The Maduro Toilet Paper Crisis

May 23, 2013

toiletThis signs shows the effects of shortages in Venezuela: Not only is toilet paper scarce you can only buy one package

It has been Nicolas’ misfortune that the toilet paper crisis exploded in his face less than one month after assuming the Presidency. It is not the worst shortage under Chávez or in Nicolas’ short Presidency, but it is one that affects everyone, captures the imagination of the foreign press and is simply quite symbolic of the failures of the Bolivarian revolution.

Start with the supposed solution to the problem. Have the National Assembly approve an emergency allocation to have the Government import two weeks of toilet paper. When you need to involve the legislature to import something, you can tell the system is really screwed up. After all, why toilet paper and not antibiotics, which have been scarce since December?

The answer is simple, not everyone uses antibiotics, or high blood pressure medicines or insulin, but in Venezuela, most everyone expects to be able to buy a roll or two once in a while when it is needed. In some sense, it is the same reason why Chávez never cared too much about fighting crime. At least in the first few years of his Government, crime only affected a small segment of the population, but as it went off the charts, it became a significant problem as more people were or knew victims of crime.

And while the Venezuelan President blames the crisis on hoarding and conspiracies by the opposition, the head of the National Statistics office blames the fact that people are eating a lot. Which makes you wonder if the problem is that they are eating the wrong stuff and going to the bathroom a lot, because there are many shortages in the food sector too.

But in the end, the problem is precisely that the Government has to go and import the toilet paper, because of the simple fact that it controls everything:

-The price of the toilet paper is controlled

-The foreign currency used to buy paper pulp is controlled

-The ability to buy or import toilet paper is controlled

Beyond that, it gets even more complex, depending if you are on the importing or on the local manufacturing side.

If you are an importer, you compete with none other than the Government. First your dollars may not be approved, thus you bring nothing. But the friendly “Boliborgeois” who competes with you, gets the money to import good quality toilet paper from reliable suppliers, but ends up getting it from who knows where, making half the profit in the toilet paper and the other half on only using a fraction of the dollars allocated to buy the toilet paper. The remainder dollars can stay in dollars or you can sell them at the unmentionable rate, making a profit with them of 344% at today’s rate.

So, as an importer, you can’t compete with those “briefcase companies” mentioned by Mario Silva in his top hit recording.

But if you are crazy enough to still be a manufacturer you are in Bolivarian control hell.

Suppose you priced the roll of toilet paper at a dollar in January 2010, when the exchange rate (official) was at Bs. 2.6. Well, your raw material costs had gone up by 65% by Christmas 2012 and 142% by today, but your price increases have not reached 40%.

To say nothing about your labor costs, which I will simply adjust for inflation, ignoring the recent labor Bill. By last December, your local costs had gone up by 98% and 122% by today. This is more than double the price increases for toilet paper.

And if you needed a part for your rolling machine, the dollar the swap market that you bought at Bs. 6 in January 2010 is now worth close to four times more and that is an integral part of your cost.

That is why the manufacturer is a fool, the legal importer is trying to get lucky and the “Boliborgeois” with his “empresa de maletin” (Mario Siva dixit) is becoming a millionaire.

And that is also why the revolution has failed. It has replaced a productive system by a planned system full of controls and corruption, which favors the buddies that can get official dollars, sometimes benefits occasional importers who get lucky and screws those that are still trying to make and produce something in Venezuela.

Just think, if you were trying to get into the toilet paper business in Venezuela, which model would you want to follow?

Well, given that they hate productive capitalists and oligarchs, Chavismo and now Madurismo have also chosen the same path that any sane person like you would, it is the most profitable for those involved, but the most expensive for the country.

And yes, people are eating more food, but I am not going to get involved in a technical discussion about whether the length of the toilet paper you use is directly proportional or not to mow much or how often you eat. But the most important reason that people are eating more is the same reason why they are using more gasoline and more electricity: They are all heavily subsidized. Assign a fair price to food, gasoline and electricity and the overall economy of the country would be better off, even if individually people would be worse off. And before anyone makes the argument that I have it backwards, you could give away the food for free, the electricity for free and the gasoline for free and the country would be in deep …. and we would all need a lot of toilet paper.

And with shortages comes rationing, something Cubans have known for 50 years, but Venezuelans had very little exposure to. Something the sign in the picture above clearly depicts.

Oh! But ideology beats realism or the “people’s” well being.

And thus Chavismo/Madurismo is never going to accept that its centralized planning system full of controls, rules and corruption is to blame for any of these problems. They have a religious belief that what they call “socialism” should work, despite the fact that all historical evidence shows it has always been a failure. But like Nicolas says, he believes more in “popular” wisdom than in scientific and technical facts.

