The following short article, "ChvezThreatens to Jail Price Control Violators", is from The New York Times.

Based on this article, provide your thoughts relating to the two questions below.

1) What did you learn? In this section, you should summarize what you have learned from the article connecting these thoughts, as much as possible, to the subjects discussed in class and covered in the text. Chapters 4 and 6 are the primary sources of this information. You should read both chapters before commenting.

2) What is your opinion? In this section, you should present your reaction to the analysis presented by the author. Do you agree with the application of economic principles to this topic and why? Do you support the author's conclusions and why? Does the author's arguments/analyses have applications in other areas and why? The three preceding sentences are meant to stimulate your thinking; you are not required to respond to these three sub-questions, nor are you limited to these topics.

Clearly indicate, via a headline, which section of your paper deals with each question.

lme The New York Times February 17, 2007 Chavez Threatens to Jail Price Control Violators By SIMON ROMERO CARACAS, Venezuela Feb. 16 Faced with an accelerating ination rate and shortages of basic foods like beef, chicken and milk, President ergo Chavez has threatened to jail grocery store owners and nationalize their businesses if they violate the country's expanding price controls. Food producers and economists say the measures announced late Thursday night, which include removing three zeroes from the denomination of Venezuela's currency, are likely to backre and generate even more acute shortages and higher prices for consumers. Ination climbed to an annual rate of 18.4 percent a year in January, the highest in Latin America and far above the ofcial target of 10 to 12 percent. Mr. Chavez, whose leftist populism remains highly popular among Venezuela's poor and working classes, seemed unfazed by criticism of his policies. Appearing live on national television, he called for the creation of \"committees of social control,\" essentially groups of his political supporters whose purpose would be to report on farmers, ranchers, supermarket owners and street vendors who circumvent the state's effort to control food prices. \"It is surreal that we've arrived at a point where we are in danger of squandering a major oil boom,\" said J os Guerra, a former chief of economic research at Venezuela's central bank, who left Mr. Chavez's government in 2004. \"If the government insists on sticking to policies that are clearly failing, we may be headed down the road of Zimbabwe.\" For now, Venezuela remains far from any nightmarish economic meltdown. The country, which has the largest conventional oil reserves outside the Middle East, is still enjoying a revenue windfall from historically high oil prices, resulting in a surge in consumer spending and lavish government nancing for an array of social welfare and infrastructure programs. Dollar reserves at the central bank total more than $35 billion. The economy grewby more than 10 percent last year, helping Mr. Chavez glide to a reelection victory in December with 63 percent of the vote. Yet economists who have worked with Mr. Chavez's government say that soaring public spending is overheating Venezuela's economy, generating imbalances in the distribution of products from sugar to basic construction materials like wallboard. Public spending grew last year by more than 50 percent and has more than doubled since the start of 2004, as Mr. Chavez has channeled oil revenues into social Drograrns and projects like bridges. highanS. trains. subanS. museums and. in a departure for a countrv where baseball reigns supreme. soccer stadiums. are... a .0 I. o ', e a v a; g {g} mam-6.21230 programs and projects like bridges, highways, trains, subways, museums and, in a departure for a country where baseball reigns supreme, soccer stadiums. In an indicator of concern with Mr. Chavez's economic policies, which included nationalizing companies in the telephone and electricity industries, foreign direct investment was negative in the rst nine months of 2006. The last year Venezuela had a net investment outow was in 1986. Shortages of basic foods have been sporadic since the government strengthened price controls in 2003 after a debilitating strike by oil workers. But in recent weeks, the scarcity of items like meat and chicken has led to a panicked reaction by federal authorities as they try to understand how such shortages could develop in a seemingly ourishing economy. Entering a supermarket here is a bizarre experience. Shelves are fully stocked with Scotch whiskey, Argentine wines and imported cheeses like brie and Camembert, but basic staples like black beans and desirable cuts of beef like sirloin are often absent. Customers, even those in the government's own Mercal chain of subsidized grocery stores, are left with choices like pork neck bones, rabbit and unusual cuts of lamb. With shoppers limited to just two large packages of sugar, a black market in sugar has developed among street vendors in parts of Caracas. \"This country is going to turn into Cuba, or Chavez will have to give in,\" said candida de Gomez, 54, a shopper at a private supermarket in Los Palos Grandes, a district in the capital. J os Vielma Mora, the chief of Seniat, the government's tax agency, oversaw a raid this month on a warehouse here where ofcials seized about 165 tons of sugar. Mr. Vielma said the raid exposed hoarding by vendors who were unwilling to sell the sugar at ofcial prices. He and other ofcials in Mr. Chavez's government have repeatedly blamed the shortages on producers, intermediaries and grocers. Those in the food industry argue that the price controls prevented them from making a prot after ination rose and the value of Venezuela's currency plunged in black market trading in recent weeks. The bolivar, the countrfs currency, fell more than 30 percent to about 4,400 to the dollar in unofcial trading following Mr. Chavez's nationalization of Venezuela's main telephone company, CANTV, and its largest electric utility, Electricidad de Caracas. Fears that more private companies could be nationalized have put further pressure on the currency as rich Venezuelans try to take money out of the country. Concern over capital ight has made the government jittery, with vague threats issued to newspapers that publish unofcial currency rates {ofcially the bolivar is quoted at about 2,150 to the dollar]. Regardless of efforts to stop illicit currency trading, the weaker bolivar has made imported food1 fertilizers and agricultural equipment more expensive. Venezuela, despite boasting some of South America's most fertile farmland, still imports more than half its food, largely from Argentina, Brazil, Colombia and the United States. can\"... :: .0 u o a e a v a; g {g} mam-6.421230 States. Supermarket owners expressed relief when the government this week cut valueeadded taxes on retail food sales and raised the prices on more than 100 staples _i_I_J__ angffggttg alleviate the shortages. The announcement included an average 32 percent increase in beef prices and a 45 percent increase in chicken prices. Following Mr. Chavez's nationalization threat, supermarket owners were cautious in their public statements. \"As long as we are complying with the regulations, 1 don't believe there will be any type of reprisal,\" said Luis Rodriguez, executive director of the National Supermarket Association. But many were clearly torn, afraid that their stores could be seized if they complained, but at a loss as to how to continue operating. \"If I don't sell at the regulated price they'll ne me, and if I don't sell meat I'll be out of business,\" said a butcher shop owner here. During his television broadcast, Mr. Chavez said his measures would be laid out in a decree, a power that his rubberstamp legislature just bestowed upon him. He acknowledged that removing taxes on food sales would deprive the govermneut of more than $3 billion in revenues, higher than the military budget, but he said tax increases on luxuries like beach homes and yachts would make up for part of the shortfall. Mr. Chavez also said he would raise subsidies for stateeowned grocery stores. Economists say such subsidies, together with hefty loans to farmers, have allowed the price controls to function relatively well until recent weeks. But recent expropriations of farms and ranches, part of Mr. Chavez's effort to empower statenanced cooperatives, have also weighed on domestic food production as the new managers retool operations. So has the ood of petrodollars into the economy, easing food imports and making some domestic producers uncompetitive, an afiction common to oil economies. \"There seems to be a basic misunderstanding in Chavez's government of what is driving scarcity and ination,\" said Francisco Rodriguez, a former chief economist at Venezuela's National Assembly who teaches at Wesleyan University. \"There are competent people in the government who know that Chavez needs to lower spending if he wants to defeat these problems,\" Mr. Rodriguez said. \"But there are few people in positions of power who are willing to risk telling him what he needs to hear.\" Daniel Cancel contributed reporting. can\"... :: .0 u o ', e a v a; g {g} mam-6.421230