, milk and some vegetables being in short supply regularly.

[Kitten Festival]

This article is a brilliant illustration of communist economics in action, same old communist economics that has been tried and failed the world over. The government sells cut rate food and sure enough, shortages follow when some people buy the food at the cheap prices and sell it at a profit elsewhere. Net result? Shortages, rationing and military goon squads. This item shows how this is happening brilliantly.

[the invisib1e hand]

communist economics in action

Communist economics isn't about satisfying the needs of people. It's about keeping them in subjugation and enriching the elites.

[dynachrome]

"Next week a decree will be issued prohibiting the sale of Mercal products by anyone but Mercal vendors and the National Guard...."
Got to it pretty fast. Now every street vendor will be a criminal. Prices will be adjusted accordingly.

[operation clinton cleanup]

I met with an American citizen who lives in Caracas last week, she says the government delivers truckloads of supplies to the peasants on a regular basis, hence they will vote for Hugo for life.

[Mr Ramsbotham]

All true, but why should Chavez care? It's like a premature ejaculator and his lover. "Was it as good for you as it was for me?"