Editorial: former folly resurrected

Photo: Liis Treimann

Late last year, the Venezuelan President Nicolas Maduro declared that as life is too costly, the state would be regulating car prices. According to the Latin-American leader, cars are produced «for the needs of the society, not for the mafia».

In 2012, the same country banned retail price rises on toothpaste, shampoo, and toilet paper.

When talking about state campaigns featuring cheap shops and discounted goods, the former Venezuelan President Hugo Chávez and his colleague in Zimbabwe, Robert Mugabe, come to mind among world leaders. For these heads of state, regulating prices and commanding them to be lowered was actually needed to counter public discontent with rampant inflation due to failed economic policy.

In Estonia, we don’t have to go that far to find examples of price regulation and its effects. Sufficient to recall the «pearls» of pocket-friendly trade during the Soviet times. Compared to that, the municipal shop Lipo opened in Tallinn, yesterday, is just a small PR experiment to leave the impression of city fathers bravely standing for the less privileged. For city folks’ finances, of course – and at the expense of fulfilling the legal obligations of a local government.

Whoever knows the slightest thing about economy will realise that selling a couple of dozen basic products at a relatively low price in a small Lasnamäe over-the-counter store will not solve social etc problems of Tallinners. In any supermarket, these kinds of daily offers are available – to attract customers. Should Tallinn really seek to supply all its inhabitants with low-priced stuff, the subsidy costs would soon rocket to be astronomical. When attempting to steadfastly maintain an unusually low price level for vital basic goods even in one store, the development options are the same as in times gone by: either the long lines at the doors, or else the empty counters with potential customers seeking to know when the next batch of cheap washing powder or sausage might arrive. With such scenario avoided, all we’re going to see is the usual corner shop that just happens to be run by the city government.

Not surprising, however, for Tallinn to try and erect its regulated economy corner in open market economy conditions – considering its former antics. For Estonia, the parallel world has taken on dimensions rather impressive – mupo (municipal police), municipal media, city TV, zero-price public transport. In the list, the freshly opened counter is quite unnoticeable. Next in line, there loom the municipal garbage collection, and municipal banking plans.