NationStates Jolt Archive

After the riots in Iran over petrol rationing due to crappy government policy, here's another installment of a collection of annecdotal evidence I'm bringing forward to complement the first-year economic theory that so many politicians apparently aren't interested in.

http://news.bbc.co.uk/2/hi/africa/6283990.stm
Mass Zimbabwe arrests over prices

A total of 1,328 Zimbabwean businessmen and women have been arrested and fined for breaking official price controls in the past two weeks, police say.

Colour me surprised.

This sentence in particular was just beautiful: "The government ordered that the prices of many goods be cut in half, in order to tackle the world's highest rate of inflation - more than 3,700%."

What could be better to illustrate the sheer hybris. "Ordered prices"...it would make me laugh if they weren't so serious.

Do you think the world will ever get to a stage where politicians no longer believe they're somehow more important or more powerful than supply and demand? Where they learn to work with people's needs, wants and abilities, rather than against them?

undoubtedly there is also situations where price control would be a good idea, like maybe putting a minimum selling cost on natural resources (yeah I didn't really think about that one, its been a long day)

in other words I don't think you should just rule out price controls, idealism should never interfere with economics or something like that...

Supply and Demand and the Market are not benevolent deities that will grant you wishes if you sacrifice 40 hours a week to them and pledge your loyalty to them. They are mechanisms and like any other mechanism can run ripshod over anything and anyone.

People are bigger than Supply and Demand, and should always be bigger than the tools they use (figuratively...)

Supply and Demand and the Market are not benevolent deities that will grant you wishes if you sacrifice 40 hours a week to them and pledge your loyalty to them. They are mechanisms and like any other mechanism can run ripshod over anything and anyone.
Well, they're mechanisms, but not normal ones. They're the cumulative actions of everyone in the economy acting according to what they consider to be in their best interest. Price controls can only work if they come with behaviour controls that somehow stop people from acting in their best interest (for example a firm charging at least as much as it costs them to supply the good in question).

Governments know that, and it looks like Mugabe's regime is painfully aware. Hence the punishments and police controls.

Well, they're mechanisms, but not normal ones. They're the cumulative actions of everyone in the economy acting according to what they consider to be in their best interest. Price controls can only work if they come with behaviour controls that somehow stop people from acting in their best interest (for example a firm charging at least as much as it costs them to supply the good in question).

Governments know that, and it looks like Mugabe's regime is painfully aware. Hence the punishments and police controls.

You seem to be under the delusion that 'people act in their own self interest' without manipulations from the market or even being decieved by the market as to what their self interest actually is, or that people acting in their individual self interest is a good idea. Frankly it's that kind of thinking that creates traffic jams. If people considered the flow of traffic and their part in it, instead of edging that one spot ahead, traffic as a whole would move on much more quickly.

I don't see any romantic beauty in people straightarming their neighbors to get that 'extra little bit.'

You seem to be under the delusion that 'people act in their own self interest' without manipulations from the market or even being decieved by the market as to what their self interest actually is, or that people acting in their individual self interest is a good idea.
Well, the former is probably a fact of life. It's not the market that changes what people perceive to be their self interest as much as it is society as a whole. The market is bound to reflect society to some extent, so you'll have some overlap. This doesn't count for bananas though, I don't think anyone is deceived into wanting to buy affordable food or sell one's produce without making a loss.

The idea that it is good that people act in their self interest is a little more complicated and would take the thread and hijack it. If you want we can start another one. To keep it short, the best reasons are that people will in fact act according to self interest regardless of what I say or believe, that as adult beings they have a right to their own person and thus the actions of their own person (until they start infringing on the right of others) and that individual self interest as a motivator has brought humanity forward at a greater pace than any time before. In modern times, usually whenever people have been made to behave a certain way by some authority figure the outcomes have been pretty bad.

Well, the former is probably a fact of life. It's not the market that changes what people perceive to be their self interest as much as it is society as a whole. The market is bound to reflect society to some extent, so you'll have some overlap. This doesn't count for bananas though, I don't think anyone is deceived into wanting to buy affordable food or sell one's produce without making a loss.
Madison Avenue is full of people betting you're wrong. Since the end of WWII there has been an increased need in making people think they need luxury items to drive production. Thats been the norm even before WWII, see:Conspicuous Consumption. Whose best interest is that in? Or for that matter, smoking?

The idea that it is good that people act in their self interest is a little more complicated and would take the thread and hijack it. If you want we can start another one. To keep it short, the best reasons are that people will in fact act according to self interest regardless of what I say or believe, that as adult beings they have a right to their own person and thus the actions of their own person (until they start infringing on the right of others) and that individual self interest as a motivator has brought humanity forward at a greater pace than any time before. In modern times, usually whenever people have been made to behave a certain way by some authority figure the outcomes have been pretty bad.
The problem is where the line gets drawn. If your excess adversly effects the way of life of someone in Uganda (Grabbed at random) aren't you infringing on their rights? If you contribute to a widening gap between the haves and have nots, aren'tyou infringing on the rights of the have nots? There are more ways to hurt you than to just punch you in the nose.

Madison Avenue is full of people betting you're wrong.
But I said I agreed with you. Except that it's not the market as a mechanism that's causing it, it's society as a whole.

As far as I know, the Mursi tribe in Africa doesn't have a free market system. Nonetheless, women do quite extraordinary things to themselves in order to comply what their fellow Mursi expect of them.

If your excess adversly effects the way of life of someone in Uganda (Grabbed at random) aren't you infringing on their rights?
It could, though it depends on the details. At best the connection would be very indirect though.

If you contribute to a widening gap between the haves and have nots, aren't you infringing on the rights of the have nots?
The answer is an emphatic "no". If we both start off with a hundred dollars and you spend it on ice cream and I invest it and you end up with nothing and I'm a millionaire...how did I infringe on your rights?

Let's face it, absolute poverty has been decreasing steadily for decades now. Relative poverty is the issue, but by definition that then has to be due to some people getting rich quicker than others. No one gets hurt.

There are more ways to hurt you than to just punch you in the nose.
Yes. But notwithstanding externalities, all ways except to punch me would have been agreed to by me in advance.

But I said I agreed with you. Except that it's not the market as a mechanism that's causing it, it's society as a whole.

As far as I know, the Mursi tribe in Africa doesn't have a free market system. Nonetheless, women do quite extraordinary things to themselves in order to comply what their fellow Mursi expect of them.
There is a gulf of difference between traditional dress and The Pepsi Generation.

Only in one of those scenarios is a group actively plotting to create that pressure regardless of its benefit to society.


It could, though it depends on the details. At best the connection would be very indirect though.
Ah, the pirate's adage, if I don't have to face those I effect, it doesn't matter.


The answer is an emphatic "no". If we both start off with a hundred dollars and you spend it on ice cream and I invest it and you end up with nothing and I'm a millionaire...how did I infringe on your rights?
When was this clean start?

