Tuesday, July 03, 2007

Even if it hurts 

And sometimes you have a hard time explaining things people say. Tim Worstall points out the results of Zimbabwean price controls: emptying markets. In turn, the Mugabe government is arresting shopkeepers and blaming them for price increases. Even the central bank blames speculators:
Three quarters of our problems today are of our own making as Zimbabweans because of:
  • Our insatiable appetite for everything external, from economic and technical advice to wine, food, cigarettes, milk and bottled imported water, among many other trinkets, which can not go on unchecked through progressive introspection.
  • Indeed, quite strangely, some would rather listen to external economic advisors than our very own sons and daughters with exposure and personal distinctions in these areas.
  • Some Zimbabweans have also elected to sell their souls in pursuit of foreign exchange, to the extent that damaging or weakening their own currency at home does not matter to them at all.
It does not seem to matter to them at all that the government runs a deficit of 25% of GDP or that monetary base growth has exceeded 1200%.

Zimbabwe's social contract -- in essence, the first step of a macro stabilization, which has a half-hearted look to it -- is not likely to last even through the summer if it includes arresting and beating shopkeepers.