So it’s never fun to retract a post once someone lets you see you had it totally backward, but sometimes that’s just how it goes…and yeah, I really mangled this one.
It’s worth taking a minute to ponder the Soviet Economy as it was circa 1983 for clues about what we have coming. By then, the Soviet economy had hit so many production and distribution bottlenecks in so many markets straining under misaligned prices for so long that shortages became generalized. We’re not talking about the kinds of shortages that Venezuelans have been getting used to, with problems concentrated on a limited number of basic products and bare shelves sitting alongside shelves full of non-price-controlled products. By the early 1980s, it was hard for Russians to buy anything, except via the ration book, in strictly limited quantities, or after a kilometric line (which amounts to the same thing: rationing-by-willingness-to-wait rather than rationing-by-bureaucratic-fiat). The funny thing is that Russians had plenty of rubles in their pockets. It’s just that there wasn’t anything they could do with them. In this view, “financial repression” – coercive government measures to force people to keep bolivars, by limiting their access to other assets, like dollars – has just barely staved off a collapse so far, but is inherently unstable and could come apart at any time. Well, yes, maybe. Or maybe not. Maybe shortages, taken to their logical extreme, are the ultimate in financial repression: a way of forcing people to hold bolivars simply because there is literally nothing you can trade them for. Maybe, to a guy like Maduro, generalized shortages look much more politically palatable than hyperinflation: a way of destroying the money system consistent with his staying in power. These guys, after all, are disciples-of-Fidel: shifting as much of the adjustment as possible onto the empty shelf comes naturally to that mindset. Fidel long ago mastered the way to leverage a Shortage Economy into a technique for regime survival, forcing people to spend so much time and energy just trying to secure the basics they’ve no time to try to overthrow you. Like Russians before them, Cubans today know only too well what it is to have pockets full of basically useless money. In neither case did we end up in a hyperinflationary situation, in both cases the debasement of money was subtler and much more sustainable in the long term. The Soviets, lest we forget, managed to claw on to power over 8 decades, all of them shortage plagued. And the Cubans are not too far behind. The governing clique is dumb, but they’re not that dumb: they know full well that the aggressive fiscalizaciones of the last few weeks will dramatically worsen the supply situation in a few months’ time, as store after store simply finds it impossible to replenish stocks. That they’re doing it anyway suggests to me that they think a generalized shortage economy is compatible with their perpetuation in power in ways a hyperinflationary economy isn’t. Whether a society as steeped in consumerism as ours will stand for it is…something we will find out.