Let's face it, absolute poverty has been decreasing steadily for decades now. Relative poverty is the issue, but by definition that then has to be due to some people getting rich quicker than others. No one gets hurt.
Tell it to those in East St. Louis. (http://www.thirdworldtraveler.com/Third_World_US/SI_Kozol_StLouis.html)

Yes. But notwithstanding externalities, all ways except to punch me would have been agreed to by me in advance.
This is a delusion.

Only in one of those scenarios is a group actively plotting to create that pressure regardless of its benefit to society.
And that is more unnatural than it just somehow coming up to shove plates into your lips?

Ah, the pirate's adage, if I don't have to face those I effect, it doesn't matter.
No, it means in this case that I might contribute, by I'm not the actual cause. Me not buying Product X wouldn't change a thing.

When was this clean start?
I suppose you'd have to ask a paleontologist on the exact date. 200,000 years or so ago seems about right. Though during those 200 millennia there've been continuous attempts to interfere in the market and individual rights, which has created real inequalities.

Tell it to those in East St. Louis. (http://www.thirdworldtraveler.com/Third_World_US/SI_Kozol_StLouis.html)
I'm talking aggregate. Of course there will be single people who are worse off at any given point than they were at some other given point previously. But on aggregate absolute poverty has been falling worldwide.

This is a delusion.
Explain. Force and fraud (both illegal) are the only two things that could allow someone to hurt me without me having agreed to the risk.

In other news: NB is on some kind of anti-nationalization crusade when he has no idea what he's talking about!

And that is more unnatural than it just somehow coming up to shove plates into your lips?
One is a direct manipulation for profit and gain with only the consideration of those pushing the product. This is a different mechanism than, "You know what'd be cool? If we put plates in our lips."


No, it means in this case that I might contribute, by I'm not the actual cause. Me not buying Product X wouldn't change a thing.
Immunity by anonymity. "I'm not responsible, we are. So I'm cool." Nope, you're still responsible. "I wasn't the Nazi pulling the lever, I was just the one reporting my neighbor." (Save your Goodwins, I wasn't calling anyone a Nazi, just mocking the idea that acting in a group removes guilt) And Ceasar Chavez has already disproved your second point.


I suppose you'd have to ask a paleontologist on the exact date. 200,000 years or so ago seems about right. Though during those 200 millennia there've been continuous attempts to interfere in the market and individual rights, which has created real inequalities.
Did you dislocate your shoulder making that stretch? C'mon man...are you really under the delusion that we all start off on the same line and all the crap thats gone on in all of human civilization is justified because Ogg gathered clubs when Ugg was gathering flowers?


I'm talking aggregate. Of course there will be single people who are worse off at any given point than they were at some other given point previously. But on aggregate absolute poverty has been falling worldwide.
That's not a single person, that's a whole city. In a supposedly developed country in a supposedly developed area.


Explain. Force and fraud (both illegal) are the only two things that could allow someone to hurt me without me having agreed to the risk.
Read the article.

In other news: NB is on some kind of anti-nationalization crusade when he has no idea what he's talking about!

Prove it.

Prove it.

Well for one, unregulated markets, the ones NL promotes, are the speculative and volatile ones that are most prone to failure, regulation is needed in markets.

People are bigger than Supply and Demand, and should always be bigger than the tools they use (figuratively...)

People are bigger than supply and demand, aggregate shifts in preferences shift supply and demand.

But supply and demand is not a tool to be used, that is silly.

Well for one, unregulated markets, the ones NL promotes, are the speculative and volatile ones that are most prone to failure

A truly unregulated market has never been tried.

regulation is needed in markets.

Prove it.

You seem to be under the delusion that 'people act in their own self interest' without manipulations from the market or even being decieved by the market as to what their self interest actually is, or that people acting in their individual self interest is a good idea. Frankly it's that kind of thinking that creates traffic jams. If people considered the flow of traffic and their part in it, instead of edging that one spot ahead, traffic as a whole would move on much more quickly.

I don't see any romantic beauty in people straightarming their neighbors to get that 'extra little bit.'

You have little room to talk of delusions.

Well for one, unregulated markets, the ones NL promotes, are the speculative and volatile ones that are most prone to failure, regulation is needed in markets.

Not an argument.

You have failed his challenge.

People are bigger than Supply and Demand, and should always be bigger than the tools they use (figuratively...)
Please do not speak of things that you have no understanding whatsoever. As NL said, supply and demand are aggregates; and more appropriately, they are economic phenomena, not tools. Demand-management is a tool; demand itself is not. Supply-side policies are tools; supply itself is not. And whilst both may be described as mechanisms, this term is best used for concepts such as price, which relays the relative scarcity of goods in the market.

One is a direct manipulation for profit and gain with only the consideration of those pushing the product. This is a different mechanism than, "You know what'd be cool? If we put plates in our lips."
Of course it's different, we're not living in the same culture. In a "primitive" tribe the reasoning might be to make for a more successful hunt rather than to earn a few extra dollars. What I mean to say is that in both cases people's preferences are influenced by peer pressure, and that peer pressure doesn't necessarily produce particularly smart outcomes. How exactly that peer pressure might come about differs between places, but not the phenomenon itself.

Immunity by anonymity. "I'm not responsible, we are. So I'm cool." Nope, you're still responsible.
You're pushing a dangerous argument. If even the tiniest contribution to what ends up being pain for someone is enough to make you responsible, then we're all guilty of pretty big crimes, though we never had a chance to stop them from occuring.

And Ceasar Chavez has already disproved your second point.
No, he started a big movement to achieve various things. That's different from just not buying Product X.

Did you dislocate your shoulder making that stretch? C'mon man...are you really under the delusion that we all start off on the same line and all the crap thats gone on in all of human civilization is justified because Ogg gathered clubs when Ugg was gathering flowers?
"Justified" can be a loaded word. Of course I'm not calling everything morally just simply because it happened. In fact I'm adamant that using force or fraud to take other people's property is a very bad thing to do.

But I'm saying that rising inequality in our modern world is mainly due to some people getting richer while others fail to do so, not because some people are getting objectively poorer.

That's not a single person, that's a whole city. In a supposedly developed country in a supposedly developed area.
It certainly is. But that doesn't change my point: on aggregate people aren't getting poorer.

Read the article.
I did. I didn't want to go down the road of saying "well, what's the local government doing to make the place attractive to business" even though that seems to be something they owe their constituency, nor did I want to suggest that people do whatever they can to move away from there.

Neither would have contributed to the debate.

In other news: NB is on some kind of anti-nationalization crusade when he has no idea what he's talking about!

You, dearest, are the one who has no idea what he's talking about.

"Justified" can be a loaded word. Of course I'm not calling everything morally just simply because it happened. In fact I'm adamant that using force or fraud to take other people's property is a very bad thing to do.
How would you say one ought to acquire property then? And by your standard of justice, do you not agree that a fair deal of property (e.g. that gained by conquest) is in fact unjustly owned? The present level of inequality has quite a bit to do with this fact. Essentially I agree with you though, especially on your subsequent point.

I think that is harsh, I think the government should have instead increased taxes, then invested the money to create government crown corporations for essential services.

taxes are way better for the government than price controls.

