Bad economics will out you know. Adam Smith was right, there’s an awful lot of ruin in a country. But not an unlimited amount. As this shows:
So scarce is bread that 500 loaves were stolen in an armed heist last week from a delivery truck in Harare.
Armed robbers are stealing the bread.
Turns out that taking all the productive assets from people competent to produce with them and handing the goodies over to political favourites doesn’t work.…
See MoreAs we reported some 6 weeks back, we’ve an interesting sign of the incompetence of Zimbabwean economic policy. It’s not actually possible to leave the country as there’s no paper to print the passport upon that will allow some other country to take you in.
With Zimbabwe’s economy in shambles and political tensions rising, leaving the country seems the best option for many who are desperate for jobs. But those dreams often end at the passport office, which doesn’t have enough foreign currency to import proper paper and ink.
The government of Zimbabwe is complaining about how exporters are not repatriating foreign currency earned from those exports. The government of Zimbabwe manipulates the official exchange rate to keep it higher. The two points are not just connected they are the same thing. The exporters are not repatriating their foreign exchange earnings because the government of Zimbabwe manipulates the exchange rate upwards.
The Zimbabwean government is the cause of the very thing the Zimbabwean government complains about:
The current bank exchange rates for the RTGS$ today are as follows USD to RTGS$: 4.9516
RTGS$ to RAND: 2.9092
Data according to the Reserve Bank of Zimbabwe Black Market Rates:
USD to RTGS$: 6.95
USD to BOND: 6.75
RTGS$ to RAND: 2.07
That’s it, that’s the problem right there.…
See MoreSomething that’s just so hard to get across to people is that special exemptions and treatments for certain parts of the economy just don’t work. People are interested in money and they’ll exploit any system at all to try and get it. Thus this move to using the basic market exchange rate for fuel purchases is a step forward for Zimbabwe’s economy – for it removes one of those exploitable special treatments.
Sure, it means that fuel prices have gone up.…
See MoreIf we could actually get the universe to write letters to people that’s what the current one to the Zimbabwean Government would read :
Sirs Please stop setting the petrol price too low Yours etc Reality.
Because that’s what they’re doing, setting it too low. No, I know, no one can afford the stuff, there’s a shortage and all that. And that there’s a shortage is the very proof we need that the price is too low.…
See MoreThere are certain bits of government that are actually necessary, there are certain things which simply must be imported to aid in doing those essential government actions. A good signal, symbol, of government falling into catastrophic disorder is when the trivial sums necessary to purchase such imports prevent those necessary things from being done.
There was an example of this under Mugabe. That 100 trillion Zim $ note we all make fun of. The only reason they didn’t carry on printing was because those notes weren’t worth enough to buy the ink necessary to print further notes.…
See MoreA useful test of how well a country is doing is whether those who purport to rule it are subject to the same laws as everyone else. If not then you’re going to get – if you haven’t already – capricious government. Capricity not being a good sign in government. So, just as an example, the recent jailing of a British MP for lying in court is a good sign. No, not a joy at an MP lying, but that she was indeed charged, tried and sentenced just like anyone else would have been over the same issue.…
See MoreThe precise details of this call for Zimbabwean businesses to price in South African Rand, put forward by Strive Masiyiwa, might not be entirely correct. But the overall idea, that no one should be trying to price nor transact in variations of the Zimbabwe dollar are entirely correct.
In conventional economics not having your own currency is something of a problem. It means that there can be no monetary policy that is locally determined. Thus there’s no monetary policy attuned to the needs of the local economy.…
See MoreNot that we ever expected those white farmers to receive proper and fully legal compensation for the land that was confiscated under Mugabe. But this current process is being touted as being compensation to those farmers when it’s only a very faint shadow of what is due. Sure, the Zimbabwean Government doesn’t have any money but that’s rather their own fault, it’s in large part due to their own stupidity – OK, Mugabe’s such – in throwing those white farmers off that land.…
See MoreUs humans are pretty simple to understand – we respond to incentives. This being something that those who govern us don’t want to grasp as this latest case involving Zimbabwe’s Nedbank branch shows. The government of Zimbabwe fixed the price of the locally issued currency as against the US dollar. That’s not a sensible thing to do in the first place, especially if you’re going to start manufacturing the local currency with gay abandon – as they obviously did.…
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