Dispatches from District 48
Posts tagged ‘Zimbabwe’
Price controls, like those famously instituted by Diocletian, are something like 0 for 162,000 in their success rate at "fixing" inflation.
So of course, Argentina has instituted price controls on supermarkets. Argentina, meet Zimbabwe. Another agricultural powerhouse that will soon see food shortages.
But what is really happening here is that the dollar is being devalued. This is one of the semantic quirks that make me laugh "” when Argentina or Zimbabwe do this, its called devaluation. When a western nation does it, it is called quantitative easing.
Fed Chairman Ben Bernanke, fresh from injecting hundreds of billions of new U.S. currency units into the economy "“ and from planning the injection of yet an additional 600 billion such units "“ criticizes the Chinese government for injecting hundreds of billions of new Chinese currency units into the economy ("Bernanke Takes Aim at China," Nov. 18). Apparently, when Beijing increases the supply of Chinese currency it does so as part of what Prof. Bernanke ominously labels a "strategy of currency undervaluation," but when Uncle Sam does the same thing with U.S. currency units it's called "quantitative easing" and "a move in the right direction."
I was reading through some leftish/alarmist environmental blogs, and I was struck by how many desperately want to buy into the story line that poorer nations are the true heroes of Copenhagen, holding the rich nations feet to the fire so they will commit to deeper CO2 cuts.
Really? A bunch of dictators who demonstrably have little concern for their citizens and spend most of their time trying to figure out how to divert state funds into their Swiss bank accounts suddenly care about the effects of anthropogenic climate change on their nations? Hugo Chavez, whose nation currently is avoiding following Zimbabwe down the toilet only by its oil revenues really wants the world to wean itself off oil?
Here is the perfect analogy for the Third World's sudden interest in climate: The "I will work for food" sign. Beggers learned that (at least for a while) this sign was a good marketing tool. They had no intention of doing any work (I had a friend who used to drive up to all of them and offer them landscaping work in exchange for lunch, always to be turned down flat) but they knew it made potential donors more sympathetic - see, they really want to work but are just down on their luck. If you haven't seen the movie Interstate 60, you really need to. Relevant clip below:
This is exactly the equivalent of the Third World's sudden interest in climate change. Up to this point, their leaders have shown no interest in stopping the raping of their own local ecosystems. These guys are certainly not conservationists, but they know a good marketing tool. Copenhagen is about these guys putting their hands out, and using climate as the marketing tool to soften up their marks in the West. These nations certainly have no intention of having any targets or restrictions placed on their countries. And it looks like they may succeed, at least in the treaty phase.
Obama has positioned himself in such a way that he feels that he has to have something he can call a win at Copenhagen. So he goes to the politician's traditional playbook, which is to use taxpayer money to buy a deal to try to make himself look better. He is working to do this with the passage of the health care bill and he probably will do this in Copenhagen, agreeing to $100 billion a year in payoffs to third world kleptocracies so he can look like a winner to western socialists.
Apparently Zimbabwe had an inflation rate of 14,000% last month, for a total of 531 billion percent inflation this year. If we assume for simplicity that inflation occurs only during working hours, if we spread if over 22 days a week, this means that ones pay at the end of the day is worth only 1/3 its value by lunch the next day, and 1/6 its value by the end of the next day. My understanding is that Zimbabwe companies pay their employees several times a day and let them go out at lunch and buy something, anything, tangible with the cash before it is worthless a few hours later.
By the way, I have my Zimbabwe 50 and 100 billion dollar notes on the wall of my office. I am hoping for a trillion dollar note to go with it. Meeses and Gippers coming soon.
Zimbabwe introduces a new 50,000,000 bank note. And if you do not understand the post title, shame on you. Go read this book immediately.
