Originally published at Sultan Knish.
In Venezuela, savvy shoppers are hunting down scarce supplies of toilet paper with a smartphone app. The smartphones, compact packages of electronics, are several generations more advanced than the white square, but they are available when the toilet paper isn’t, because unlike the toilet paper they aren’t subsidized and price controlled.
While Hugo Chavez did at one point unveil a Chavezphone for the poor, he succumbed to the wonders of Cuba’s Socialist medicine before they could become as big as Obamaphones. But if Venezuela ever falls to the dumbphone, then there won’t be a smartphone app to find a smartphone with.
The sight of modern men and women hunting down toilet paper with smartphones seems like the Soviet Union as reimagined by William Gibson, but it’s a common enough outcome in an economy that is really a patchwork of uneven subsidies.
The Arab Spring was fueled by the social media apps of smartphones and anger over insufficient subsidies for staples such as bread and fuel. The smartphones may bring you the revolution, but it’s the toilet paper and bread shortages that set them off.
The problem is a commonplace one that Americans will shortly begin experiencing with the subsidized medicine of Obamacare.
Most governments subsidize or price control some necessities to win over the underclass… or at least keep them from burning down everything in sight.
The Arab Spring took place in countries where government subsidized food and fuel existed side by side with monopolies over nearly everything held by cronies if the ruling class. Bread was temporarily cheap, but nearly everything else was either substandard or nonexistent… except for the American-designed and Chinese-built smartphones being used to document the food and fuel revolution.
A society stuck somewhere along the way in the transition between Socialism and a free economy finds itself in these savage intersections in which high technology is available, but the basic needs which the underclass is bought off with aren’t.
Manhattan, that glittering island of towers rising between the waters of two rivers that are one, values real estate above gold. A square foot of dirt in Manhattan might as well be marble for what it fetches.
Finding an apartment in Manhattan is a challenge worthy of a treasure hunter and Bloomberg recently unveiled a plan for micro apartments that would be little more than closets with kitchen sinks.
Manhattan is a small and narrow strip of land which accounts for some of the high prices, but its real estate is also a crazy quilt of wildly overpriced market housing and subsidized housing projects. In some tenements rent-controlled apartments that cost less than anywhere else in the city coexist with 5,000 dollar a month pads and the only difference between them is regulation.
Downtown grim blocs of housing project towers crowd out riverfront views that would be worth hundreds of millions while the bankrupt city Housing Authority fights pitched battles with residents to sell a few scraps of empty land to developers to finance the welfare castles.
Uptown, large lots sit empty and bound to a covenant of affordable housing signed during the city’s lean years that now make the land worthless for anything except growing weeds.
A booming housing market in the city is built on runaway prices caused by artificial shortages. Manhattan is really two islands, one is being built up and torn down again every few years, while the other is stuck in a state of permanent slumhood since the seventies. One pays for its organic grapes with smartphone apps and the other buys everything with food stamp cards.
The gap between these extremes is where the shortages form and the Middle Class eventually falls into that hole between the extremes of the liberal poor who want to be subsidized and the liberal rich who want someone to do something about the poor. The welfare class is relieved not to be burdened with the slog to the Middle Class and the crony capitalists are not interested in more competition. Both agree on a static society managed with subsidies and monopolies. This system had more than a passing resemblance to the dysfunctional countries of the Middle East. The only difference is that America still has a Middle Class for the system to drink dry.