3700 inflation is rediculous, I'd be dumping the currency and going for an afrodollar or something with more stability.

not to say the goverment is wrong..

but what is causing inflation in zimbawe anyway.. pricefixing is issued because foreign markets can then buy into you (in a foreign currency with a stronger value than the local currency.. and get products for less.

I'd say I'm guessing the government knows what they are doing (but 3700% inlation is pretty crazy..

ICCD-Intracircumcordei;12860637']
but what is causing inflation in zimbawe anyway.. pricefixing is issued because foreign markets can then buy into you (in a foreign currency with a stronger value than the local currency.. and get products for less.

I'd say I'm guessing the government knows what they are doing (but 3700% inlation is pretty crazy..

No, it's mostly Mugabe trying to save his ass as all of his boneheaded economic policies come crashing down upon him. Price fixing is a clear sign that the government has no idea what it's doing and that it's making a last gasp attempt to placate the population which will fail spectacularly.

You have little room to talk of delusions.
You have a duck on your head.


Both statements have equal value.

Please do not speak of things that you have no understanding whatsoever. As NL said, supply and demand are aggregates; and more appropriately, they are economic phenomena, not tools. Demand-management is a tool; demand itself is not. Supply-side policies are tools; supply itself is not. And whilst both may be described as mechanisms, this term is best used for concepts such as price, which relays the relative scarcity of goods in the market.
Single word usage is a pretty lame thing to focus on.
Of course it's different, we're not living in the same culture. In a "primitive" tribe the reasoning might be to make for a more successful hunt rather than to earn a few extra dollars. What I mean to say is that in both cases people's preferences are influenced by peer pressure, and that peer pressure doesn't necessarily produce particularly smart outcomes. How exactly that peer pressure might come about differs between places, but not the phenomenon itself.
In one someone is paid to create peer pressure. That's a significant difference.


You're pushing a dangerous argument. If even the tiniest contribution to what ends up being pain for someone is enough to make you responsible, then we're all guilty of pretty big crimes, though we never had a chance to stop them from occuring.
By being aware and informed as a consumer you do have the chance to stop it from happening. Unregulated free markets don't act responsibly, and if that becomes important they don't change their ways, they hide their foulness instead.


No, he started a big movement to achieve various things. That's different from just not buying Product X.
Product X was grapes.


"Justified" can be a loaded word. Of course I'm not calling everything morally just simply because it happened. In fact I'm adamant that using force or fraud to take other people's property is a very bad thing to do.

But I'm saying that rising inequality in our modern world is mainly due to some people getting richer while others fail to do so, not because some people are getting objectively poorer.
There is a reason they call the American Dream a 'dream'. (I know you're not an American, but that dream is predicated on the myth of the boot straps. But that is a myth.)


It certainly is. But that doesn't change my point: on aggregate people aren't getting poorer.
I can't justify what happens by 'aggregate.'


I did. I didn't want to go down the road of saying "well, what's the local government doing to make the place attractive to business" even though that seems to be something they owe their constituency, nor did I want to suggest that people do whatever they can to move away from there.

Neither would have contributed to the debate.

They have encouraged business. Business has been allowed to 'incorperate' single blocks in order to create their own zoning laws to create a toxic environment for the people living nearby, and with no prospects and the only asset being what they have which decreases past worthless there is no resource to 'just move.' Never mind that if these business' weren't allowed to steamroll over them in the first place they wouldn't have to.

Both statements have equal value.
He's only mimicking your statements. Perhaps you see now what airy little assertions they are?

Single word usage is a pretty lame thing to focus on.
It wasn't "single word usage" I focused on. It was on your utter inability to comprehend the concepts at hand.

No, it's mostly Mugabe trying to save his ass as all of his boneheaded economic policies come crashing down upon him. Price fixing is a clear sign that the government has no idea what it's doing and that it's making a last gasp attempt to placate the population which will fail spectacularly.
Yeah, as if pushing up taxes at this point is going to save him (or would even in the event that he had done so earlier; bad economic policies will have repercussions no matter what one does - they can try be avoided in the short-term, only to bring about worse effects in the long-term.)

The Argentine economic crisis was part of the situation that affected Argentina's economy during the late 1990s and early 2000s. Macroeconomically speaking, the critical period started with the decrease of real GDP in 1999 and ended in 2002 with the return to GDP growth, but the origins of the collapse of Argentina's economy, and their effects on the population, can be found in action before. As of 2005, the crisis is arguably over, though many challenges remain for the country.

Origins

Argentina was subject to military dictatorship (alternating with weak, short-lived democratic governments) for many years, that resulted in an important number of economic problems. During the National Reorganization Process (1976-1983) huge debt was acquired for money that was later lost in different unfinished projects, the Falkland/Malvinas Islands War, and the state's takeover of private debts; in this period, a neoliberal economic platform was introduced. By the end of the military government the country´s industries were severely affected and unemployment was at its highest point.

In 1983, democracy in the country was restored with the election of president Raúl Alfonsín. The new government's plans included stabilizing Argentina's economy including the creation of a new currency (the Austral, first of its kind not to carry the word peso as part of its name), for which new loans were required. The state eventually became unable to pay the interest of this debt, the economy collapsed and inflation began increasing. In 1989, Argentina's inflation reached 200% per month, topping 3,000% annually. President Alfonsín resigned six months before ending his term, and Carlos Menem took office.

Menem, who had campaigned on a populist platform, immediately went back on his promises and began a plan, aligned on the neoliberal Washington consensus, of trade liberalisation, labor deregulation and privatisation of state companies which were the source of much spending (such as those providing the telephone, energy and water services).

The 1990s

The fight against inflation did not go well. In early 1991, under the rule of Minister of Economy Domingo Cavallo, executive measures fixed the value of Argentine currency at 10,000 australes per U.S. dollar. Furthermore, any citizen could go to a bank and ask for any amount of cash in domestic currency to be converted to the corresponding amount of dollars; in order to secure this "convertibility", the central bank was bound to keep its dollar reserves at the same level as the cash in circulation. The initial aim of such measures was to ensure the acceptance of domestic currency, since during 1989 and 1990 hyperinflation peaks, people had started to reject it as payment, demanding U.S. dollars instead. This regime was later fixated by a law (Ley de Convertibilidad) which restored the peso as the Argentine currency, with a monetary value fixed by law to the value of the United States dollar.

As a result of the convertibility law, inflation dropped sharply, price stability was assured, and the value of the currency was preserved. This raised the quality of life for many citizens, who could now afford to travel abroad, buy imported domestic appliances and electronic products or ask for credits in dollars at very low interest rates.

But Argentina had international debts to pay, and it needed to keep borrowing money. The fixed exchange rate made imports cheap, producing a constant flight of dollars away from the country and a progressive loss of Argentina's industrial infrastructure, which led to an increase in unemployment.

In the meantime, government spending continued to be high and corruption was rampant. Argentina's public debt grew enormously during the 1990s, and the country showed no true signs of being able to pay it. The IMF, however, kept lending money to Argentina and postponing its payment schedules. Massive tax evasion and money laundering explained a large part of the evaporation of funds toward offshore banks. A congressional committee started investigations in 2001 about accusations that Argentina's central bank governor, Pedro Pou, as well as part of the board of directors, had failed to investigate cases of alleged money laundering through Argentina's financial system [1]. Clearstream was also accused of being instrumental in this global financial process.