Yeah, I know they seem to care so much, but nearly every policy they actively advocate turns out to be a disaster for the poor. Here is a great example:
In May 2002, in the midst of a severe food shortage in sub-Saharan
Africa, the government of Zimbabwe turned away 10,000 tons of corn from
the World Food Program (WFP). The WFP then diverted the food to other
countries, including Zambia, where 2.5 million people were in need. The
Zambian government locked away the corn, banned its distribution, and
stopped another shipment on its way to the country. "Simply because my
people are hungry," President Levy Mwanawasa later said, "is no
justification to give them poison."The corn came from farms in the United States, where most corn
produced"”and consumed"”comes from seeds that have been engineered to
resist some pests, and thus qualifies as genetically modified.
Throughout the 90s, genetically modified foods were seen as holding
promise for the farmers of Africa, so long as multinationals would
invest in developing superior African crops rather than extend the
technology only to the rich. When Zambia and Zimbabwe turned away food
aid, simmering controversy over the crops themselves brimmed over and
seeped into almost every African state. Cast as toxic to humans,
destructive to the environment, and part of a corporate plot to
immiserate the poor, cutting edge farming technology is most feared
where it is most needed.
This is simply awful, and is driven by progressive politics in Europe that abhor GM food, despite reams of scientific evidence and years of experience that it has no demonstrable health effect. (It is particularly ironic that GM corn should be the target, since corn as we know it is a man-made genetically modified food, albeit by the slow process of cross-breeding. The very existence of corn is one of the great triumphs of pre-Columbian agriculture.)
A key element of progressive politics is to apply western middle class perspectives to Third World problems. In this case, Europeans who are wealthy and well-fed have time and capacity to worry about problems at the margin, such as "might GM corn somehow have a negative health effect on one in a million people?" I believe this concern is absurd even at the margin in western society, but it becomes criminally insane when applied to countries beset with abject poverty and starvation. So we would rather let a million people starve than have one person face some hypothetical health risk?
This same approach can be seen in a myriad of other instances. For example, progressive wish to prevent Nike from building factories in the Third World that hire locals for fifty cents a day. Again, the middle class western perspective: I would never take a job that paid $5 a day for ten hours of labor, so they should not either. But this is in countries where more than half of the population makes less than $1 a day performing subsistence farming for perhaps 12-14 hours a day, and even then risk starvation when the crop fails. The Nike factory represents incredible salvation for many. Do we all hope they will do even better economically in the future? Sure, but you can't step from unskilled subsistence farming for a dollar a day to middle manager at GE all in one step.
And then there is climate. The climate change hysteria, and the associated calls for reductions 80% or higher in CO2 output, is the greatest threat to the world's poor that has existed since the bubonic plague. And yes, I mean the hysteria, not climate change itself. Because if the world gets warmer because of man's CO2 (an iffy proposition), the poor might or might not be worse off. After all, it was during warm periods of the past that the poor thrived, such as the population boom in Europe during the Medieval warm period. But if the world's governments agree to shut down fossil fuel production and reduce the size of economies, over a billion people who are set to emerge from poverty over the next few decades will instead be doomed to remain poor. Progressive environmentalists are not even subtle about what they want -- they are seeking a poorer, lower-tech world. They are selling poverty.
Brendan O'Neil writes in this vein:
In these various scandalous schemes,
we can glimpse the iron fist that lurks within environmentalism's green
velvet glove. "˜Cutting back carbon emissions' is the goal to which
virtually every Western politician, celebrity and youthful activist has
committed himself. Yet for the poorest people around the world,
"˜reducing carbon output' means saying no to machinery and instead
getting your family to do hard physical labour, or it involves
collecting cow dung and burning it in an eco-stove in order to keep
yourself warm.... Carbon-offsetting companies have encouraged Kenyans
to use dung-powered generators and Indians to replace kerosene lamps
with solar-powered lamps, while carbon-offsetting tree-planting
projects in Guatemala, Ecuador and Uganda have reportedly disrupted
local communities' water supplies, led to the eviction of thousands of
villagers from their land, and cheated local people of their promised
income for the upkeep of these Western conscience-salving trees....Carbon
offsetting is not some cowboy activity, or an aberration, or a
distraction from "˜true environmentalist goals' - rather it expresses
the very essence of environmentalism. In its project of transforming
vast swathes of the developing world into guilt-massaging zones for
comfortable Westerners, where trees are planted or farmers' work is
made tougher and more time-consuming in order to offset the activities
of Americans and Europeans, carbon offsetting perfectly captures both
the narcissistic and anti-development underpinnings of the politics of
environmentalism. Where traditional imperialism conquered poor nations
in order to exploit their labour and resources, today's global
environmentalist consensus is increasingly using the Third World as a
place in which to work out the West's moral hang-ups....Carbon-offsetting also shines a light on the dangerously anti-development sentiment in environmentalism....
