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Here's How Socialism Creates a Capitalist Black Market

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Socialism works really well. On a piece of paper. It doesn't work too well when it encounters a real world economy driven by the needs and wishes of actual human beings. Here's what happens when that happens.

Live from Venezuela.

She is up by 2 a.m., trudging down 12 flights in her housing project and over three blocks to a small pharmacy in eastern Caracas. This city is filled with danger at night but when Laura arrives, dozens are already there, holding their places in line with a practiced shrewdness. When the doors swing open at 7:30, hundreds of people elbow their way past security guards. Laura manages to find just one bottle of detergent and two bottles of shampoo. She’ll resell them hours later for 10 times their sticker price.

“About a year ago, I realized I could make more from reselling a single packet of diapers than cleaning an entire house,” Laura said. She asked that her last name not be published since she is, in effect, part of a criminal network. (It’s illegal to sell some staples above official prices and the government sporadically cracks down on the practice.)

She is part of a group of young mothers who grew up in the same slum and scour the capital for consumer items, texting one another to signal when a product hits store shelves, swapping goods for their clients.

“You’ve got to hustle to stay ahead,” Laura said as she left the pharmacy and headed straight to a nearby supermarket to pick through leftovers.

You know all those great proposals to have the government provide all the services? It doesn't work when the government can't actually pay. And so doctors and teachers start working low end jobs to make ends meet.

Doctors and accountants moonlight as cooks at restaurants; teachers skip class to wait outside supermarkets. “It’s suffocating,” said Erik, 48, an elementary school teacher in southern Caracas, who withheld his last name for fear of reprisals.

With a salary that barely begins to cover grocery bills, Erik says he and his colleagues are often truant, using the time to wait in line.

Venezuela has created only one real commodity. The line. And places on the line get sold and resold.

Still, spots near the front of the line have become so valuable that even they are now up for sale too. A good one typically fetches about 500 bolivars. That may not be much when measured in dollars -- somewhere around $1.25 -- but it’s not bad money in a country where the minimum wage is just over 15,000 bolivars a month.

Marilin Barrios, a 27-year-old mother of four, arrived at the pharmacy well before Laura on this day, grabbed one of the first spots and sold it hours later.

In a system that mirrors the rationing implemented across communist countries last century, Venezuelans are allotted certain days of the week that they can purchase goods deemed most essential by the government. Laura waits in line but sends in her mother or husband at the last minute to make the actual purchases with their ID cards on the days when her number is not up.

And those who don't want to wait in line, go right for the smash and grab.

Mobs in Venezuela have stolen flour, chicken and even underwear this week as looting increases across the crisis-hit OPEC nation where many basic products have run short.

Many people now get up in the dead of night to spend hours in long lines in front of supermarkets. But as more end up empty-handed and black market prices soar, plundering is rising in Venezuela, already one of the world's most violent countries.

There is no official data, but rights group Venezuelan Observatory for Social Conflict reported 107 episodes of looting or attempted looting in the first quarter.

In one of the latest incidents, several hundred people looted a truck carrying kitchen rolls, salt and shampoo after it crashed and some of its load tumbled out in volatile Tachira state on Thursday, according to a local official and witnesses.

Fifteen people were injured, including six security officials trying to restrain the crowd, said local civil protection official Luis Castrillon.

Power to the people. I'm guessing this won't make into the new Sony TV series about the life of dead Socialist dicrator Hugo Chavez.


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