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Economic destruction gains momentum
Eric Bloch, The Zimbabwe Independent
July 20, 2007

http://allafrica.com/stories/200707200856.html

GOVERNMENT'S diabolically ill-conceived recent interventions in the economy are only exceeded by the even more diabolically implemented fulfillments of those interventions by Zimbabwe's so-called guardians of law and order.

Government has unhesitatingly abused its power and authority (inclusive of self-bestowed authority instead of that lawfully vested in it by the constitution and by parliament).

It has availed itself of existing legislation (and, in particular, the Control of Goods Act) to apply draconian regulations at pronounced variance to the intents of that Act, and at even more pronounced variance to the best interests of Zimbabwe, its economy in general, and commerce and industry in particular, and especially contrary to the best interests of the Zimbabwean populace. And many of its law enforcers have exploited the created opportunities of self-enrichment, and of excessive, over-reactive demands upon the business sector, including forced sales at astronomic losses to that sector, endangering its survival.

As noted in this column a week ago, rigid price controls and stringent price regulations have never succeeded in countering pronounced hyperinflation. Even more, they have never succeeded in rescuing any government which recurrently and endlessly ignores all economic fundamentals, disregards all evidence of its own culpability for the creation of economic ills, and have never resulted in obtaining the enduring respect and support of electorates.

Instead, without exception, they have resulted in worsened economic circumstances, intensified hardships for the populations, and the ultimate demise of those governments as have obdurately and steadfastly persisted with their foolhardy endeavours of self-protection, self-enrichment, and attempted deceptions of those they were supposed to represent and care for, but which instead they continuously sought to rule and dominate.

The Zimbabwean government treats history with the same contempt as it accords any who have the temerity to differ with it, any who espouse policies at variance to its own, and any who do not demonstrate absolute, unswerving obeisance and subservience to it.

Occasionally, its contempt is expressed merely by total indifference and offhanded dismissal. More often it reacts by pouring forth vitriol against its perceived enemies, the outpourings of that vitriol emanating from all levels of the political hierarchy, from its administrative arm of disinformation, misrepresentation and indoctrination, and from the sanctimonious apostates within the realms of the state-controlled media.

When the Control of Goods Act was promulgated 53 years ago, the intent was to ensure justice and equity for enterprise and consumer alike, within an essentially free and minimally regulated economy, whensoever exceptional circumstances necessitated interim, short-term, constructive measures.

Moreover, the legislation was subject to the basic principles of democracy. However, from 1989 onwards, government has progressively bulldozed modifications to the Act through parliament, including vesting the president with immense powers of rule by dictate and decree (whensoever he deems it to be necessary or expedient).

It was government, and not business as it alleges, that caused Zimbabwe to sustain the world's highest levels of inflation. Its policies and actions destroyed agriculture, decimated industrial productivity, debased the nation's currency, sharply diminished foreign currency inflows, occasioned an intense brain-drain, and consequential further economic prejudice, and all that has caused the hyperinflation that characterises Zimbabwe in its 27th year of so-called Independence.

But government is wholly convinced of its absolute infallibility, and is therefore totally unable to recognise its culpability, let alone acknowledge it to others. Therefore, it has had to delude and deceive itself as to the causes, and convince others of such causes. Being profoundly paranoiac, government inevitably believes that economic morass to be the willful, ill-intentioned machinations of others.

However, never-ending blame being placed at the feet of (the now-retired) Tony Blair, George Bush, the European Union, the International Monetary Fund and of virtually non-existent economic sanctions (speciously alleged to be illegal) has lost credibility.

Populations can only be misled, hoodwinked, and fooled for a period of time, and eventually the truth will out. (That even happened to Nazi Germany's minister of propaganda, Josef Goebbels, who was the all-time master of misinformation!)

So government has had vigorously to identify another scapegoat to blame, and who better to attack falsely than the business community, for that community determines prices (as government has not allowed market fundamentals to do so).

However, false attribution of blame could no longer suffice to appease a sorely afflicted populace. So government turned to the Control of Goods Act, and misused it. Very temporarily the populace were exhilarated and exuberant, with the expectations of an end to gross hyperinflation, and instead a progressive restoration of economic wellbeing.

The exhilaration and exuberance has been short-lived! The realities are becoming more and more pronounced.

Almost immediately, there has been a virtually total non-availability of most essential commodities, including maize meal, bread and flour, sugar, cooking oil, salt, milk, beef, chicken, fuel and public transport.

It is not that commerce and industry is deliberately withholding products from sale, but that none can afford to manufacture at a loss, and shopkeepers cannot afford to sell at prices that do not cover costs and operating expenses, let alone also not to yield even a limited profit.

Similarly, transport operators cannot operate when their costs are greater than the fares that they are permitted to earn. But government is too obdurate or dense to accept this basic economic fact. Instead, the scarcities are the fault of millers, private abattoirs, manufacturers, retailers, and others, or so government would spuriously have one believe.

The long-existent black market has been reinvigorated and enlarged, both because the operators saw the opportunity of exacerbating scarcities by bulk-purchasing of the forcibly price-reduced goods, and because of discontinued or much-reduced production and imports.

As a result, while official (unannounced) levels of inflation may be falling (being calculated on controlled prices, at which no goods are available), actual inflation is soaring upwards.

The official price of petrol is $60 000 per litre, but in the black market, which is the only source available to most, the price ranges from $160 000 to $200 000 per litre. The official price of a loaf of bread is $22 000, but on the black market a loaf costs between $45 000 and $50 000.

The harsh facts are that despite government's protestations of inflation-containment, despite the original consumer enthusiasm at the state's pursuit of price controls, and despite the approbation of the Consumer Council of Zimbabwe, cost of living is spiraling up and up, while hardships and discomforts caused by scarcities are increasing;

• Business enterprises are fast collapsing. Some may be surprised thereby (and especially those in government), but businesses cannot survive if they are forced to sell their goods at a loss, and even if they are allowed to sell at a profit, but that profit is insufficient to fund overhead expenditures and finance costs. Thanks to government's bigoted, irrational policies, businesses are fast being destroyed, be they manufacturers, wholesalers, or retailers;
• As a result of the accelerating collapse of businesses, and of the battle to survive of many others, unemployment (already intolerably great) is intensifying to an immense extent. Almost all contract labour has been terminated whilst thousands of others have also faced sudden loss of employment. This has greatly increased poverty and hardship for tens of thousands, if not more;
• The already catastrophically great brain drain has become even greater, with ever more departing to live in viable economies. The constraints that the brain drain places upon productivity and, therefore, upon curbing inflation, are vast, whilst the prejudice to future economic recovery is gargantuan;
• The previous low levels of investment have fallen to zero, for there is no motivation to invest when each and every enterprise (other than within the black market) is condemned to operational losses, and potential total failure;
• The fiscal inflows are sharply diminishing, as turnovers of business fall, thereby reducing value-added tax revenues, and as profit-generation becomes a thing of the past, and therefore there are few business payments of income tax, and decreasing dividends yielding withholding tax. As a result, the gigantic deficits of the state are becoming even more immense;
• Respect for the police has been almost totally destroyed, as with each and every action of theirs to force price reductions they, their families, and friends (armed with prior warnings of those actions) swarm to the targeted businesses, ahead of any other consumers, in vast volumes, undoubtedly driven by intents of subsequent disposal in unofficial markets, at immense profits.

And these are but a few of the numerous negative consequences of government's harebrained actions. And there are not even any compensatory benefits to government (other than profiteering by a select few who are exploiting the opportunities created), for the electorate no longer see any benefit from government's actions.

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