In the near term, countries are already using global warming as an excuse for protectionism, and in particular are cutting off imports from poorer countries that are trying to make some economic progress:
There is little
that angers me more than disingenuous attempts to employ "˜global
warming' as an argument against trade, especially against trade from
the developing world. More often than not, blatant self-interest - that
is, old-fashioned protectionism by another name - is being masked
beneath self-righteous, middle-class gobbledygook.
Such a case is brilliantly exposed today by Dominic Lawson writing in The Independent ["˜Food
miles are just a form of protectionism. Middle-class neurosis is being
exploited to protect an archaic form of agriculture' (April 1)]:
"Was
Prince Charles' chum Patrick Holden, director of the Soil Association,
expecting the Kenyan High Commissioner to fall to his knees in
gratitude? It rather sounded like it yesterday morning, when the two of
them met in a BBC radio studio.
They
were there to discuss the Soil Association's proposals to discriminate
against the "˜organic food' which is air freighted into this country,
mostly from East Africa. "˜One option was to ban it altogether,'
declared Mr Holden, but instead he and his colleagues had decided that
such food would only be banned if it was "˜not produced ethically' -
whatever that means...."On the whole it
is a "˜lifestyle choice' limited to middle-class mothers in the
South-east of England who are neurotic enough to believe the
insinuations of the Soil Association that little Henry and Caroline are
more likely to get cancer if mummy doesn't buy organic (at twice the
price).Now
another largely middle-class neurosis - we are all doomed unless
everybody stops flying! - is being exploited to protect an archaic form
of agriculture which could never feed this country, still less the
world. It
is, at best, an exercise in self-delusion. At worst, it is a way of
using food as the instrument of a deliberate policy of racial
discrimination."
Maxed Out Mamma has more on the global warming excuse for protectionism:
I am genuinely concerned
that environmental concerns are being used as a proxy for protectionist
economic legislation and may have severe consequences. I would like to
discuss this article from a Canadian source about carbon taxation:Imposing
carbon tariffs on emerging economies with low manufacturing costs and
high greenhouse gas emissions could drive some manufacturers back to
Western countries, according to two economists.Jeff
Rubin, chief strategist and economist at CIBC World Markets, thinks
such tariffs could emerge quickly. Countries in Europe are already
becoming publicly intolerant of emissions elsewhere and the next
president of the United States is expected to institute a cap on
greenhouse gas emissions alongside the trading of carbon credits....Europe is in an extremely
protectionist mood, and I believe one of the reasons for the
non-scientifically based focus on carbon is that it serves as a
justification for tariffs. If the next president does institute carbon
tariffs, the result will have a real impact on world trade.I
believe that many politicians are being deeply dishonest about their
"environmental" concerns. I also believe that instituting a carbon
tariff will cause Asian growth to slow remarkably and further
destabilize the world economy. The rise in food prices is very
dangerous because it has an impact on the ability of emerging market
countries to support consumption increases necessary to rebalance
trade. If you add to the situation by doing something like this, you
could recreate the conditions which caused the Great Depression.
Here are a few scenes from Zimbabwe, stitched together form several posts by Cathy Buckle. For all of those who support Hugo Chavez, and there are a surprising number in this country, this is exactly where Venezuela would be in a year if it wasn't for its oil. And it may get there none-the-less (hat tip Q&O):
After three months of price controls the food situation in the country is
perilous and even those who were able to stock their pantries and cupboards are
now in trouble. In a main supermarket in my home town this week there was air
freshener, window cleaner, some vegetables, Indonesian toothpaste and imported
cornflakes from South Africa - one single packet costing more than half of a
teachers monthly salary. There was also milk being sold from a bulk tank to
people who bring their own bottles and the queue went through the empty shop,
out the door and along the pavement. The line broke up suddenly before 10am when
the milk ran out and the huge shop was suddenly completely empty - nothing left
to sell, no more customers. This situation was a mirror image of conditions at
three other major supermarkets in the town and so we look desperately into
another week of struggle, praying for relief....
