TheHugo Chávez government has always seized opportunities to insert itself intothe economy in ways that will bring political payoffs. The bureaucrats inCaracas have been known to subsidizegasoline, sell dollars toVenezuelans traveling abroad at below-market rates, or give away washing machines to poor voters. (See, for example, this video, in which Chávez himself is offering appliances to buyers at 40 percent off the market price:)
Latelast year the national assembly passed a measure called the "Law of FairCosts and Prices."The new statute forces private businesses to providedetailed cost information that will allow the government to set all the prices in the country.
This is, essentially, price regulation on steroids. it goes without saying that thefew private businesses left in the country shuddered when the law came to pass.but the main target of this new bureaucracy so far has been a curious one.
Inlate February, SUNDECOP (the unfortunate acronym of the new Fair PricesSuperintendency) announced that it wasapplying its broad powers to regulate the prices of, among other things,deodorant, hair conditioner, shampoo, soap, and toothpaste.A recent report bythe Caracas daily El Universal found that the shelves remain stocked up withthe products in spite of the regulation, but that the quality and variety of brands has decreased substantially. Premium toilet paper, for instance, isexpected to slowly disappear from the shelves.
Themove was met with a mixture of relief and derision. Why, some asked, would thegovernment go to such great lengths to regulate the price of… beauty care products?
Thereason is simple: Venezuelans are obsessed with beauty and personal care. Anythingthat feeds into that part of their culture is bound to reap political benefits.
Howimportant are beauty and personal care to Venezuelans? this is a nation withthe highest ratio of beauty queens per capita, but other statistics are evenmore telling.
Asurvey conducted a few years ago by Roper Starch, a consulting company, found thatVenezuelans were the vainest of all the countries studied. A full 65 percent ofwomen and 47 percent of men owned up to worrying about their looks "all of thetime."
Itshows. Venezuelans spend an average of$115 per year on cosmetics and toiletries on a per capita basis, according toEuromonitor, a consultancy. The Venezuelan figure is higher than those for Mexico($74), Argentina ($78), Colombia ($56), and Chile ($90). Only Brazilians, at$149, spend more in the region.
Venezuelansare also regional leaders in plastic surgery. according to the InternationalSociety of Aesthetic Plastic Surgery, Venezuelans rank eighth in theworld in terms of per capita aesthetic surgical procedures. They have about thesame number of per capita aesthetic surgical procedures as Americans, eventhough Venezuela is, of course, much smaller and poorer than the U.S.
Thereis, of course, a dark side to this obsession. Last August, for example, RosaPérez, a 40-year old janitor and grandmother from a poor slum in Caracas, died fromcomplications following a botched breast augmentation procedure done in amakeshift clinic. two months later, Elizabeth Veloz, a slim 23-year oldbusiness major from Maracaibo, died fromcomplications during a combined breast, buttock, and liposuction surgicalprocedure. most of the victims of these apparent malpractice cases are poorworking women.
Thisobsession withbeautyis undoubtedly behind SUNDECOP’s moves. Price controls can yield politicalbenefits in the short run, even if the distortions they create hurt production.Initial results apparently show inflation inthe targeted products slowing down, while demand appears to be picking up.
Obviously, theeffects of these distortions will be felt at some point, and scarcity is boundto rear its head. Venezuela’s soaring inflationand intermittent shortages of goods are a major political problem for the administration. for the moment, though, the prices and supplies of these particular products remain stable. If the government can pull off its latest attempt at regulation without emptying the shelves, it could a big boost for a president who has an electionjust around the corner. in this respect, a bit of economic populism that plays up to what voters like may be just what the doctor ordered — at least if you’re a Chavista.