EspañolPresident Juan Carlos Varela of Panama was warned a thousand times that implementing emergency price controls after taking power was not a good idea. Panama is so close to Venezuela; to repeat its experience with price controls ignores reality.
As a new resident, I can confirm that we have already started to see empty shelves in Panamanian supermarkets. We are not talking about a situation as bad as Venezuela’s, where you will need to stand in line for hours to purchase a product, but the situation in Panama serves as evidence that common sense regarding market behavior is never wrong.
It is natural, for consumers to purchase products they can easily afford, especially when these products are similar in quality to other products that are not regulated.
In addition, the Panamanian government thought it would be a bright idea to label the products that are regulated and part of the program. This idea to win political points, however, is only adding to the disaster that will come from the program, because these are precisely the products that are missing from the shelves.
— Economía Panamá (@EconPanama) July 15, 2014
I experienced it myself, while at the supermarket; I saw that the regulated meat had disappeared from its usual place. What they did have, of course, was more expensive meat. And there have been numerous reports on Twitter, of the same thing happening with many other products.
I understand the president’s noble intentions, as he wants everyone in Panama to be able to afford the basic food basket, which indeed is expensive. However, if the president talks about wanting a more open Panama — an international meeting point with a bilingual population — he cannot impose restrictive measures that will only worsen food availability.
Furthermore, Panama’s strategic position as a hub for world trade (starting with the banking industry), will be impossible to maintain beyond the six months that the price control regulations will last. Just as Panamanians gave democracy a lesson on democracy when they voted against corruption and continuity in the last elections, we hope they have the wisdom to understand that a free market is not to blame for their basic food basket’s price. Rather, other factors, such as the local oligopoly on supply, still prevent their economy’s growth.
Varela’s rhetoric throughout his campaign had always been that of immediate action. He can rely on it, reverse course on this measure, and make decisions that will allow Panamanians to enjoy of a better and more prosperous economy.