Milk is like gold in our town, as it is almost all over the country. When you
appreciate that the shops are empty and there is no food to buy, no protein, no
meat or eggs and now not even bread, you understand that people are desperate
for nourishment. A phone call to the local bulk dairy marketing outlet this week
went as follows:Q: Hello, Do you have milk please?
A: Nothing.
Q: What about lacto (sour milk)?
A: Nothing.
Q: Any cheese?
A: (Bored) Nothing
Q: Ice Cream! ?
A: (Slightly annoyed) No, we have nothing. We are playing football in the car
park!
...Standing outside over yet another smoky fire late one afternoon this week, a
Go-Away bird chastised me from a nearby tree. I'm sure this Grey Lourie is as
fed up of me intruding into its territory as I am of being there - trying to
get a hot meal for supper. For five of the last six days the electricity has
gone off before 5 in the morning and only come back 16 or 17 hours later a
little before midnight. "Go Away! Go Away!" the Grey Lourie called out
repeatedly as my eyes streamed from the smoke and I stirred my little pot. My
hair and clothes stink of smoke, fingers are yellow and sooty but this is what
we've all been reduced to in Zimbabwe. Our government don't talk about the power
cuts anymore and don't even try and feed us with lame excuses about how the
power is being used to irrigate non-existent crops. We all know it's not true
and the proof is there in the empty fields for all to see.Something else our government aren't talking about anymore is the nationwide
non availability of bread and the empty shops in all our towns and cities.
Everywhere you go people are struggling almost beyond description to try and
survive and yet the country's MP's, both from the ruling party and the
opposition, do nothing to put an end to this time of horror. I have lost count
of how many weeks this has been going on for but it must be around three months.
None of the basics needed for daily survival are available to buy. There is no
flour to bake with, no pasta, rice, lentils, dried beans or canned goods. People
everywhere are hungry, not for luxuries like biscuits or snack food but for the
staples that fill your stomach. When you ask people nowadays how they are
coping, mostly they say that they are not, they say they are hungry, tired and
have little energy. This is a national crisis almost beyond description and
people say they are alive only because of " the hand of God."
One sure sign of a hyperinflation is that the central bank must
issue new currency notes in ever higher denominations so that people
won't have to carry bags or wheelbarrows of money around to make
everyday purchases. Sure enough, the government of Zimbabwe is now
wrestling with that very question. According to the FT story:The launch yesterday of a new large-denomination bank
note of Z$200,000"”worth [US$13] at the official exchange rate and
[US$1.30] at the more realistic parallel rate"”underlines the disarray.
The central bank had wanted to issue a Z$500,000 note, but a bank
official said this was vetoed by the finance ministry because senior
staff thought such a large denomination would have reinforced an
impression that inflation was out of control.At a 13,000 percent rate, that cat is probably already out of the bag.
What a mess. Explanation of the post title here.
I'm blogging here at about 300 baud so I will have to, for once, keep it brief. There appears to be a fair amount of momentum building to do "something" about conditions in sub-Saharan Africa, which have sucked, still suck, and will probably continue to suck without some help.
Unfortunately, many of the usual suspects are pushing the "US does not send enough aid" line as the main failure mode for Africa. A full fisking of this will have to wait for a better connection, but suffice it to say that we have already dropped billions in direct aid and billions more in loans and loan forgiveness, without much benefit.
Who do you give the aid to? The vast majority of sub-Saharan governments are full of corrupt looters, who will always find ways to put most of the aid money in their own pocket and those of their cronies. Just look at what happened to oil for food money in Iraq, and that money had MUCH better oversight than the money that goes to Africa.
