What I reported here on the Caracas coffee shortage turns out to be a part of a much larger story many details of which I saw in different areas of the country.

Venezuelan dictator Hugo Chavez has forced producers of coffee to sell their beans below cost, or face confiscation of assets. He’s also done the same for meat, as we reported here. And when I was in Caracas, a full-page ad taken out by Polar Group in El Universal warned that it was the same dynamic with corn flour – and that the company was unlikely to survive on current government rules.

The Miami Herald reports electricity shortages in Venezuela based on the exact same dynamic.

Artificial price controls are a no-win situation for the producers, and the net result has been rationing of coffee and other goods due to inevitable shortages.

These shortages occur in every communist country – and it makes me recall that it was price controls that took down the Soviet Union, following decades of stories about factories that made thousands of left shoes – and no right ones – among other things. All of that was a function of price controls. Mess around with prices and watch it all come down.

But Hugo Chavez would have you believe that to support him to is to tap a bottomless well of free goodies, cost-free, accountable only to him. And that the only reason there is any cost at all for things is the ‘greed’ of merchants. Caracas Chronicles has an awfully good piece on this very issue here. These shortages, and the causes of them, completely misunderstood by the Venezuelan government and anyone who thinks populism is the answer, are showing up the lie of that myth. As economists say: anything that can’t go on, won’t.

With a hat tip to Boz, the AP has done a tremendous investigative piece on this phenomenon I saw with my own eyes in Venezuela. Their don’t-miss story explaining the economic dynamic can be read here.

UPDATE: FT has more on the food shortages, likely to accelerate with the collapsing airport bridge, in this item here.

UPDATE: World coffee prices are soaring as a result of this AP story. The market commentary here cites ‘unrest’ in Venezuela as the reason.