Monday, August 20, 2007

Zimbabwe -- the denouement? 

It's a perfect illustration of the end game for statist economics. When state-created shortages threaten the economy, dictators attempt to stamp out the symptoms through even heavier state action rather than cure the original disease.
That's Captain Ed commenting on the collapse of the Zimbabwean economy. And the heavy state actions include a price police that have arrested thousands, wherein the police can say with a straight face "the police are major players in creating a conducive business environment, which bolsters investor confidence." There are opposition reports that the government is using its artificial shortage to steer food to its supporters and away from its opposition. The central bank is so desperate for foreign currency that it is buying them in the black market.

And neighboring countries continue to sit on their hands.

Funny side story in this otherwise sad tragedy -- like the Russians and vodka, Mugabe has learned not to mess with Zimbabweans' beer. Notice how quick the supply response was in this case. Do you think it possible that Mugabe understands he could end famine tomorrow if he would just relax the price controls? If so, why do you think he does not?