Other countries, such as Mexico and Brazil (both of which also happen to be important trade partners for Argentina) faced economic crises of their own, leading other countries to mistrust Latin American countries moneywise, and affecting the overall economy of the region. The influx of foreign currency provided by the privatisation of state companies had dried out, and after 1999 Argentine exports were harmed by the devaluation of the Brazilian real and a considerable international revaluation of the dollar, effectively revaluing the peso against its major trading partners, Brazil (30% of total trade flows) and the euro area (23% of total trade flows).

By 1999, newly elected President Fernando de la Rúa faced a country where unemployment had risen to a critical point, and the undesirable effects of the fixed exchange rate were showing forcefully. In 1999 Argentina's GDP dropped 4% and the country entered a recession (which was to last three years, ending in a collapse). Stability became stagnation (even deflation at times), and the economic measures taken did nothing to avert it; in fact, the government continued the contractive economic policies of its predecessor. The possible solution (abandonment of the exchange peg, with a voluntary devaluation of the peso) was considered a political suicide and a recipe for economic disaster. By the end of the century, a spectrum of complementary currencies had emerged.

While the provinces had always issued complementary currency in the form of bonds and drafts to brave shortages of cash, the maintenance of the convertibility regime led to this being done in an unprecedented scale, leading to their being called "quasi-currencies", the strongest of them being Buenos Aires province's Patacón. The national state also issued its own quasi-currency-the LECOP.

The crisis

Argentina quickly lost the confidence of investors and the flight of money away from the country increased. In 2001, people fearing the worst began withdrawing large sums of money from their bank accounts, turning pesos into dollars and sending them abroad, causing a run on the banks. The government then enacted a set of measures (informally known as the corralito) that effectively froze all bank accounts for twelve months, allowing for only minor sums of cash to be withdrawn.

Because of this allowance limit and the serious problems it caused in certain cases, many Argentines became enraged and took to the streets of important cities, especially Buenos Aires. They engaged in a form of popular protest that became known as cacerolazo (banging pots and pans). These protests occurred especially during the period of 2001 to 2002. At first the cacerolazos were simply noisy demonstrations, but soon they included property destruction, often directed at banks, foreign privatized companies, and especially big American companies. Many businesses installed metal barriers because windows and glass facades were being broken, and even fires being ignited at their doors. Billboards of such companies as Coca Cola and others were brought down by the masses of demonstrators.

Confrontations between the police and citizens became a common sight, and fires were also set on Buenos Aires avenues. Fernando de la Rúa declared a state of emergency (illegally since it needed confirmation by the Congress) but this only worsened the situation, precipitating the violent protests of 20 and 21 December 2001 in Plaza de Mayo, where demonstrators clashed with the police, ended with several dead, and precipitated the fall of the government. De la Rúa eventually fled the Casa Rosada in a helicopter on 21 December.

Since De la Rúa's vice president, Carlos Álvarez, had resigned in October 2000, a political crisis ensued. Following presidential succession procedures established in the Constitution, the president of the Senate Ramón Puerta took office but quickly resigned, followed by the president of the Chamber of Deputies, Eduardo Camaño. The Legislative Assembly (a body formed by merging both chambers of the Congress) convened with the goal of creating a more legitimate interim government. By law, the candidates were its own members plus the Governors of the Provinces -they finally appointed Adolfo Rodríguez Saá, then governor of San Luis. During the last week of 2001, the interim government led by Adolfo Rodríguez Saá, facing the impossibility of meeting debt payments, defaulted on the larger part of the public debt, totalling no less than 93,000 million dollars.

Politically, the most heated debate involved the time for the following elections -the spectrum ranged from March 2002 to October 2003 (the original date for the ending of De la Rúa's office).

Rodríguez Saá's economy team came up with a project designed to preserve the convertibility regime, dubbed the "Third Currency" Plan. It consisted of creating a new, non-convertible currency called Argentino coexisting with convertible pesos and U.S. dollars. It would only circulate as cash (checks, promisory notes or other instruments could be nominated in pesos or dollars but not in Argentinos) and would be partially guaranteed with federally-managed land -such features were expected to counterbalance inflationary tendencies.

Argentinos having legal currency status would be used to redeem all complementary currency already in circulation -the acceptance of which as a means of payment was quite uneven. It was hoped that preservation of convertibility would restore public confidence, while the non-convertible nature of this currency would allow for a measure of fiscal flexibility (unthinkable with pesos) that could ameliorate the crippling recession of economy. Critics called this plan merely a "controlled devaluation"; its advocates countered that since controlling a devaluation is perhaps its thorniest issue, this criticism was a praise in disguise. The "Third Currency" plan had enthusiastic supporters among mainstream economists (the most notorious being perhaps Martín Redrado, current president of the central bank) citing sound technical arguments. However, it could never be implemented because the Rodríguez Saá government lacked the political support required.

Rodríguez Saá, utterly incapable to deal with the crisis and unsupported by his own party, resigned before the end of the year. The Legislative Assembly convened again, appointing Peronist Eduardo Duhalde-then a Senator for the Buenos Aires province-to take his place.

The end of convertibility
Monthtly inflation in Argentina, 2002 (the peak is 10.4%, in April).
Enlarge
Monthtly inflation in Argentina, 2002 (the peak is 10.4%, in April).

After much deliberation, Duhalde abandoned in January 2002 the fixed 1-to-1 peso-dollar parity that had been in place for ten years. In a matter of days, the peso lost a large part of its value in the unregulated market. A provisional "official" exchange rate was set at 1.4 pesos per dollar.

In addition to the corralito, the Ministry of Economy dictated the pesificación ("peso-ification"), by which all bank accounts denominated in dollars would be converted to pesos at official rate. This measure angered most savings holders and appeals were made by many citizens to declare it unconstitutional.

After a few months, the exchange rate was left to float more or less freely. The peso suffered a huge devaluation, which in turn prompted inflation (since Argentina depended heavily on imports, and had no means to replace them locally at the time).

The economic situation became steadily worse with regards to inflation and unemployment during 2002. By that time the original 1-to-1 rate had skyrocketed to nearly 4 pesos per dollar, while the accumulated inflation since the devaluation was about 80%. (It should be noted that these figures were considerably lower than those foretold by most orthodox economists at the time.) The quality of life of the average Argentinian was lowered proportionally; many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis.

Since the volume of pesos didn't fit the demand for cash (not even after the devaluation) huge quantities of a wide spectrum of complementary currency kept circulating alongside them. Fears of hyperinflation as a consequence of devaluation quickly eroded the attractiveness of their associated revenue, originally stated in convertible pesos. Their acceptability now ultimately depended on the State's willingness to take them as payment of taxes and other charges, consequently becoming very irregular. Very often they were taken at less than their nominal value -while the Patacón was frequently accepted at the same value as peso, Entre Ríos's Federal was among the worst-faring, at an average 30% as the provincial government that had issued them was reluctant to take them back. There were also frequent rumors that the Government would simply banish complementary currency overnight (instead of redeeming them, even at disadvantageous rates), leaving their holders with useless printed paper.

