Minimum Wage Increase Forces 40% of Stores to Close in Socialist Country
Socialism works. This is the end result.
Venezuela’s socialism bankrupted the country. Its attempt to rigorously control the economy through price controls, nationalization and a monetary policy utterly ignorant of anything except its immediate goals pushed it to a million percent inflation and shortages of everything, which the government denied existed, and then to attempting to adopt a massive minimum wage increase.
That’s going well too.
Nearly 40 percent of all Venezuelan stores have closed —some of them perhaps permanently —after the government of President Nicolas Maduro increased the minimum salary by nearly 3,500 percent in one fell swoop, according the National Council of Commerce and Services of Venezuela.
The problem is that Venezuelan companies are being forced to sell at prices far below cost just as employee salaries are increasing 60 times, Uzcategui said.
What’s more, the regime has banned stores from increasing their prices to cover the salary increases, arguing that it is not necessary.
If they do increase prices, store owners or managers can end up in prison, Uzcategui said.
“We have inspections, and they force us to sell at last month’s prices,” she said. “That takes money away from the business because of the hyperinflation, when you can’t even sell at yesterday’s prices because you lose money.”
And we are talking about a country that is headed to 1 million percent inflation.
Estimates by the legislative National Assembly show that the country’s inflation hit 200 percent in August alone —which means the currency, the bolivar, lost two-thirds of its value in 31 days.
So to compensate, prices would have to go up as much. Instead businesses have to sell products at a fraction of the cost.
About four in 10 stores have not opened since Maduro announced the salary increase two weeks ago. And some of the stores that did open are liquidating their merchandise and plan to close definitively when that’s done.
That will put even more of the country out of work.
But it also means that the Maduro regime will have even tighter control of food distribution and will continue using that to buy loyalty from the military.
But, as Bernie Sanders said, bread lines are a good thing. Wait until they come to America.