Which only shows how primitive and lost the revolution is. Maduro’s paper toilet crisis is simply a reflection of both this and his ignorance.

Notes added: To add to the craziness, El Mundo reports today that the Government imports meat from Brazil at twice the price it pays Venezuelan producers. And people who are lucky enough to find toilet paper, put it into black bags to avoid being mugged, according to today’s El Nacional.

Such a pretty revolution!

44 Responses to “The Maduro Toilet Paper Crisis”

  1. carne tremula Says:

    pero tenemos patria.

  2. CarlosElio Says:

    Here is a metaphor to help people understand the consequences of state control of the economy.
    Imagine that the government decided to control urban traffic. How you accelerate, brake, stop, turn tot he right, turn to the left, honk the horn, flash the lights, everything behind the wheel must be done according to government regulations. A sensor inside the vehicle tells the government when you are not obeying. Well, such an arrangement of things will make traffic impossible, not only in Caracas (where it is already hellish to drive) but even in quiet Ann Arbor, Michigan, where I live my placid life.
    Hundreds of drivers, each trying to get to a destination without crashing into another car, will work as a coordinated mechanism that will find its optimal way of functioning. Those hundreds or thousands of drivers are like individual CPUs that will use their individual intelligence to make traffic the best it can be within their constraints of numbers and space available. Together, they make a supercomputer, immensely powerful and with short reaction time.
    The central government in control of traffic cannot, despite their good intentions (assuming they are good) match the performance of thousands of CPUs acting in parallel.
    Bring the same reasoning to the production and distribution of goods. The central government in charge of commerce will make your ass dirty.

  3. sapitosetty Says:

    I guess now we know why it’s called the devil’s excrement.

  4. Manuel Scettri Says:

    So….”And before anyone makes the argument that I have it backwards, you could give away the food for free, the electricity for free and the gasoline for free and the country would be in deep …. and we would all need a lot of toilet paper.” regarding this statement I would venture to say that gasoline already IS free! A full tank is 4 Bs. and the guy pumping it gets 10 Bs. of which the change is always left as a tip (at least my mom does) so he literally gets more tip than the gas he just pumped!

    If we translate that price to dollars then forget it…its mere cents for a FULL tank. In all practical terms, free. I(f on top of that we add the fact that PDVSA has to import gasoline because their refineries are in shambles then we can almost say that PDVSA pays US to get gasoline. Just another waste of money that sucks the country dry.

    But woe he that raises gasoline prices…remember what happened last time they tried that…

    • moctavio Says:

      Electricity is also free for that matter. The point is you could make everything free and we would go down the drain fast, giving it away for a little bit just changes the rate at which we sink.

      You last statement is incorrect. The last time that gasoline prices were increased…absolutely nothing happened. The caldera Government, a very unpopular Government, under the ledearship of not very charismatic Teodoro Petkoff increased gasoline prices by 500% AND NOTHING HAPPENED. In fact, under that increase, prices were adjusted quarterly to the export FOB price and NOTHING HAPPENED.

      The Caracazo had its roots in the antipathy the left felt towards CAP. If anyone had the goodwill to increase gasoline was Chavez, but he never dare do it. In fact, in the middle of the 1998 Presidential race, he asked Caldera to stop the quaterly price increases until the race was over. Caldera stopped them.

  5. Kepler Says:

    ” in the middle of the 1998 Presidential race, he asked Caldera to stop the quaterly price increases until the race was over. Caldera stopped them.”
    Really? I didn’t know that.

    I wish we had something like this: a good journalist with studies in economics as in Germany (like at least a minor) on a 45 minute interview on national TV to the minister of finance asking at least 10 minutes about the logics of petrol prices.

    OK, I also dreamed of a candle dinner with Nicole Kidman. Guess what’s happening first.

  6. Mick Says:

    How long would it have taken Cuba to collapse if the USSR didn’t want a colony off the US coast? Would Castro have even come to power?

    • Ira Says:

      It would have taken awhile, especially when you consider that technically, they STILL haven’t collapsed:

      Aside from USSR assistance, Cuba lived off of internal stolen assets and unpaid foreign loans–which lasted for YEARS. And while 99% of the world wants to blame the U.S. embargo on Cuba’s horrific condition, it’s these other entities as enablers that caused it.

      For God’s sake, even VIETNAM went capitalist, not to mention China and the USSR, yet Cuba is still stuck in this ideological twilight zone.

  7. xp Says:

    Also from today’s El Nacional
    “Somos el HAZMERREIR del mundo como lo refiere la prensa internacional”, afirmó una ama de casa que hacía cola para comprar papel higiénico.