Immediate effects

Many private companies were affected by the crisis: Aerolíneas Argentinas, for example, was one of the most affected Argentine companies, having to stop all international flights for various days in 2002. The airline came close to bankruptcy, but survived.

Most barter networks, viable as devices to ameliorate the shortage of cash during the recession, collapsed as large numbers of people turned to them, desperate to save as many pesos as they could for exchange for hard currency as a palliative for uncertainty.

Several new homeless and jobless Argentines found work as cartoneros, or cardboard collectors. The 2003 estimation of 30,000 to 40,000 people scavenged the streets for cardboard to seek out a living by selling it to recycling plants. This method accounts for only one of many ways of coping in a country suffering from unemployment rate soaring at nearly 25%[1].

Agriculture was also affected: Argentine products were rejected in some international markets, in fear that they might come damaged because of the poor conditions in which they grew, and the USDA put restrictions on Argentine food and drugs arriving at the United States.

Producers of television channels were forced to produce more reality shows than any other type of shows, because these were generally cheap to produce as compared to other programmes. Virtually all education-related TV programmes were cancelled.

The recovery

Eduardo Duhalde finally managed to stabilise the situation to a certain extent, and called for elections. On 25 May 2003 President Néstor Kirchner took charge. Kirchner kept Duhalde's Minister of Economy, Roberto Lavagna, in his post. Lavagna, a respected economist with moderate-centre-wing views, showed a considerable aptitude at managing the crisis, with the help of heterodox measures.
Evolution of the Argentine GNP, 1999–2004
Enlarge
Evolution of the Argentine GNP, 1999–2004

The economic outlook was completely different from that of the 1990s; the high exchange rate made Argentine exports cheap and competitive abroad, while discouraging imports. In addition, the high price of soy in the international market produced an injection of massive amounts of foreign currency (with China becoming a major buyer of Argentina's soy products).

The government encouraged import substitution and accessible credit for businesses, staged an aggressive plan to improve tax collection, and set aside large amounts of money for social welfare, while controlling expenditure in other fields.

As a result of the administration's productive model and controlling measures (selling reserve dollars in the public market), the peso slowly revalued, reaching a 3-to-1 rate to the dollar. Agricultural exports grew and tourism returned.
Foreign currency reserves of Argentina's central bank, in millions of USD
Enlarge
Foreign currency reserves of Argentina's central bank, in millions of USD

The huge trade surplus ultimately caused such an inflow of dollars that the government was forced to begin intervening in order to keep the peso from revaluing further, which would have ruined the tax collection scheme (largely based on imports taxes and royalties) and discourage further reindustrialisation. The central bank started buying dollars in the local market and stocking them as reserves. By December 2005, foreign currency reserves had reached $28,000 million (they were greatly reduced by the anticipated payment of the full debt to the IMF in January 2006). The downside of this reserve accumulation strategy is that the dollars have to be bought with freshly-emitted pesos, which may induce inflation. The central bank neutralises a part of this monetary emission by selling Treasury letters. In this way the exchange rate has been stabilised near a reference value of 3 pesos to the dollar.

The currency exchange issue is complicated by two mutually opposing factors: a sharp increase in imports since 2004 (which raises the demand of dollars), and the return of foreign investment (which brings fresh currency from abroad) after the successful restructuring of about three quarters of the external debt. The government has set up controls and restrictions aimed at keeping short-term speculative investment from destabilising the financial market.

Argentina's recovery suffered a minor drawback in 2004 when rising industrial demand caused a short-lived energy crisis. Scenarios of energy shortage are not discarded in the near future.

Argentina has managed to return to growth with surprising strength; GNP jumped 8.8% in 2003, 9.0% in 2004, and 9.1% in 2005 (with expectations of 8% for 2006). Consumer prices have accompanied this surge; though not comparable to the levels of former crises, the inflation rate was 12.5% in 2005, with expectations around 10% for 2006, though average wages have increased 18% in the same year. This has prompted the government to restrict benefits for exporters and put pressure on companies in order to stabilize prices. While unemployment has considerably reduced, Argentina has so far failed to reach an equitable distribution of income (the wealthiest 10% of the population owns 31 times more wealth than the poorest 10%). [2] [3]

Effects on wealth distribution

According to Argentine agronomist Alberto Lapolla, who has written extensively on the transformation of Argentina from the "granary of the world" to a "soy republic", 450,000 Argentines died below the poverty line between 1990 and 2003. Citing the Institute of State and Participation Studies (IDEP), a thinktank, Lapolla adds that every day, 55 children, 35 adults and 15 elderly die in the country from illnesses related to hunger.

Although GDP has grown consistently and quickly since 2003, it was only in late 2004 that it reached the levels of 1998 (the last year before the recession). Other macroeconomic indicators have followed suit. A study by Equis, an independent counseling organisation, found out that two measures of economic inequality, the Gini coefficient and the wealth gap between the 10% poorest and the 10% richest among the population, grew continuously since 2001, and decreased for the first time in March 2005.
Poverty in Argentina Date of
measurement Extreme
poverty Under
poverty
line
May 2001 11.6% 35.9%
Oct 2001 13.6% 38.3%
May 2002 24.8% 53.0%
Oct 2002 27.5% 57.5%
May 2003 26.3% 54.7%
2nd sem 2003 20.5% 47.8%
1st sem 2004 17.0% 44.3%
2nd sem 2004 15.0% 40.2%
1st sem 2005 13.6% 38.5%


The table on the left shows statistics of poverty in Argentina, in percent of the population. The first column shows the date of the measurement (note that the method and time changed in 2003; poverty is now measured each semester). Extreme poverty is here defined as not having enough money to eat properly. The poverty line is set higher: it is the minimum income needed for basic needs including food, clothing, shelter, and studies.

Debt restructuring

Main article: Argentine debt restructuring

When the default was declared in 2002, foreign investment fled the country, and capital flow towards Argentina ceased almost completely. The Argentine government met severe challenges trying to refinance the debt. The state had no spare money at the time, and the central bank's foreign currency reserves were almost depleted.

The Argentine government kept a firm stance, and finally got a deal by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms.

Criticism of the IMF

The International Monetary Fund suffered no discounts in its part of the Argentine debt. Some payments were refinanced or postponed on agreement. However, the authorities of the IMF at times expressed harsh criticism of the discounts and actively lobbied for the private creditors.

In a speech before the United Nations General Assembly on 2004-09-21, President Kirchner said that "An urgent, tough, and structural redesign of the International Monetary Fund is needed, to prevent crises and help in [providing] solutions". Implicitly referencing the fact that the intent of the original Bretton Woods system was to encourage economic development, Kirchner warned that the IMF today must "change that direction which took it from being a lender for development to a creditor demanding privileges".

