Economics

Robert Mugabe Exerts Downward Pressure on Prices

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Zimbabwean dictator Robert Mugabe's predictable response to the soaring inflation caused by his ruinous, kleptocratic economic policies: a decree commanding lower prices. But as The New York Times observes, "not even an unchallenged autocrat can repeal the laws of supply and demand." The state-ordered bargains were snapped up by Mugabe's cronies, tipped off to which stores would be visited by price inspectors. And since farmers, manufacturers, and distributors cannot sell products at a loss indefinitely, food, gasoline, medical supplies, and other necessities have disappeared as a horrendous economic situation continues, incredibly, to get even worse. In response, Mugabe is nationalizing more and more industries, asserting that the problem is greedy businessmen. Although Mugabe's policies won't find many defenders in the U.S., they reflect the same mentality that leads American politicians to denounce (and legislate against) "price gouging" and "windfall profits."

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  1. Although Mugabe’s policies won’t find many defenders in the U.S., they reflect the same mentality that leads American politicians to denounce (and legislate against) “price gouging” and “windfall profits.”

    Well, no, but I’m that was fun to write.

  2. And also to address the 100,000% inflation rate, they will be printing more money.

    I hope Zimbabwean’s can afford the wheelbarrows they’ll need to carry their cash in.

  3. “Although Mugabe’s policies won’t find many defenders in the U.S.”

    Are you sure?

    This would be a good time to get into the cigarettes-for-diamonds trade.

  4. “Mugabe’s policies…reflect the same mentality that leads American politicians to denounce (and legislate against) ‘price gouging’ and ‘windfall profits.'”

    Yep, and people who want burglars arrested have the same mentality as Hitler against the morally bankrupt peoples. Godwin-ized already!!

  5. joe,

    Is the mentality not the same because of some different grasp of economics by American politicians and Mugabe?

  6. SIV,

    There’s a big ideological difference, sure, and also a basic common-sense difference.

    Noticing the difference between windfall profits for a limited time in certain sectors or locations vs. inflation-driven price increases across the entire economy is a pretty significant difference.

  7. Hey – replace Mugabe with Chavez and you can probably reuse that exact same article.

    How about that for productivity.

  8. Well, no, but I’m [sure] that was fun to write.

    I don’t see how you can deny the similarity. They’re both based upon blaming “greedy businessmen”.

  9. I hope Zimbabwean’s can afford the wheelbarrows they’ll need to carry their cash in.

    If not, will Mugabe impose price ceilings on wheelbarrows? And if so will there be any available or will the price cap eliminate any incentive anyone would otherwise have to produce them?

  10. “not even an unchallenged autocrat can repeal the laws of supply and demand.”

    Pretty please tell me that this was on the same page as another article demanding free universal health care.

  11. We will tell you what an acceptable profit is Mister Man.

  12. Noticing the difference between windfall profits for a limited time in certain sectors or locations vs. inflation-driven price increases across the entire economy is a pretty significant difference.

    Strikes me more as a difference of degree, not of kind. The “windfall profit” argument is usually used against gas and oil companies these days. Well, demand for petroleum is growing faster than supply, which means prices are going up. That price increase comes from normal supply and demand, but the government has arbitrarily decided that it’s a “windfall profit” instead. (The implication being, of course, that the government should decide what is the right and proper price for anything.)

  13. NAL,

    One concerns itself with how markets function during a particular crisis of limited duration brought out by an outside force, with the goal being to make it easier for people to ride out a hard time until the market gets back to normal, while the other treats the ordinary functioning of markets, itself, as the problem to be solved.

  14. Jennifer,

    On the policy level, the difference can be one of degree – a minor intervention vs. a large one, if you’re inclined to view politics in terms of points on a line – but on an ideological level, the difference is between being skeptical of non-market forces that create massive shocks in the markets vs. being opposed to the market system itself.

    It’s the difference between mandating that cars come equipped with seat belts vs. forbidding people from driving on the road.

    On the specific point you’re bringing up about “windfall profits” for oil companies, you’ve got a point.

  15. joe,

    I’d say that this is a cautionary tale about the use of anti-business rhetoric. Remember, even if the leaders of whatever group trashing business are mostly capitalistic, the rhetoric can still help to undermine the capitalist tendencies of the hoi polloi. That’s bad, and it’s one reason the government needs to tone down the negativity against corporations and businesses in general (both parties are guilty of this, incidentally).

  16. Even if we don’t like “windfall profits” would the government be nimble enough to do anything about them anyway?

  17. One concerns itself with how markets function during a particular crisis of limited duration brought out by an outside force, with the goal being to make it easier for people to ride out a hard time until the market gets back to normal…

    I’m sure that’s the intention (well, that and looking tough on corporate greed) but the results will be essentially the same as a price cap–increased demand for the already limited resource in question.

