Sunday, July 22, 2007

The politically-inspired economic disaster in Zimbabwe - a Parable

My earlier post might leave a (mistaken) impression that I am opposed to ~Capitalism~. Far from it. The ability of the economy to function efficiently depends heavily on the information that is provided by market transactions in free exchanges where both buyer and seller have full information on the product and both are independent of the other. The problem I was discussing is when political or organizational power interferes with the working out of efficient free markets in which neither buyer nor seller can establish a price other than that the market sets.

Let's look at the misuse of political power in the market. [The Parable, by the way, is about political power, not directly about economics.]

Julian at "Swords Crossed" describes the politically-inspired decree by Robert Mugabe that every business-owner must cut his prices in half in order to stop the runaway inflation there. Go read it.

Now - beyond the economics, which are clear to the economically illiterate - notice that what Mugabe is doing will have an even further disastrous result on the economy. But in his grandiosity, Mugabe is blaming the inflation on the business sector. He contends that they are creating the inflation because they oppose him and want to bring him down. He is dismissing any suggestion that it is his own behavior that is the source of the problems in Zimbabwe.

But if we recognize that the economic problems are being caused by Mugabe's misgovernment and that they threaten the livelihood of the merchants, they should feel threatened by him. The natural result is that they will want him gone.

Mugabe's reaction is to make the economic situation even worse, and blame the business community for wanting him out of office. His supporters are economically illiterate and do not recognize the real source of the problem. The result is that Robert Mugabe has a lot of what could be called "Mugabe-haters" to deal with. He is working hard to blame his economic disaster on someone besides himself and gain political advantage of the bad situation he, himself, has created.

See any resemblances to the Bush administration here? Only the disaster Bush has created and continues to make even worse is the senseless preemptive invasion of Iraq. His right-wing supporters a foreign policy ignoramuses who think that the military is the solution - and the only solution - to foreign policy problems. They don't recognize that the problems in Iraq are all created by Bush's unnecessary invasion and that keeping American troops in that poor benighted nation is the original cause of the insurgency, and remains the major cause of it. They fear the creation of a new failed state like Afghanistan, so having created al Qaeda in Iraq, they fear that when we leave it will mean that al Qaeda in Iraq will become like the original al Qaeda in Afghanistan and become an even greater threat to America.

The fact is that shortly after we leave Iraq the Shiites will establish their government and will quickly dispose of the foreign Jihadists. Even the Iraqi Sunnis don't want those people in their country - except to kill the hated occupiers - the Americans. The foreign Jihadists will be leaving at the same time as the American troops, because they know that if they stay they will be brutally killed by the Iraqis.

The similarity between the two political regimes - Bush and Mugabe - is that each has created a major disaster for his nation in order to benefit politically, and the only solution for each nation is to repudiate the earlier actions of its government. Needless to say, neither Bush nor Mugabe are going to reverse themselves. Both are painted onto corners because of the misuse of their power and their refusal to accept criticism.

[/Parable]

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