  8. Javier Says:

    If Venezuela had authorize a Bond issue to finance the import of toilet paper it had been called Excrement Bonds

    • bt Says:

      Yes, an excellent explanation of several important points on why a planned economy never works.

      • Mick Says:

        A planned economy is by definition “unnatural”. You can fight nature temporarily, but in the end nature will always prevail. In any controlled society, black markets thrive like weeds.

        Even in Venezuela, those who are successful are not looking out for society, they are looking out for themselves.

        Socialism just creates an opaque very unjust system where there is no middle class. In a moderately regulated free market thee is more transparency and opportunity for participation. The US is 98% immigrants or their descendants. It is not the best system, it is not a perfect system. But, it does have many more opportunities and a fairer playing field. That is why many more people come than leave. Just ask the 10000+ who move north every year.

  9. Ira Says:

    I don’t think you make more doodies if you’re eating more. You just make BIGGER doodies.

    Maybe I should email this fact to Eljuri so he can revise his hypothesis.

    • Ira Says:

      And if this abundant food supply is so drastically affecting the quantities of doody and availability of toilet paper, shouldn’t the water supply also be dangerously reduced on account of so much flushing?

      This is a fascinating subject, since so many of VZ’s ills can be blamed on VZ’s INCREDIBLE capacity to overfeed its people.

      • Ira Says:

        It just came to me that Caracas’s traffic problems are ALSO caused by overeating:

        People have to drive slower if they’re making a doody behind the wheel.

      • Ira Says:

        And let’s not forget PDVSA’s reduced production figures:

        It’s hard to operate an oil rig while covering your culo with one hand in pain because you’re dying to make a doody.

      • Ira Says:

        The VZ-Cuba internet cable never went operational because doody overflowed from the main waste treatment facility and encased the servers two miles away, making them inoperable.

      • Ira Says:

        VZ’s horrific murder rate is not caused by the administration’s terrible policies, but instead, by “Diarrhea Rage.”

      • Ira Says:

        Government expropriations of private businesses and lands has been carried out simply to house the country’s ever-growing demand for toilet bowls.

      • Ira Says:

        Government officials now explain that overeating is also responsible for increased menstrual flow, explaining VZ’s critical Tampons shortage.

      • Ira Says:

        After Hugo’s five-minute shower edict, can we expect to hear Maduro’s two-sheets-per-dump manifesto?

  10. Iguana_Master_7000 Says:

    Hey Miguel, do you have any news regarding caracas gringo?

    He hasn’t posted for so very long……….

  11. concerned Says:

    It is a little expensive, but check out “cubanfoodmarket.com” for rolls of toilet paper. They have sold for years rolls of toilet paper with the face of fidel or chavez printed on each sheet. Recently the price for chavez rolls has increased due to demand, but I am sure soon to come will be the maduro rolls.

  12. Roger Says:

    Speaking of Cuba, there was a TP shortage there in 2009. http://www.huffingtonpost.com/2009/08/11/cuban-economy-worsens-cit_n_256588.html The alternative of choice was the newspaper Granma.Recycled by enterprising Cuban senior citizens! Perhaps several shipments were rerouted to Cuba to prevent this happening again? Thus Venezuelans go with out?
    Banana leaves work well to if there are any trees left in Venezuela?

    • Kepler Says:

      Sorry, but banana leaves are not good. The best are maize leaves but now we are importing US maize!

      • Roy Says:

        Kepler,

        We can always use the pages from the Constitution. It seems we aren’t using that any longer.

    • Ira Says:

      From what I recall, the alternative wasn’t Granma:

      At the time, Fidel had published a free little red book for the masses, millions of copies.

  13. Iguana_Master_7000 Says:

    In a twisted way, you could argue that the Devils Excrement is to blame for the shortage.

  14. Bill S. Says:

    It could be worse. You could be importing refined oil products made from Canadian tar sands oil shipped down to your US refineries in Louisiana and Texas, while you give away your oil to Cuba.


  15. […] Up to the BRICS Generation (Foreign Policy) Twittervisión in Venezuela (Caracas Chronicles) The Maduro Toilet Paper Crisis (Devil’s Excrement) Radamel Falcao García negocia su fichaje por el Mónaco (El Universal, […]

  16. RattInnaCage Says:

    An interesting story from the BBC about the Church running out of wine and bread:

    http://www.bbc.co.uk/news/world-latin-america-22684619

    How many people in Venezuela still believe the official state line:
    “But the government insists that an opposition-led conspiracy and price speculations are the problem.”

  17. Melita Says:

    It just keep going and going, and there’s no signal of change at the horizon.


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