Back in February, I blogged about Zimbabwe’s $10 million note and received a ton of hits when it got stumbled. At that time, Zimbabwe had an official annual inflation rate of over 150,000%. Now that Mugabe has blatantly stole the elections, inflation has again shot up so ridiculously high that it makes the previous rate look like just a milk run.
According to this report in the Guardian, the official, and hence woefully under-reported, inflation rate is now at 2.2m% and the largest bank note is now denominated at $50 billion, with a value of around 18 British pence. The government can’t even print money fast enough, so that ordinary people are now limited to only $100 billion of withdrawals a day.
Just another day in the ongoing trainwreck that is Zimbabwe.
Check out this story about a family in the United Kingdom with three generations of people who do not work, live in a government-owned house and live only on government benefits. Apparently, between the lot of them they manage to collect benefits worth 32,000 pounds a year, which is a very tidy sum by Malaysian standards. The worst part of all of it that they’re perfectly content to live like this for the rest of their lives and more disgustingly, believe that it is their right to live like this and it is the government’s responsibility to provide for them. And, by the way, they’d like the government to give them a 10-bedroom house too, because they think their current 3-bedroom house isn’t big enough.
Granted, this story was published in the Daily Mail, which isn’t exactly a paragon of journalism, but if the facts stated in it are broadly accurate, it’s a good example of why socialism is a bad idea. I’ve railed a bit here and there over the populist electoral promises made by the DAP. All too many people, it seems, believes that the proper role of government is to distribute largesse to the people who voted it in, but where does government revenue come from if not from the people themselves?
I just read these lyrics, to be sung to the tune of Queen’s Bohemian Rhapsody on QT3 and just had to post them here.
Is this the real price
Is this just fantasy
No escape from reality
Open your eyes
And look at your buys and see.
I’m now a poor boy
Because I bought it high,
watched it blow
Any way the Fed goes
Doesn’t really matter to me,
Continue reading 2008 Recession
Continuing its slide into barbarism, the government of Zimbabwe has just released a $10 million Zimbabwe dollar note, which as this article writes, is still not enough to buy a single hamburger. An inflation rate of 150,000% is almost impossible to comprehend, so to break it down a bit:
150,000% inflation per year / 365 days = 410.96% inflation per day
To put this into perspective, at a daily inflation rate of 410.96%, something that costs, say, $10 today would end up costing $51.10 at the same time tomorrow. Needless to say, this makes life in Zimbabwe pretty tough. The really sad thing is that Zimbabwe was once one of the most developed countries in Africa with decent transport and power infrastructure and a thriving economy based on agriculture, mining and tourism. This of course is due to President Mugabe’s harebrained land redistribution policy in the late 1990s which resulted in the eviction of 4,000 white farmers and a stubborn refusal to face basic facts.
Between 2000 and 2007, Zimbabwe’s economy contracted by 40%, tourist visits fell by 75% in 2000 and the government has given up publishing official inflation figures. Within a period of less than 10 years, Zimbabwe has gone from a big exporter of wheat to having its citizens hunt for rats in fields to eat. President Mugabe continues to insist that the economy’s problems are due to sanctions imposed by Western countries despite the fact that the only sanctions that have been imposed are travel bans against the members of his government. His government insists that the inflation is caused by shopkeepers who keep raising their prices and has introduced price controls, though these are impossible to properly enforce, that effectively obliges shops to sell goods at a loss.
Zimbabwe will make a fantastic case study of how not to run an economy for many decades to come. It’s an incredibly potent reminder of how quickly and how completely a country can be ruined by gross mismanagement.
Addendum (1st March):
Someone has since commented on StumbleUpon that my daily inflation calculation above is incorrect. He is in fact right and that my calculations suck because they do not take into account the compounded effects of daily inflation. In fact, with an annual inflation rate of 150,000%, the daily inflation rate for Zimbabwe should only be around 2.0240155%. I’ve left the original text unchanged as a record of my stupid mistake.
As a libertarian, the subject of environmentalism often makes me uneasy and this dispute in California makes for a good example of why that is. The facts of the case are as follows: from 1997 to 1999, Richard Treanor and Carolynn Bissett planted eight redwood trees in the yard behind their house in Santa Clara county. In 2001, after the trees were already planted, their neighbour, Mark Vargas, decides to install a 10-kilowatt solar power system in his house. At the time, Vargas knew that his neighbours’ trees would eventually grow so big as to cover the sunlight that his solar panels would need, so he approached Treanor and Bissett and asked them to remove the trees or trim them back. They refused, stating that they planted the trees for privacy reasons. Vargas went ahead and installed his solar system anyway.
Continue reading Trees vs. Solar Panels: Fight!
If each man has the right to defend, even by force, his person, his liberty, and his property, several men have the right to get together, come to an understanding, and organize a collective force to provide regularly for this defense. Collective right, then, has its principle, its raison d’être, its legitimate basis, in individual right; and the collective force can rationally have no other end, no other function, than that of the individual forces for which it substitutes. Thus, as an individual cannot legitimately use force against the person, liberty, or property of another individual, for the same reason collective force cannot legitimately be applied to destroy the person, liberty, and property of individuals or classes.
– Frédéric Bastiat in The Law
In a modern France that idolizes José Bové, a French farmer who is best known for vandalizing a McDonald’s restaurant, as a national hero, it is easy to forget that there once lived in that same country, a liberal economist by the name of Claude Frédéric Bastiat. In America, he happens to be one of the most well-known of the French liberalists, yet is almost completely unheard of in his native France.
Bastiat is most famous for his 1845 “Candle-makers’ Petition”, a satirical plea on behalf of the candle-makers of France to the French Parliament to ban the sun, which he wittily describes as a competitor that brings ruin to the candle-makers since it offers illumination for free. Here, Bastiat effectively demonstrates that if the citizens of the country may obtain a good or a service cheaply, it would be ludicrous to turn down this offer even if it would mean some loss of business for the domestic producers of that same good or service. This is one of the best-argued denunciations of protectionism ever written and is justly reprinted in a number of economics textbooks.
Continue reading A Biography: Frédéric Bastiat