  18. Pro Libertate-

    Thats a really good point about the dangers of anti-business rhetoric. Every dictator in history has been a big-business basher, and its no coincidence.

  19. Cesar,

    Every dictator in history has been a big-business basher, and its no coincidence.

    Was Pinochet a “big business basher?”

  20. Grotius-

    You’re right, I’ll rephrase that. Either a big business basher or a supporter of massive corporate welfare, for the most part.

  21. That’s fair, pro-Lib.

    NAL,

    If we look back to the Florida laws restricting price-gouging in Florida, there is absolutely no indication that they are restricting the supply of everything.

    Cesar,

    Well, once you add “…or a supporter of massive corporate welfare,” you kind of undermine your point about dictators being anti-business.

    FYI, Hitler declared that businessowners were “fuhrers” in their workplaces, and it was the rightful order for their workers to unquestioningly obey their workplace fuhrers, just as much as any other fuhrers.

  22. Cesar,

    Tip of the hat to ya then.

  23. joe,

    Well, in no way was Hitler’s Germany one of unfettered capitalism. The Nazis believed in economic planning and the like and had definite ideological notions about how an “Aryan” business culture would work.

  24. Grotius,

    No, of course not. It was a very different version of the pro-business right, more like Bismarck, only moreso.

    The point here is that Cesar’s initial statement is dead wrong, and dangerous. Business-loving ideologies can be dangerous and totalitarian, too. You can’t just assume that dictatorship and totalitariansim are the sole preserver of one or the other side of the political spectrum.

  25. I hope Zimbabwean’s can afford the wheelbarrows they’ll need to carry their cash in.

    It won’t matter. There won’t be anything in the stores to buy.

  26. Well, once you add “…or a supporter of massive corporate welfare,” you kind of undermine your point about dictators being anti-business.

    Dictators may not always be anti-business, but they are almost always anti-free market. I’m sure you have been reading here long enough to understand the difference.

  27. Cesar,

    Yes, that’s a very defensible distinction.

  28. Cesar,

    I get the difference. For a minute there, I didn’t think you did.

  29. Although Mugabe’s policies won’t find many defenders in the U.S., they reflect the same mentality that leads American politicians to denounce (and legislate against) “price gouging” and “windfall profits.”

    Well, no, but I’m that was fun to write.

    joe, Jacob Sullum was spot on with that sentence. Would you like a link to a few of the “price gouging” and “windfall profits” bills introduced, given serious consideration, and enacted into law in my state?

  30. And since farmers, manufacturers, and distributors cannot sell products at a loss indefinitely, food, gasoline, medical supplies, and other necessities have disappeared as a horrendous economic situation continues, incredibly predictably, to get even worse.

    Fixed that for you, Jacob.

  31. I say we make Mugabe our new Oil Czar!

  32. Link away, jh.

    I’m sure that’s a lot easier than trying to come up with a rational response to my explanation of the difference.

    Seriously, when was the “fixed that for you” bit funny? 2002? 1999?

  33. I’m sure that’s the intention (well, that and looking tough on corporate greed) but the results will be essentially the same as a price cap–increased demand for the already limited resource in question.

    The statist state I live in passed the only gasoline price-control cap in the nation. After a few really sucky months at the gas pumps and the predictable public outcry, it was repealed, only to be replaced with really vague and ill-defined legislation outlawing “price gouging” and “windfall profits”. These laws, if implemented during a sharp rise in prices after something such as a Katrina event, would be temporary price caps that would force gasoline to be sold well below prevailing market rates by local refiners able to ship their products to other states.

    Anyone want to take a stab at what would happen to the availability of gasoline should this attempted repeal of the laws of supply and demand actually be implemented?

    Part-time economic stupidity isn’t as bad as full-time economic stupidity, joe, but that doesn’t make it good.


  34. Anyone want to take a stab at what would happen to the availability of gasoline should this attempted repeal of the laws of supply and demand actually be implemented?

    1970s-style gas shortages?

    Joe, I have never understood this about certain liberals so maybe you can help. They want gasoline consumption in this country to go down to help the environment, correct? So, why do they also want to keep gas as cheap as possible?

  35. Is Mugabe so well protected that there are no Zimbawean patriots, with terminal diseases, who are willing to try to assassinate the S.O.B.?

  36. Is Mugabe so well protected that there are no Zimbawean patriots, with terminal diseases, who are willing to try to assassinate the S.O.B.?

    I’m pretty sure Mugabe is pro-gun control, too.

  37. Anyone want to take a stab at what would happen to the availability of gasoline should this attempted repeal of the laws of supply and demand actually be implemented?

