The Deadly Kiss of Price Controls

The Deadly Kiss of Price Controls / 14ymedio, Yoani Sanchez
Posted on January 4, 2016

14ymedio, Generation Y, Yoani Sanchez, Havana, 4 January 2016 — I was
ten years old when Fidel Castro launched the economic battle he called
the "Rectification of errors and negative tendencies." The Maximum
Leader's rage fell, at that time, on private farmers and on the
intermediaries who marketed their products. Cuatro Caminos Plaza in
Havana, then known as the Single Market, was assaulted by officials and
after that raid several foods disappeared from our lives: onions,
garbanzo beans, chili peppers and even taro.

Almost a decade later, when the country had reached bottom with food
shortages and scarcities, the government again authorized non-state food
markets. The first time I approached a stand and bought a string of
garlic, without having to practice stealth, I recovered a part of my
life that had been snatched from me. For years we had to appeal to the
illegal market, to a precarious clandestinity, to get things ranging
from a pound of beans to the cumin seeds needed to season them.

However, the return of "farmers markets" has not been free of attacks
and government animosity. The official press blames private producers
for the high prices of many foods, and the figure of the intermediary
has been demonized in the extreme. In the last 2015 session of the
National Assembly, the idea was floated of imposing price regulation on
certain food products, to force merchants to reduce the amounts.

At first glance, this would appear to favor consumers. Who wouldn't
consider it good news that a pound of pork without bones would not
exceed 30 Cuban pesos, or never reach the astronomical 50 peso asking
price in Havana's Egido market at the end of 2015. The initial reaction
of customers would be to welcome it, because a single lemon would no
longer cost one Cuban peso, nor would papaya sell for 5 Cuban pesos a
pound. However, behind the regulated prices come greater evils.

What could happen is that the products subjected to price controls would
disappear from the agricultural markets and once again go into hiding.
We would not be able to go to the corner to buy a pound of onions, like
we have done over the last two decades, but would return to the times
when we'd end up at the side of some road or in the middle of nowhere
illegally dealing directly with the producers or the persecuted
intermediaries.

Consumers would end up paying the piper for a measure that does not
solve the problem of the lack of productivity on our farms or of the
extremely low wages.

An economy is not planned on a whim, nor is it managed by force of
restrictions, rather it is a fragile framework where lack of confidence
and excessive state control are like a deadly embrace, leaving us
without the ability to breathe on our own. In this grip, controlled
prices come to be feared as the kiss of death that strangles commerce
and leaves it lifeless.

Source: The Deadly Kiss of Price Controls / 14ymedio, Yoani Sanchez |
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