NationStates Jolt Archive

If you force people to sell goods for less than it cost for them to purchase them, or produce them, they go out of business.

Seizing the business afterwards won't make the factory run (without supplies) or the store sell goods (without goods purchased to sell).

Mugabe, one of those graduates of the Patrice Lumumba University, where Communism was taught, evidently skipped the class on basic economics.

Or, they didn't teach it there.

HARARE (Reuters) - Zimbabwe President Robert Mugabe on Friday told manufacturers to carry on with normal production despite an official price freeze, warning that his government would seize firms that stopped producing basic goods.

Mugabe was addressing thousands of ruling ZANU-PF party supporters in Harare, some who had earlier marched through Zimbabwe's capital in support of the freeze introduced to curb the world's highest inflation rate of over 4,500 percent.

The march came ahead of a ZANU-PF party meeting to adopt tougher measures against firms defying the freeze, which was introduced last week when the government ordered businesses to put prices back to June 18 levels.

The move, which sparked frenzied buying from shoppers, came after prices of some goods tripled within a week.

"This is no joke ... there are some people who think this (freeze) will not succeed because they say there are empty shelves," Mugabe told supporters at the ZANU-PF national headquarters in Harare.

"We are saying to all factory owners you must produce. If you don't produce we certainly will seize the factories," Mugabe said to loud cheers from supporters.

Spiralling prices and soaring inflation are part of an eight-year economic crisis that has caused foreign currency, fuel and food shortages. Economists say the price freeze would decimate what remains of Zimbabwe's struggling industry as manufacturers will not be able to produce goods at a loss.

No matter how hard Mugabe wishes for it to be so, it won't work. This is the end of whatever might be left of Zimbabwe's economy.

I thought the thread title was "Brice Freezers Don't Work"

Ah, my head is now attracted to the pillow.

Well anyways, I could only cover my eyes when the Zimbabwean economy finally collapses and we have another humanitarian crisis.

So, Nixon was a commie?

So, Nixon was a commie?

It was certainly a boneheaded Communist idea he had, wasn't it?

He can either seize complete control of the economy, or leave it alone. Just freezing a few prices certainly won't work unless you have rock-solid evidence that the good your messing with is being purposefully overpriced.

Now, setting ALL the prices on the market in such a manner that factories and farms could sell for profit might work. Of course it won't work for international trade, but what kind of international trade does Zimbabwe have? Hell it can't be worse than what he's already done.

He can either seize complete control of the economy, or leave it alone. Just freezing a few prices certainly won't work unless you have rock-solid evidence that the good your messing with is being purposefully overpriced.

Now, setting ALL the prices on the market in such a manner that factories and farms could sell for profit might work. Of course it won't work for international trade, but what kind of international trade does Zimbabwe have? Hell it can't be worse than what he's already done.

It can be worse.

He's wanting to set prices even lower - you can't just set prices anywhere you like.

It was certainly a boneheaded Communist idea he had, wasn't it?

Boneheaded, sure. Communist? That's less clear.

Remote Observer, I agree with you that this plan is about as sound as a dead man, but it seems you're plugging it into a little rant you wanted to do about Communism.

As if Zimbabwe has any economy left. It's gonna take a century to fix Mugabe's mistakes.

Well, does anyone have any better ideas? Inflation is running out of control, it's at 4,500%. 100% is VERY bad. The prices need to stop going up, and hopefully Mugabe's pockets are deep enough that he can keep the production running until the costs of production go down.

If the prices keep going up, people won't be able to afford basic goods. They have to be brought down or people will starve in the streets.

Well, does anyone have any better ideas? Inflation is running out of control, it's at 4,500%. 100% is VERY bad. The prices need to stop going up, and hopefully Mugabe's pockets are deep enough that he can keep the production running until the costs of production go down.

If the prices keep going up, people won't be able to afford basic goods. They have to be brought down or people will starve in the streets.

Guess who originally started this problem. Robert Mugabe did.

Guess who originally started this problem. Robert Mugabe did.

Well, yes. And this is far from the best solution. However, there aren't many options left. At this point, the nation has probably shifted back to a barter system. If inflation is 4,500%, your money is worthless the moment you touch it. Monetary policy is slow to effect change, and, as far as I know, there isn't much else that will change it aside from a massive recession/depression (which would be caused by an interest rate hike). Price control has been mildly successful before (but I think they used rationing when it did work), and might help? maybe?

Clearly, there is no doubt that there will be a massive depression, and soon. While I agree Mugabe is an idiot of immense proportions, I wonder if this might soften the blow (granted, that is like saying "I jumped off the Sears Tower" instead of saying "I jumped off the Taipei 101")

If you force people to sell goods for less than it cost for them to purchase them, or produce them, they go out of business.

Seizing the business afterwards won't make the factory run (without supplies) or the store sell goods (without goods purchased to sell).
Yes. This is true.

On the other hand, if it's not about business, but about attempting in vain to keep the population alive, then it's going to work a damned sight better than having prices go up.
Mugabe, one of those graduates of the Patrice Lumumba University, where Communism was taught
Irrelevant, really.
evidently skipped the class on basic economics.

Or, they didn't teach it there.
Or he just doesn't care and is trying to carve out a legacy, before he dies?
No matter how hard Mugabe wishes for it to be so, it won't work. This is the end of whatever might be left of Zimbabwe's economy.
Zimbabwe's economy has been completely clusterfucked for about 10 years, really. I don't think much could sort it out.
Well, does anyone have any better ideas?
Recreate Rhodesia and get a new currency, so that it works properly. It doesn't really matter if the general public gets a vote in who's running the country, because after 8 years of starvation under Mugabe, I'm sure they'd be a fair bit cheerier with food on the table, no matter from what source.
Inflation is running out of control, it's at 4,500%. 100% is VERY bad. The prices need to stop going up, and hopefully Mugabe's pockets are deep enough that he can keep the production running until the costs of production go down.
I have very, very little faith in Mugabe's government at the moment, to be honest. I'm unsure that he's got any money for ANYTHING, let alone enough money to pay wages, not forgetting benefits for the population which has the majority of people completely unemployed.

But yes, the prices need fixing, or people will starve, which would be extremely bad indeed.
If the prices keep going up, people won't be able to afford basic goods. They have to be brought down or people will starve in the streets.
Very true.

It's not like Mugabe is known for his firm, rational grasp of reality. To wit, "HIV doesn't cause AIDS!!!11!"

My brother's fiance is from Gambia (one of the more prominent families, from what I gather) and she is NOT PLEASED with the moron there who claims God gave him an herbal cure for AIDS.

Of course price fixes don't work. We've known that since Diocletian was Roman Emperor, if not earlier.

I think it just wont make much difference (good or bad). We will probably see a quality adjustment. Business will use cheaper input or lie on the real quantity (500g when it's really 450g).

So all in all inflation will keep going.