    Since the non-gouging rates in Hawaii are still higher than the rest of the country, and they would be higher-still in the aftermath of a disaster, and the suppliers are quite aware that the “what we can screw people out of this very minute” price doens’t last more than a few days, while the economy as gasoline demand on the islands will to on after the crisis period pass, even without indefensible profit-taking what would happen is that companies would still ship their gasoline to Hawaii, exactly as they did before.

    As a matter of fact, gasoline suppliers make a point of getting their stations back on line as soon as possible after a disaster, regardless of whether the owner is a decent human being or a parasital piece of crap.

    But, hey: DEMAND KURV!

  38. Mugabe is a Gorilla-in-the mist

  39. No Racial Slurs or puns intended

  40. Cesar,

    One is a long-term concern, and the other is a short-term concern.

    What you’ve written is like asking, “Homeowners are always complaining about heating costs, and yet when their house catches on fire, they want it put out!” Yes. Yes, they do. It’s really not hard to figure out why.

  41. u gotta c this site

  42. What you’ve written is like asking, “Homeowners are always complaining about heating costs, and yet when their house catches on fire, they want it put out!” Yes. Yes, they do. It’s really not hard to figure out why.

    It would be more like homeowners complaining about heating costs, and then at the same time wanting snow on the ground in time for Christmas.

  43. So anyway, Joe, I take it you would have no problem with rising gas prices in the future since it would reduce emissions and spur the development of alternatives?

  44. Cesar,

    Liberals like me don’t like the severe price shocks that seem to be such an unavoidable part of being dependent on petroleum to run our economy and go about our lives. The harm those shocks do is one of the many reasons we want to get off oil.

    I think we should work on the alternatives now, so that the option to switch to them will already be there as gas prices go through a long-term rise (which they seem to already be doing, if you look beyond the noise).

  45. I don’t mind price shocks because they send an important message to consumers. Namely “sell that big SUV and get a Prius unless you want to feel even more pain in the future”.

  46. You know who severe gasoline price shocks fall the hardest on, Cesar?

    Poor people. And working families.

    Not to mention the working poor.

    And the children.

    Don’t even get me started on families of poor working children.

  47. Cesar,

    It would be nice of people just making it had actuall options, and not just noticing that one of the new cars they can’t afford gets good mileage.

    But, yeah, God bless the Japanese for subsidizing the R&D necessary to develop the Prius. Actually, it’s pretty clear the American consumer is going to bless them just fine for the next couple of decades.

  48. It would be nice of people just making it had actuall options, and not just noticing that one of the new cars they can’t afford gets good mileage.

    joe-

    You can get a used TDI Golf Diesel for very cheap, which is what I’ve done. Its certainly less expensive than Big Shitbox.

  49. Big Shitbox. That’s awesome.

    I think deisel’s got a big future, as a half-step until we get off fossil fuels entirely. Hybrids, with a turbo-deisel engine.

    Plus, biodeisel makes a lot more sense than ethanol.

  50. joe-toss the battery and just give me a clean diesel with big, honking alternator to send power straight to the electric motors at the wheels. The battery just takes up room and adds weight.

    Diesel-electric. The only way to fly.

    Oh, and repeatedly hammering a nail into your head makes more sense than ethanol, ‘less you’re a corn farmer or a congresscritter.

  51. Also, do not forget that the Mugabe cronies can sell ZWDs at official exchange rates.

  52. “I’m pretty sure Mugabe is pro-gun control, too”

    Have you ever known a dictator to not be pro-gun control?

  53. You know who severe gasoline price shocks fall the hardest on, Cesar?

    Poor people. And working families.

    Not to mention the working poor.

    And the children.

    Don’t even get me started on families of poor working children.

    They also signal entrepeneurs to come into the market and lower the price, so poor working children can buy gas. Meanwhile, price controls cause shortages, as they have for the last 4000 years. Shortages hurt working children, too, if I reckon right.

  54. All your profits are belong to us.

    This starvation has been brought to you by Jimmy Carter.

  55. Liberals like me don’t like the severe price shocks that seem to be such an unavoidable part of being dependent on petroleum to run our economy and go about our lives. The harm those shocks do is one of the many reasons we want to get off oil.

    The price is oil is rather insignificant in the scheme of things. The “shock” is more perception than reality (admittedly, mere perceptions can be damaging, if they lead to stupid policies).

    I think we should work on the alternatives now, so that the option to switch to them will already be there as gas prices go through a long-term rise (which they seem to already be doing, if you look beyond the noise).

    I suppose “we should work on…” translates into “the government should fund some boondoggles”. Seems kind of pointless. Yes, theory says that the price of oil will increase in the long run.

  56. Jimmy Carter just wrote an opion article for USA Today on bad health care in underdeveloped nations. Apparently, doctors stopped working in Zimbabwe, because medical professionals are migrating to the US, because we don’t subsidize medical schools enough. It’s scary that his work still gets published.

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