War on Christmas, Venezuela style

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Venezuela’s electronics and hardware stores are bound to run out of home appliances and more by December, according to the Chamber of Commerce director Gilberto Gudiño Millán in La Verdad newspaper:

The situation is critical, worrying. It happens not only to the electronics shops, but with all of those in the sector that are being interfered with and inspected. That allows one to predict that soon we will be living an unprecedented crisis, because companies are already out of stock, which indicates that in December there won’t be any more products available.

This crisis is a direct consequence of President Nicolás Maduro’s campaign to lower prices by fiat. Over a week ago Maduro ordered the military to take over nationwide electronics chain Daka and other stores that he accuses of price gouging and other unjustified price hikes. He’s also ordered the detention and arrest of many storeowners and managers. As these measures encourages home-appliance shops to not keep their inventory levels high, Millán’s prediction seems likely to come true, hence the war on Christmas.

That’s not stopping Maduro. To prosecute this so-called “economic war” – and in the same way his predecessor did politics – he obtained a yearlong grant of power to pass laws without congressional approval, to rule by decree. (Hugo Chavez passed nearly 200 laws by decree during his time in office.) Maduro is now widely expected to limit businesses’ profit margins to 15% to 30% as part of his “economic offensive” against price gouging.

Venezuelans have been pleased with Maduro’s initiative to slash prices in electronics shops. But as inventories wane down, consumers are going to become frustrated, as they will want to return for more cheap home appliances. As Millán noted:

When people will go to the stores they will get annoyed because they won’t find what they need. December will really be critical, that worries us. They have wanted to blame this crisis on the business sector but the reality is that the government created this system. Commerce is affected, but at the end consumers will be the most affected.

Maduro may have conceived of his move against the retail electronics sector as a sound populist play in the run-up to December 8 municipal elections, which are seen as a referendum on his first eight months in power. It’s also a piece of his broader economic strategy to blame Venezuela’s private sector for its fragile economic situation. (The inflation rate is now at 54.3% – the highest level since hyperinflation attacked the country in the mid-1990s.) If Millán is correct, Maduro’s electronics ploy will prove to be a severe miscalculation. His efforts to mimeograph the strategy and tactics of his predecessor might well be another.