Posts tagged with: zimbabwe

When we think of rule of law failure, countries like Zimbabwe and Somalia come to mind. But as Acton Research Director Samuel Gregg points out in his latest piece over at Public Discourse, rule of law can also be subtly eroded in wealthy countries. The negative consequences for risk-taking, entrepreneurship, and long term investment, he says, can be far-reaching.

Risk is an inherent part of the workings of market economies. But Gregg notes that’s not the same thing as uncertainty:

Measurable risks are . . . no deterrent to the making of economic choices. If we take them seriously, they help us to calibrate our economic choices to be consistent with our responsibilities, resources, and opportunities. The same measurements also allow us to distinguish between prudent risk takers and the reckless, and reward them appropriately. Uncertainty, by contrast, involves those risks that cannot be quantified. It can occur either because of the sheer complexity of a given situation or because the subject matter cannot be reasonably measured. As long as a situation of uncertainty persists, it will deter many people from even considering whether to take economic risks.

Uncertainty in America, according to Gregg, is being magnified by the sheer complexity of laws such as the United States Internal Revenue Code:

A tax code of this size and complexity which is subject to so many sources of potentially conflicting official and semi-official explanations is bound to embody significant contradictions, and offers considerable scope for arbitrary decision-making. Uncertainty is the result. It’s also valid to claim that the same tax code may well be impossible for large numbers of honest law-abiding citizens to understand and comply with—not to mention difficult for conscientious civil servants to administer justly. As a result, many people may unintentionally violate the law or simply choose to forgo making any number of potentially wealth-creating opportunities for fear of violating the law.

Another example is the thousands upon thousands of pages of legislation being passed by Congress every year. As Gregg writes:

Then there are the rule-of-law problems associated with the sheer volume of law that directly shapes American economic life. The 2010 healthcare reform legislation, for instance, amounted to 2,700 pages. Not far behind it in length was the 2010 financial overhaul act: a mere 2,300 pages. More than a few legislators have confessed to never having read either piece of legislation in its entirety. Nor should we assume any great familiarity on their part with the thousands of pages of legislation which these acts superseded, integrated, or reinterpreted. The possibility that many laws governing healthcare and financial services have subsequently been rendered unclear, inconsistent, and impossible to comprehend is high.

These erosions of rule of law, Gregg says, result in large incentives not to take risks and not to make long-term investments. It also encourages entrepreneurs to look elsewhere for a more friendly, stable and comprehensible legal environment.

Read the piece in its entirety at Public Discourse.

Blog author: jballor
Monday, February 1, 2010
By

Business Weekly, a production of BBC World Service, had an informative feature on Toby Sheta, a Zimbabwean mobile phone trader, who provided insights into the courage and tenacity required of entrepreneurs under Mugabe’s brutal dictatorship (you can download the original Business Daily story in MP3 format here).

During the worst times of the Mugabe regime, Sheta would illegally buy and sell fuel coupons, a profitable enterprise because of the chaos of governmental interference in international trade and domestic fuel markets. Sheta says in the context of survival the “black market actually became the formal market,” the place where products were available. “For us the black market was the real market.”

Sheta says that what he gained as an entrepreneur in the emergency economy translate into more normalized economic conditions: “The skills that were learned and some of the principles that we’re using apply in any situation.” Sheta says, “Zimbabweans overall have gone through a school, a very informal school that was first upon us, in some ways in a positive way for us, to actually think and work for ourselves, work with our hands and see where we can see opportunity.”

Risk is a constant feature of enterprise, and Sheta testifies to the survival of the human spirit of innovation: “What I’ve learned is, even as I think of Haiti right now, as long as you’re human, and you’ve got your two feet, your two hands and your brain is still functioning, you’ll survive.”

“As you go into the problems you also go in terms of our creativity and learn how to survive,” he says.

As put by dairy farmer Brad Morgan, featured in Acton’s The Call of the Entrepreneur, “You put your butt in the corner, you’d be surprised what you can achieve.”

In terms of Zimbabwe’s future, Sheta points to stabilization in 2010 and beyond, in part because of the dollarization of the economy, and he concludes that Zimbabweans have “graduated to another level” from the emergency school of economics under Mugabe, looking forward to “see opportunities where in the past we wouldn’t have seen those opportunities.”

An interesting article in the Los Angeles Times detailing how badly wrong Robert Mugabe’s supporters in the West have been from the very beginning (requires “free” registration; may I suggest BugMeNot?):

From the beginning of his political career, Mugabe was not just a Marxist but one who repeatedly made clear his intention to run Zimbabwe as an authoritarian, one-party state. Characteristic of this historical revisionism is former Newsweek southern Africa correspondent Joshua Hammer, writing recently in the liberal Washington Monthly that “more than a quarter-century after leading his guerrilla army to victory over the racist regime of Ian Smith in white-minority-ruled Rhodesia, President Robert Mugabe has morphed into a caricature of the African Big Man.”