During the weekend of October 1–2, 2004, at the annual meeting of the International Monetary Fund/World Bank, leaders of the IMF, the European Union, the Group of Seven industrialised nations, and the Institute of International Finance (IIF), warned President Kirchner that Argentina had to come to an immediate debt-restructuring agreement with the speculative "vulture funds", increase its primary budget surplus in order to pay more debt, and impose "structural reforms" to prove to the world financial community that it deserves their loans and investments.

In 2005, as a large and consistently growing fiscal surplus made it possible, Argentina shifted to a policy of "disindebtment" towards the IMF: paying the IMF in schedule, with no negotiation whenever possible, with the intention of gaining independence from it. On 2005-12-15, in a sudden move following Brazil, President Kirchner announced that Argentina would pay the whole debt to the IMF which had been previously financed in installments until 2008, for a total of 9,810 million USD, employing the central bank's foreign currency reserves.

In a report published in June 2006, a group of independent experts hired by the IMF to revise the work of its Independent Evaluation Office (IEO) stated that the assessment of the Argentine case suffered from informative manipulation and lack of collaboration on the part of the IMF; the IEO is claimed to have unduly softened its conclusions to avoid criticizing the IMF's board of directors.
Results of capitalism.

This doesn't show that price controls are a bad idea, nor even that price controls are failing in this particular case.

Rather, it shows that this particular government is incompetent to institute price controls.

The fact that large numbers of people are violating the law is NOT evidence that price controls, if successfully applied, will be ineffective or counter-productive with respect to the goals for which they were instituted. It does not show the economic effects of price controls, because in point of fact there are no price controls.

It has already been pointed out that supply and demand are not benevolent gods, but I think it has been inadequately stressed that they are not gods at all, nor forces of nature akin to gravity or magnetism. They are artifacts of human behavior. And even if they are relatively stable, even universal artifacts, because they are fundamentally based in the behaviors of actual human beings they are in principle mutable--if perhaps only for short times or in extreme circumstances.

Think of the price controls and rationing in the United States during WWII. They were overwhelmingly successful. Why? Because the United States was a) competent to enforce its own laws; and b) standing on sufficient moral foundation (during the war) to convince people to change their behavior.

Could such a situation endure indefinitely, as some socialists or communists would like to believe? That is a different question entirely.

~snip~
It certainly is. But that doesn't change my point: on aggregate people aren't getting poorer.

When you start at zero, there's only one direction to go in.
People aren't getting poorer because it's impossible to be "poorer" than having nothing.

After the riots in Iran over petrol rationing due to crappy government policy, here's another installment of a collection of annecdotal evidence I'm bringing forward to complement the first-year economic theory that so many politicians apparently aren't interested in.

http://news.bbc.co.uk/2/hi/africa/6283990.stm


Colour me surprised.

This sentence in particular was just beautiful: "The government ordered that the prices of many goods be cut in half, in order to tackle the world's highest rate of inflation - more than 3,700%."

What could be better to illustrate the sheer hybris. "Ordered prices"...it would make me laugh if they weren't so serious.

Do you think the world will ever get to a stage where politicians no longer believe they're somehow more important or more powerful than supply and demand? Where they learn to work with people's needs, wants and abilities, rather than against them?

WOW! Just wow. The government really does not have a clue how to run a country do they?

WOW! Just wow. The government really does not have a clue how to run a country do they?

Governments are brilliant at running countries...into the ground.

Governments are brilliant at running countries...into the ground.

indeed

This doesn't show that price controls are a bad idea, nor even that price controls are failing in this particular case.

Rather, it shows that this particular government is incompetent to institute price controls.

The fact that large numbers of people are violating the law is NOT evidence that price controls, if successfully applied, will be ineffective or counter-productive with respect to the goals for which they were instituted. It does not show the economic effects of price controls, because in point of fact there are no price controls.

It has already been pointed out that supply and demand are not benevolent gods, but I think it has been inadequately stressed that they are not gods at all, nor forces of nature akin to gravity or magnetism. They are artifacts of human behavior. And even if they are relatively stable, even universal artifacts, because they are fundamentally based in the behaviors of actual human beings they are in principle mutable--if perhaps only for short times or in extreme circumstances.

Think of the price controls and rationing in the United States during WWII. They were overwhelmingly successful. Why? Because the United States was a) competent to enforce its own laws; and b) standing on sufficient moral foundation (during the war) to convince people to change their behavior.

Could such a situation endure indefinitely, as some socialists or communists would like to believe? That is a different question entirely.
Well exactly, that's pretty much it.

This doesn't show that price controls are a bad idea, nor even that price controls are failing in this particular case.

Rather, it shows that this particular government is incompetent to institute price controls.

In terms of price controls, subsidies, etc, it doesn't help that Zimbabwe has only 20%-30% employment and is being run by a corrupt, uncaring dictatorial elitist party.

WOW! Just wow. The government really does not have a clue how to run a country do they?
If all goods were price controlled and the country didn't rely on tons of imports (I have no idea what the import status of Zimbabwe is) price controlling insanely out of control inflation may be the only answer. Should he instead stand aside and pretend the "invisible hand" will fix everything?


Didn't Mexico have problems with a devalued Peso so they just made a new Peso worth like 1000 times what the old one was?

This doesn't show that price controls are a bad idea, nor even that price controls are failing in this particular case. It is a example of bad effects amongst many and it goes along with theoretical arguments along the same vein.

Rather, it shows that this particular government is incompetent to institute price controls. Well, I believe that it would end up that most if not all governments would be incompetent to administer peace time price controls just as most governments would be too incompetent to administer a movement to transcend the need for food.

The fact that large numbers of people are violating the law is NOT evidence that price controls, if successfully applied, will be ineffective or counter-productive with respect to the goals for which they were instituted. It does not show the economic effects of price controls, because in point of fact there are no price controls. Should we argue that the war against drugs suffers from the same problem and that we should re-intensify our efforts? The very fact of the matter is that the enforceability of the law cannot be separated from its true impact. One of the economic impacts of price controls is the emergence of black markets in order to meet demand, so it does show the impact in as much as that regard.


Think of the price controls and rationing in the United States during WWII. They were overwhelmingly successful. Why? Because the United States was a) competent to enforce its own laws; and b) standing on sufficient moral foundation (during the war) to convince people to change their behavior. And because the goal of society was reduced to almost one thing, and that thing was winning the war. Price controls were ONLY successful for the war, as we find that quality of products often dropped, some items completely disappeared, and the capability to determine consumer satisfaction in markets waned. In the long run I would not be surprised if it would have become similar to the pricing problems with the soviet union.

Could such a situation endure indefinitely, as some socialists or communists would like to believe? That is a different question entirely.
I think the answer is no. The system showed major cracks in the short time that it was implemented. Frankly, I think all you are arguing is that you want to recreate the Soviet Union and the economic systems of that or related systems and frankly, the experience we have with the failure of their pricing mechanism seems to indicate a major problem for your idea, especially given that it is for the purpose of improving people's quality of life.

The fact that large numbers of people are violating the law is NOT evidence that price controls, if successfully applied, will be ineffective or counter-productive with respect to the goals for which they were instituted. It does not show the economic effects of price controls, because in point of fact there are no price controls.

