Monday, July 16, 2007

Greed delivers command economy

The Flip Side with Kuthula Matshazi

The greed and unscrupulous behaviour by some of our businesspeople has unfortunately brought self inflicted misery unto themsleves and the re-establishment of a command economy.
According to Andy Hodges, the Head of Treasury for the Zimbabwe Allied Banking Group, most businesses have been setting their prices for the goods in the last two months based on "future inflation forecasts". This principle is not new but well recognised in economics. When people perceive that inflation will go up, they will generally tend to behave in a manner that actually pushes the inflation up. They will ask for raises in wages, in prices, etc. Inversely, if they perceive that it will remain low they will likewise engage in behaviour that will keep the inflation low. This principle tends to be a self fulfilling prophecy. No government or policymaker should ignore such a principle in a market economy because by the very nature of the market economy it is intrinsic. The market economy is directed and responds to market forces. More...

36 comments:

Anonymous said...

What do you mean hold us for ransom, you are in Canada, you left this rubbish for a better life. I bet you said you are a refugee when you arrived in Canada, I bet you said you are a refugee from Mugabe. They are not holding you to ransom, you are free from the mess in Canada.

Thulani

Anonymous said...

YOU have the blood of 3 innocent people on YOUR hands, Kuthula Matshazi! Yes, YOU! Shame on YOU!

MASVINGO - Three people died this week in Zimbabwe's southern Masvingo
province after eating poisonous roots, in a vivid illustration of extreme
desperation as the southern African country grapples with worsening hunger
and an acute economic crisis.

A food crisis that United Nations relief agencies earlier this year blamed
on crop failure and fast deteriorating economic conditions in the country
has forced several villagers in parts of arid southern Zimbabwe to resort to
edible wild roots and leaves for survival - sometimes with fatal
consequences.

According to the police in Masvingo, the three villagers died after eating
poisonous wild roots in a bid to beat off hunger. They had mistaken the
roots for cassava, which is edible.

The police said Ronald and Rutendo Gumbo of Runyanga village, in Gutu
district and whose ages were not given, died earlier this week after eating
the poisonous roots.

Seven-year old Chiedza Pedzisayi of Munangate village under Chief Gororo in
Chivi also died this week after eating poisonous roots. Her sister is still
battling for her life in hospital after eating the same "meal".

Kuthula said...

Thanks for your contributions but unfortunately no one engaged my points of debate so I cannot engage your insults.

Anonymous said...

To address so of your so called points would be a total exercise in futility. How do you reason with someone who shows very little understanding of economics?

It is government that caused this problem in the first place. By running up the price of forex in the parrallel market while at the same time denying businesses access to forex at a favorable rate has caused all of these problems. Businesses were forced to use the black market for the forex used to make their products, this forced them to compete with the government who was printing money left and right using worthless currency to purchase hard currency. This is why it really didn't matter how low the zimbabwe dollar fell.

You are wrong in the united states there is no national duty, this is why we have consumer protection groups, we have laws forbidding trade with certain nations with regards to sensitive materials etc etc. This is because we all know that for enough money any American firm would sell their grandmother to an Iraqi warlord if it meant cash money and access to unlimited amounts of oil.

This was a particularly bad post, I mean there is so little of substance to address, even the above material is quite boring. I've even lost interest in this response.

Kuthula said...

Good to hear from you after a while. The presence of US consumer protection groups actually signifies the roles business is supposed to play. For creating their own and the nation's wealth through revenues, manpower development, etc, and serving the people with goods and servies and also providing sources of livelihoods in the form of employment. The strength of the consumer protection groups is based on the duty business has to the people. That's why people like Lou Dobbs (CNN - Lou Dobbs Tonight) have been able to sustain a daily one hour TV programme only based on War Against Middle Class theme (well including export of US jobs to so-called low cost countries and boarder issues).
Businesses have a national dury to generate wealth that will create revenues for government and also create jobs for the Americans. That is a national duty of US businesses and if you deny that then I have no defence at all Dave. You would have won this contest fair and square.

Anonymous said...

I'm sorry but companies here do not have a national duty at all. This is the very reason Americans are up in arms about all of the jobs being exported to lower cost nations. Michael Moore did a documentary entitled "Roger and Me" which showed the devastation caused to his hometown of Flint Michigan because General Motors closed plants and sent the jobs to Mexico.

If you are suggesting that it would be nice if companies felt a national duty then I would totally agree with you it would be very nice indeed. But it seems to me you are sugesting that American firms are abiding by some sense of national duty, this is hogwash. For example, Halliburton, the oil services company formerly headed by U.S. Vice President Dick Cheney, is moving its headquarters from Texas to Dubai. Is that what you call a national duty? Walmart one of Americas most widely known compaines sources most of its materials from China, depriving most Americans of a chance to sell goods in its stores. At the same time Walmart sells these cheap Chines goods putting small America mom and pop stores out of business. I could go on and on but I think you get the point.

And if you think comapanies enjoy paying the American goverment money you'd better think again, large corporations have armies of accountants who are paid simply to find creative ways to avoid as much tax paying as possible.

To conclude, yes it would be nice if Zimbabwean companies realized that a stronger Zimbabwe would mean better business for everyone but at the same time I understand that in this prohibitive atmosphere that Zimbabwe is operating under due to the mismanagement of the economy by Zanu PF that the individuals behind these corporations are doing what they need to do to keep their businesses secure. You cannot blame them for charging high prices when in this atmosphere raw material prices are increasing daily. It's a viscious circle.

Truth be told I think your argument is simplistic and seeks to paint BUSINESS as some sort of evil entity that is out to destroy Zimbabwe, this is not the case and I think you know that.

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