Since Hugo Chavez became president of Venezuela, he has attempted to revert the economy to one controlled by the state. By fixing prices (typically the prices that suppliers receive) the president believes that he can overcome the laws of supply and demand. There are many stories regarding Venezuelan price controls that show the government may not have as much control as they might like. Try to find another story regarding price controls outside of Venezuela (and outside of this link) to display this point. You might also want to think about the law of ‘unintended consequences’ that plays a large role in this.
Questions you might try to answer:
- Why does Chavez, or any other government official attempt to put price controls into place? Who are they trying to protect?
- Describe the impact of ‘nationalization’ on the prospect of private investment in an industry. You could think specifically about foreign direct investment.
- When governments attempt to control prices, what impact does this have on the economy? What impact do price controls have on the ‘standard of living’ of different classes in the short run? What impact do price controls have on the ‘standard of living’ of different classes in the long run?
I would like your statements to be as subjective as possible, or in jargon terms, positive and not normative in nature. Also, remember, I want you to keep your descriptions short, basic, and related to classroom content. Read other students comments before posting, and please leave your name with your posting.