It's impossible to successfully apply price controls except during national emergencies like war (like you mention later), when the population's commitment to the war effort or other crisis will result in compliance with the decrees. Patriotism overwhelms market forces.

But it's also important to note that these price controls were imposed in addition to rationing, which meant the supply was controlled in addition to the price. Without controlling supply through rationing, price controls will always fail.

You have a duck on your head.


Both statements have equal value.

Let me introduce you to a concept:

http://en.wikipedia.org/wiki/Truth

Read up.

snip

Results of ignorance (or poor reading comprehension).

It has already been pointed out that supply and demand are not benevolent gods, but I think it has been inadequately stressed that they are not gods at all, nor forces of nature akin to gravity or magnetism. They are artifacts of human behavior. And even if they are relatively stable, even universal artifacts, because they are fundamentally based in the behaviors of actual human beings they are in principle mutable--if perhaps only for short times or in extreme circumstances.

Anywhere there exists people interacting with each other in relation to scarce resources, there will supply and demand. Only infinite resources undoes supply and demand.

Think of the price controls and rationing in the United States during WWII. They were overwhelmingly successful. Why? Because the United States was a) competent to enforce its own laws; and b) standing on sufficient moral foundation (during the war) to convince people to change their behavior.


Right, so when we have a powerful and morally unquestionable central government, price controls are an option.

Let me introduce you to a concept:

http://en.wikipedia.org/wiki/Truth

Read up.
I'll see your Wiki and raise you one. (http://en.wikipedia.org/wiki/Relevance)

Read up.

I'll see your Wiki and raise you one. (http://en.wikipedia.org/wiki/Relevance)

Read up.

You are saying that truth is irrelevant?

That may explain your argument thus far.

You are saying that truth is irrelevant?

That may explain your argument thus far.
Ah...and round and round it goes. I'll raise ya two more...one (http://www.answers.com/main/ntquery?s=pointless&gwp=13) and two (http://www.grief.net/images/MovingOnfrontcover.jpg)

Ah...and round and round it goes. I'll raise ya two more...one (http://www.answers.com/main/ntquery?s=pointless&gwp=13) and two (http://www.grief.net/images/MovingOnfrontcover.jpg)

Perhaps if you read David, Milton, or Thomas rather than Russell Friedman, we wouldn't be having a pissing match over who was delusional here.

Supply-side policies are tools; supply itself is not. Suppliers of a product never manipulate the supply?

Perhaps if you read David, Milton, or Thomas rather than Russell Friedman, we wouldn't be having a pissing match over who was delusional here.

Did this really just devolve into 'My authors can beat up your authors?' Good lord, just when you thought it couldn't get more pointless...

Did this really just devolve into 'My authors can beat up your authors?' Good lord, just when you thought it couldn't get more pointless...

No it didn't.

Suppliers of a product never manipulate the supply?
I think you mean demand, and if so you will probably say through advertisement; again, the latter is the tool. Demand is simply the aggregate.

I think you mean demand, and if so you will probably say through advertisement; again, the latter is the tool. Demand is simply the aggregate.No, I mean the supply. See DeBeers.

No, I mean the supply. See DeBeers.
So again you mean the tools the company employs to control supply? Not the actual concept of supply, which is the total product available on the market?

So again you mean the tools the company employs to control supply? Not the actual concept of supply, which is the total product available on the market?If the total product available on the market is manipulated by a company, then is not the supply manipulated by a company?

If the total product available on the market is manipulated by a company, then is not the supply manipulated by a company?
Supply is always manipulated by companies in the sense that they choose how much to produce, according to their goals - but that wasn't my point. Rather, it was that supply as a concept is an aggregate. It is not a tool.

Supply is always manipulated by companies in the sense that they choose how much to produce, according to their goals - but that wasn't my point. Rather, it was that supply as a concept is an aggregate. It is not a tool.Isn't manipulating the supply using it as a tool?

And supply is not manipulated so much as companies are manipulated. Companies do not choose their supply, as the market prices chooses their supply for them.

Supply is always manipulated by companies in the sense that they choose how much to produce, according to their goals - but that wasn't my point. Rather, it was that supply as a concept is an aggregate. It is not a tool.

But isn't that only a semantic difference? If a single firm controls the entire supply, they are not only able to use supply-side policies to influence the market but also control the aggregate itself. I think it's a confusion of terms more than anything else.

But isn't that only a semantic difference?
The total supply will indeed be whatever the firm supplies, but only because it is an aggregate. Supply-side policies are again the tool in question. I am simply clarifying what the term refers to.

And supply is not manipulated so much as companies are manipulated. Companies do not choose their supply, as the market prices chooses their supply for them.
Indeed.

And supply is not manipulated so much as companies are manipulated. Companies do not choose their supply, as the market prices chooses their supply for them.Yes, but couldn't companies withhold their supply in order to drive the market price up?

But isn't that only a semantic difference? If a single firm controls the entire supply, they are not only able to use supply-side policies to influence the market but also control the aggregate itself. I think it's a confusion of terms more than anything else.

The entire supply includes all substitutes as well.

Yes, but couldn't companies withhold their supply in order to drive the market price up?

Only if demand warranted it.

Also remember that EM and I are coming from a position where monopoly is state granted.

This doesn't show that price controls are a bad idea, nor even that price controls are failing in this particular case.

Rather, it shows that this particular government is incompetent to institute price controls.
As I said, it's annecdotal evidence in support of economic theory. I learned from people's responses to my thread about Iranian petrol rationing and made that very clear.

The fact that large numbers of people are violating the law is NOT evidence that price controls, if successfully applied, will be ineffective or counter-productive with respect to the goals for which they were instituted.
No, it shows that people violating the law are the reason it cannot be successfully applied.

As for the goals they were instituted for...I believe it was the fact that bad economic policies had led to bad crops and thus a shortage of food. Since the supply of food ended up being limited, prices rose and rather than have people feel the impact of the stupid policies they once cheered, Mugabe's government (like any government) imposed a populist policy to make things look better than they are.

So has it solved the lack of food supply? Definitely not.
Has it made food available to more people? The latest news from the country suggest that it probably hasn't (the best way to get rations is still to be a wealthy Mugabe supporter).
Has it made the government more popular? Well...probably, though as the policy continues to fail that will wear off pretty damn quick as people find they can only get food on the "black" market at rather unpopular prices.

They are artifacts of human behavior. And even if they are relatively stable, even universal artifacts, because they are fundamentally based in the behaviors of actual human beings they are in principle mutable--if perhaps only for short times or in extreme circumstances.
Yes, I hinted at that. For price controls to work, you need behaviour controls of some sort.

The snag is that they're not artifacts of human behaviour in the sense of there being a single person you can convince of some better way. Demand and supply can come about even if just a single person in the economy deviates from the prescribed behaviour. So the circumstances have to be extreme and they usually don't last very long. Even during WWII in the US there was a vibrant "black" market in which things were traded outside the government-imposed rules, in that case it just happened to be relatively smaller than in Zimbabwe so the effects weren't enough to seriously affect the outcome of the policy.

As for whether that policy was economically sound, that's another question. I would obviously suggest the answer is "no", but then economics was hardly what motivated the decisionmakers at the time.