But Mugabe did not “morph” into “a caricature of the African Big Man.” He has been one since he took power in 1980 — and he displayed unmistakable authoritarian traits well before that. Those who were watching at the time should have known what kind of man Mugabe was, and the fact that so many today persist in the contention that Mugabe was a once-benign ruler speaks much about liberal illusions of African nationalism.

It turns out that useful idiots still exist, and sadly, probably always will.

Every single day courageous and faithful Christians in Zimbabwe are suffering and dying through their resistance of the brutal reign of president Robert Mugabe. You would never know this is true from the lack of interest or response of conservative Christians in America. Of all the causes that are taken up by the Christian Right I have not heard a single voice lifted on behalf of the church in Zimbabwe and their struggle to resist the reign of terror led by President Mugabe.

In January, eight high-profile Christian leaders were arrested by security forces as they, and hundreds of supporters, opened a new office of the Zimbabwe Christian Alliance, an international agency that promotes non-violent resistance to Mugabe’s rule. But Mugabe’s government continues to crack down on this resistance as the nation faces total economic and social collapse. Zimbabweans struggle to survive with an inflationary rate of 1,700% as well as widespread unemployment and profound poverty. More than 3/4ths of the people live in poverty, unemployment is at 80%, and hordes of people are escaping to South Africa as refugees. Mugabe has led the nation since 1980 and every call for political and social reform has been met with more force and resistance. Other African leaders are complicit in allowing this to happen, including the president of neighboring South Africa.

Thankfully, the Lutheran World Federation has called on the international community to respond. And the World Alliance of Reformed Churches, with 75 million members in 216 countries, has also urged action by a pan-African Union to act to end this oppression. I support the actions of the World Alliance of Reformed Churches as a Reformed Christian.

While the Christian Right struggles to "rescue" America it almost universally ignores the plight of the poor and oppressed around the world, as well as in our own country. Evangelicals are rarely heard from when issues like Mugabe and Zimbabwe rise to international attention. Why? Could it be that what I have called our "America-centric" mindset is in fact a form of worldliness? Could it be that we simply don’t care about profoundly Christian concerns beyond our own land unless they represent efforts to win individual souls to Christ through our flawed approaches to mission?

Look, I believe the free-market is needed to help Africa lift itself up economically and to experience and practice real freedom. But the free-market will not work when the leadership is corrupt and the economy is a disaster because of oppressive governments. The problem is simple–most of the world doesn’t care enough to do anything about Zimbabwe. While we fight a war in Iraq, ostensibly to build freedom and to protect our own national interests and what we believe to be peace in the Middle East, we treat places like Zimbabwe as unimportant at the very best. To my mind, something is very wrong with this picture. Evangelicals need to join their Catholic and mainline Lutheran and Reformed brothers and sisters in resisting Mugabe and fighting for true reform in Zimbabwe. If we will not defend the helpless and the weakest then our witness will be blunted and our prophetic edge, if we still have one left, will be lost entirely.

Pray for Zimbabwean Christians. Better yet, do something about Zimbabwe if you have an opportunity. Your brothers and sisters need you to truly love them. Talking about politics is easy, doing something that saves lives and cultures is what really matters. Consider James 2:12-26. I don’t hear much serious preaching on James in our conservative churches. I fear that I know why. We are American Christians first, and kingdom Christians second, if at all. We love the message of faith, but we shun works of mercy and compassion when it costs us something. Something is very wrong with this picture.

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening."

This made me think of this.

From the NYTimes: “Zimbabwe’s economy is so dire that bread vanished from store shelves across the country on Wednesday after bakeries shut down, saying government price controls were requiring them to sell loaves at a loss. The price controls are supposed to shield consumers from the nation’s rampant inflation, which now averages nearly 1,600 percent annually.”

From the poem, “The Incredible Bread Machine”:

Now bread is baked by government.
And as might be expected,
Everything is well controlled.
The Public well protected.

True, loaves cost a dollar each,
But our leaders do their best!
The selling price is half a cent.
Taxes pay the rest.

Where in the world would you pay $145,750 for a roll of toilet paper? According to an article in the New York Times, inflation in Zimbabwe is soaring higher than ever — about 900 percent since President Mugabe began seizing land from wealthy landowners in 2000. And inflation is climbing at unparalleled rates.

What problems result from such rampant inflation? If inflation is climbing daily and you have $100 one day, it might be worth only $90 the next. People are spending any money that they have because whatever they buy will hold value better than cash. No money is being saved because the annual interest rates are between 4-10 percent; much less than the rates of inflation. And the government seems to think that printing more money will solve these problems.

These problems “began” when Mugabe started seizing land from wealthy white farmers in an attempt to redistribute the wealth among the native Zimbabwean population. The result, intentional or not, was that foreign investment was scared off for good. Zimbabwe’s now “solo” economy began to flounder with a lack of goods entering the market.

Let’s recap. Zimbabwe faces economic crisis (rated as a repressed economy by the Heritage Foundation, just above Burma, Iran, and North Korea) due to massive seizing of wealth and attempts at redistribution, restriction of free international trade, lack of foreign investment, and over-printing of new monies. What do you think would solve most of Zimbabwe’s economic problems? Perhaps some human dignity, some free trade, and a little less government involvement!