Even when the aid does not come in easily looted currency, but rather in food or vaccines distributed by NGO's, the aid can help support totalitarianism and even genocide in disturbing ways. The problem in Africa are the same that financial aid faces anywhere,
ie: NGO's can only go where the dictator allows. Dictators only allow
NGO's to go to towns or regions that support him, limiting access and
starving out other areas of the country. Food aid also hurts local
farmers by depressing local prices. To some extent, well-meaning NGO's
fulfill the role of Carmella Soprano, helping the brutal criminal she
is married to maintain a facade of stability and normality to the
outside world.
Zimbabwe is a classic example. People are clearly suffering there, but it is just as clear that any aid given to the people there just give comfort and additional power to Robert Mugabe, who has single-handedly engineered the current disaster.
The first thing we need to do in Africa is drop our trade barriers with them. More than ephemeral aid, they need the chance to build real businesses and real markets, and the US is the only real candidate (the EU certainly won't do it unilaterally). Its insane to me that a few Carolina-based Senators are so terrified of competition from these nations, and have to date blocked this obvious move.
The second thing we need to do is to find a country and make an example of it. Lets find a single country that has a reasonably freedom-oriented government with (for Africa) moderate levels of corruption and lets focus our aid and effort at them -- lowered tariffs, aid, pressure for more liberalization, loans, vaccines, the works. African countries have had negative reinforcement for bad government for years - lets try positive reinforcement, making it clear that democracy and good government can provide an entre to prosperity and to participation in the world community.
I am a little late linking this, but the world is in the midst of one of those pure, tightly controlled experiments to demonstrate the true price of socialism. And, as usual, no one will learn from it. Via Jane Galt:
It is depressing to look back at history and see how regularly the same
nice-sounding idea--"let's take the land from the rich people who unjustly own
it and give it to those who need it"--turns into tragedy for everyone. It's even
more depressing to realise that despite the seeming predictibility of the
result, lots of people want to do it anyway.
The Atlantic, which she quote in a follow up post, has more detail:
Mugabe decided on what he called "fast-track land reform" only in February of
2000, after he got shocking results in a constitutional referendum: though he
controlled the media, the schools, the police, and the army, voters rejected a
constitution he put forth to increase his power even further. A new movement was
afoot in Zimbabwe: the Movement for Democratic Change"”a coalition of civic
groups, labor unions, constitutional reformers, and heretofore marginal
opposition parties. Mugabe blamed the whites and their farm workers (who,
although they together made up only 15 percent of the electorate, were enough to
tip the scales) for the growth of the MDC"”and for his humiliating rebuff.So he played the race card and the land card. "If white settlers just took
the land from us without paying for it," the President declared, "we can, in a
similar way, just take it from them without paying for it." In 1896 Africans had
suffered huge casualties in an eighteen-month rebellion against British pioneers
known as the chimurenga, or "liberation war." The war that brought Zimbabwean
blacks self-rule was known as the second chimurenga. In the immediate aftermath
of his referendum defeat Mugabe announced a third chimurenga, invoking a valiant
history to animate a violent, country-wide land grab...The drop-off in agricultural production is staggering. Maize farming, which
yielded more than 1.5 million tons annually before 2000, is this year expected
to generate just 500,000 tons. Wheat production, which stood at 309,000 tons in
2000, will hover at 27,000 tons this year. Tobacco production, too, which at
265,000 tons accounted for nearly a third of the total foreign-currency earnings
in 2000, has tumbled, to about 66,000 tons in 2003.Mugabe's belief that he can strengthen his flagging popularity by destroying
a resented but economically vital minority group is one that dictators elsewhere
have shared. Paranoid about their diminishing support, Stalin wiped out the
wealthy kulak farming class, Idi Amin purged Uganda's Indian commercial class,
and, of course, Hitler went after Jewish businesses even though Germany was
already reeling from the Depression. Whatever spikes in popularity these moves
generated, the economic damage was profound, and the dictators had to exert
great effort to mask it.
Overall, the country has gone from a net exporter of food to outright famine. For this particular experiment, I am happy to live in the control group. Stay tuned, as this show is likely to hit the road soon and move to Venezuela.