Unregulated free markets don't act responsibly, and if that becomes important they don't change their ways, they hide their foulness instead.
Now you're the one associating human behaviour with basically abstract concepts.

People can act responsibly, but they don't have to. "Markets" are mediums of exchange in which people trade property rights according to prices they both agree upon - in practice that usually means the prices that are arrived at in aggregate.

That doesn't require anything in particular of people's behaviour. It doesn't make them good, nor does it make them bad.

Yes, people operating within markets have acted irresponsibly and immorally and been rewarded for it, and will continue to do so. But so have people who don't operate in market systems. As it is there are rules of behaviour like "don't steal" and "don't commit fraud"...very few of the scandalous cases anti-capitalist campaigners bring forward are actually legal. And the few that are rely on flimsy connections.

There is a reason they call the American Dream a 'dream'. (I know you're not an American, but that dream is predicated on the myth of the boot straps. But that is a myth.)
But that doesn't address my point. That's going off at a tangent.

I can't justify what happens by 'aggregate.'
And neither can I. I'm just saying that as horrible as this is, it's not representative. You can point to a person dying of cancer and call modern medicine pointless or bad, it wouldn't be a valid conclusion to come to.

They have encouraged business.
They've done a crappy job, because it seems that the real problem is the lack of funds the local government has (no business -> no jobs -> no taxes) and the fact that almost everyone is on welfare and can't afford to make the place nicer (no business -> no jobs -> no money).

The environmental damage done there is regrettable, but we have the ability to repair most of it. But that takes resources, and until some sort of business activity starts up or the taxpayer foots the bill (or both) it's not gonna get done.

Never mind that if these business' weren't allowed to steamroll over them in the first place they wouldn't have to.
Well, there wouldn't have been jobs, so they wouldn't have moved there in the first place.

Didn't Mexico have problems with a devalued Peso so they just made a new Peso worth like 1000 times what the old one was?
Not exactly. Just because the new Peso was called the same as the old one doesn't mean they simply one day they declared it worth something else. The process of "restarting" a currency to get away from hyperinflation is rather more complex than that, and it doesn't look like Mugabe's regime is ready to take any of the steps necessary, particularly because they refuse outside help.

People aren't getting poorer because it's impossible to be "poorer" than having nothing.
And what law of nature says there has to be any change at all?

Only if demand warranted it.

Also remember that EM and I are coming from a position where monopoly is state granted.For the sake of argument, sure, I'll say that monopoly is state granted. Couldn't supply be used as a tool to raise the market price in certain conditions, those being a state granting of monopoly (or near-monopoly) and a high enough demand?

For the sake of argument, sure, I'll say that monopoly is state granted. Couldn't supply be used as a tool to raise the market price in certain conditions, those being a state granting of monopoly (or near-monopoly) and a high enough demand?
Only if demand exhibits characteristics that would allow it. If it was very elastic for example, people wouldn't bother to go and look for the fewer items of product X available.

No, it's mostly Mugabe trying to save his ass as all of his boneheaded economic policies come crashing down upon him. Price fixing is a clear sign that the government has no idea what it's doing and that it's making a last gasp attempt to placate the population which will fail spectacularly.

No, After reading a bit more of this offsite it does appear they are following up on my bandwagon currency though. They are trying to make the goods accessable to the public.. they have to be able to get those goods others wise riots wouldlikely happen.. it's that simple.. if the public gets upset it will destabalize them..

but in the long term it isn't a fix because they won't be able to keep economically viable and their economy will collapse more meaning they need to stabalize it by internal production.

take into context how much is foreign influenced.. the us and other countries slap embargoes and even cofiscate bank accounts of some countries nationals.. how much of it is actually engineered and how much 'their own fault' is anyones guess.

Anywhere there exists people interacting with each other in relation to scarce resources, there will supply and demand. Only infinite resources undoes supply and demand.In a trivial sense, that's true. There will always be "a supply" of X, and there will always be "some demand" for X.

But supply and demand are both artifacts of human behavior, and they are therefore mutable.

Consider a simple example: several people are trapped in a cave waiting to be rescued. They have exhausted all their resources, they are starving and desperately dehydrated--but rescue is imminent. They can hear the rescuers not far from the cave wall, and they have received communications indicating that they will be out in a matter of hours. They will survive.

Still, when someone suddenly finds a forgotten bottle of fresh water, everyone is desperate to have some (ideally, they each think, all of it). Supply is extremely low, demand is extremely high: people are offering thousands of dollars, once on the outside, for the bottle; some are threatening violence. The lucky discoverer could, of course, drink it himself... or he could make a small fortune selling it off a sip at a time. Supply and demand.

But then someone disrupts the commotion, pointing to a young boy in the corner who is truly on the brink of death. While everyone else is expected to survive, he has been severely weakened by the ordeal: he may not make it regardless, but it is obvious to anyone that he doesn't stand a chance without getting at least basic relief... soon.

Suddenly no one would dare think of purchasing the bottle for himself, and the bidding war ceases. The price of the bottle drops quickly to zero as it becomes clear that the man will not be able to sell his find... he can either drink it himself, or do the right thing and give it to the boy.

For our purposes, it doesn't matter what he does. What matters is that demand depends on people's choices, and it is always possible to convince them to choose differently--to voluntarily limit their consumption, for instance. Depending on the good, supply is equally subject to human decisions.

While supply and demand are significant factors in human relationship that cannot be ignored, we cannot forget that they are based in human decisions. They are not all-powerful forces that control our lives. In important ways, we are always in control.

The view that "supply" and "demand" do things independent of human choices is precisely what Marx referred to as "commodity fetishism," and he meant the comparison to primitive superstitions to be taken quite literally.

For the sake of argument, sure, I'll say that monopoly is state granted. Couldn't supply be used as a tool to raise the market price in certain conditions, those being a state granting of monopoly (or near-monopoly) and a high enough demand?

Optimal return would be reached at equilibrium, so either the restriction of supply would be a method of shrinking oversupply or would be an unsustained move. Even though it kind of shifts the definition of supply, yes, it could be used as a tool to manipulate market price.

In a trivial sense, that's true. There will always be "a supply" of X, and there will always be "some demand" for X.

But supply and demand are both artifacts of human behavior, and they are therefore mutable.

The view that "supply" and "demand" do things independent of human choices is precisely what Marx referred to as "commodity fetishism," and he meant the comparison to primitive superstitions to be taken quite literally.

I said on page one that people are bigger than supply and demand, and that aggregage shifts in preferences create aggregate shifts in supply and demand.

I am not sure who, outside of maybe Victorian and earlier economists, would think that something called demand would be determined by something other than personal preferences and human action. Actually, Marx has no room to speak with his socially necessary labor-time. His work was chalked full of abstract objective economics that won't lower themselves to take human preference into view.

In the end, it is perfectly true that supply, demand, and thereby price are all completely mutable, they can be entirely done away with or created in an instant all according to human preference. The mechanism of price, the mechanism of supply and demand, however, is not mutable, it is law, and it is certainly not trivial to understand this fact.