That Zimbabwe’s economy isn’t doing well is obvious. That Venezuela’s ditto is ditto. Which doesn’t bode well for Zimbabwe adopting an economic tactic from Venezuela really. But that’s what they’re doing, the government trying to set the price of bread.
To influence the price of bread, hey, sure. And to try to bring it down, that can work and might well be desirable. But what matters is how this is done and the government just telling bakers to cut the price doesn’t work – as Venezuela shows.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] In a brief interview, Industry and Commerce Minister Nqobizitha Ndlovu said Government met bakers and they agreed to lower the price. “We met with bakers and they agreed that bread sells at $1,80… [/perfectpullquote]
Agreed along the lines of, nice business you’ve got here, be a shame if something happened to it.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Addressing a Zanu-PF Thank-You Rally in Mt Darwin, Mashonaland Central last week, Vice President Kembo Mohadi said the Government would take care of its citizens. “Basic commodities like cooking oil, sugar, salt, rice, mealie-meal, milk and flour; the prices are being looked into so that they become affordable to the generality of the public.” [/perfectpullquote]
It’s not a tactic that works.
If government wants to make bread cheaper there are ways to do this. Import more grain say, increase efficiency, all sorts of things really. But just the simple declaration that the price should be lower? Nope, doesn’t work. As we saw with the Bolivarian socialists. They decided it would be nice if food were good and cheap. Which it would be. So they set the price of food good and cheap. Below the cost of production. Which meant that no one had any food at any price because no one was growing it.
That’s just what happens. Fixing the price of food doesn’t in fact lower the price, strange but true.