Monday, January 3, 2011

Sorry about those subsidies, but we have to save money

Here’s the two-sentence announcement last Thursday that items such as toothpaste and soap will be dropped from the ration book, and will be on sale at bodegas and mercados industriales everywhere.

Consumers will lose a subsidized product, and the government will save money twice: by ending the subsidy and eventually by trimming its distribution/warehousing apparatus.

In his presentation to the National Assembly, the Minister of Economy Marino Murillo indicated that there will be more to come; that rather than eliminate the libreta in one fell swoop, products will be dropped from time to time as alternative supplies are assured in peso or convertible peso markets. “But the libreta is irrational not only for its subsidized prices – the libreta is also irrational for the very means of distribution, and it is necessary to move toward the elimination of both things,” he said. Referring to the need to have supplies in distribution centers the first day of every month, he seemed to relish the idea that the state could one day drop this task: “No one has any idea of the significance of the logistics and the irrational transportation spending.”

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