Necessity of markets
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The photographs of thousands of Venezuelans crossing over into neighbouring Colombia—and then breaking down at the sight of food—are a poignant reminder of the mess that Venezuela is in. The International Monetary Fund has recently said that it expects the Venezuelan economy to shrink by a tenth this year.
These events underline the fact that price controls drive goods out of the market. And the heavy hand of government regulation can destroy an economy. It is unfortunate that the poor in whose name Hugo Chavez ruled have suffered the most.
There is a broader lesson here. Since the financial crisis in 2008, there has been a lot of justified soul searching about the limits of market economics, especially financial capitalism. The ability of markets to solve global public goods challenges such as climate change is also limited. However, the crisis in Venezuela is a timely reminder that no country can do without functioning markets.