Chavez to jail price control violators?

This NYT story from a couple of weeks ago is an extreme illustration of the general rule that in government nothing succeeds like failure. Create a government program that makes a problem or perceived problem worse, and there's no inkling of abandoning it; rather, the failure is always taken as evidence that the government hasn't been ceded enough power, or hasn't acted aggressively enough.

The story here is about Venezuela's major-domo. The poor guy: "faced with an accelerating inflation rate and shortages of basic foods like beef, chicken and milk, President Hugo Chavez has threatened to jail grocery store owners and nationalize their businesses if they violate the country's expanding price controls."

The eternal promise of government is that it can repeal the laws of economics, but it never manages the trick. Anybody who has come within a mile of Econ 101 (or thought for a moment or two) knows that the quickest way to create a shortage of a good or service is to control its price below what it would be in a free market. When goods are in shortage, especially basic goods, the real (distinct from the legislated) price shoots up. In a free market this is an effective signal to producers to produce more, and when they do, increasing the supply, the price goes down. Supply-and-demand just isn't that hard to grasp.

If instead of letting the price rise one takes steps to keep it artificially low or to drive it lower, the result is to worsen rather than to alleviate the shortage. But a government, particularly one like Hugo Chavez's, which is attempting to assert full-fledged draconian control over as much of Venezuelan life as possible (in which it is different only by degree, in that it is actively seeking excuses to nationalize businesses as a matter of openly stated current policy, from other governments, including our own) simply threatens to become more draconian.

If a government program succeeds, or appears to succeed, that's evidence more resources should be thrown its way. If it fails, that's even better for government with a yen to grow.