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Trivia Tidbit Of The Day: Part 330 -- The Disaster That Is Zimbabwe.

When property is outlawed, only outlaws will have property-

Take note of Zimbabwe's economic fortunes over the past quarter century:

Now, look at the Freedom House ratings of Zimbabwe over that same period (.pdf):

Coincidence?

Freedom matters. That includes economic freedom, as well as political freedom.

Indeed, Robert Mugabe's Zimbabwe, with its falling levels of freedom, is a perfect example of how not to run a country.

Consider Zimbabwe--a state which, since 2000, has been in an economic tailspin. Today, it is shrinking faster than any other country on earth that is not at war. Zimbabwe’s currency is nearly worthless from hyperinflation; its financial institutions are in disarray; its world-class farms sit idle; and its manufacturing, mining, and export sectors are declining steeply. The informal exchange rate for the Zimbabwe dollar is Z$150,000 to US$1; six years ago, it was Z$55 to US$1.

When "reducing inequality" becomes the primary goal and function of a government, economic disaster is on its way. Guaranteed.

The best, fastest way to achieve equality is to destroy wealth. Ultimately, that's all populist Marxist regimes do. Destroy wealth, as well as the fonts of wealth creation. In Zimbabwe, "land reforms" were Mugabe's way of destroying wealth:

Economic growth from 1980 to 1989 averaged a robust 5.2 percent in real terms, and while it slowed from 1990 to 1999 due to questionable macroeconomic policies, it still averaged 4.3 percent during this period. A major reason for the country’s prosperity was its sophisticated commercial farming sector. Vast tracts of large-scale farms produced thousands of acres of tobacco, cotton, and other cash crops. About 4,500 white families owned these farms. In contrast, 840,000 black farmers eked out a living on small and relatively infertile plots in the communal lands, producing maize, groundnuts, and other staples.

By the late 1990s, a broad consensus had taken shape--including the Mugabe government, the IMF, the United Nations, the British government (the original colonial power in Zimbabwe), Africa scholars, and even many of Zimbabwe’s white commercial farmers--that land reforms were needed. The purpose of these reforms would be to improve agricultural productivity and, simultaneously, increase wealth for the black majority. The sensitive issue was how to redistribute the land, since the commercial farming sector provided much of the country’s foreign exchange, created thousands of jobs, and produced the essential staple of maize.

While the IMF and the British advocated that landowners be given adequate compensation, as dictated by Zimbabwe’s own laws, the Mugabe government argued that these lands had been “stolen” from the country’s black inhabitants and thus could simply be taken back. This claim ignored the fact that more than 80 percent of white-owned commercial farms in Zimbabwe had been purchased through the commercial real estate market since Robert Mugabe came to power in 1980, and less than 5 percent of the farmers could trace their ancestry back to the original British colonialists who arrived in the 1890s.

In comes "land reform," which was really just code for the confiscation of productive property. What happened in Zimbabwe after farms were ransacked? Well, inflation shot up, foreign investment skedaddled out of the country, and wealth growth went negative. The destruction of productive private agricultural enterprise rippled into every sector of the economy:

The loss of Zimbabwe’s 4,000 farms has impacted every aspect of the country’s economy. Each of these farming companies employed 100 or more people, paid various taxes to the government, and generated incomes for others that also yielded taxes. In addition, the farms provided housing, clinics, and schools; more than a million Zimbabwean children, in fact, received an education from farm schools. Communal farmers also benefited from the farming companies, sourcing their demands for seed, fertilizer, chemicals, and expertise to them.

....

Although agriculture was only directly responsible for 18 percent of the Zimbabwean economy, 60 percent of the country’s non-farm enterprises directly or indirectly depended on commercial agriculture inputs. As a result, 700 non-farming companies had shut their doors by late 2001. In addition, the agricultural sector of the economy employed 60 percent of the entire population, which meant that millions of unemployed workers now had far less disposable income to purchase the nation’s goods and services.

Zimbabwe is a perfect example of the sort of economic and political disaster that could destroy any country that pursues populist Marxism to such an extreme.

Meanwhile, a great example of a country overcoming populist Marxism and introducing property rights with great success is Nicaragua:

And wouldn't you know, political rights and civil liberties tracked right along with economic liberties (.pdf):

Ideas matter. Policies matter. Freedom matters.

Thus, in this country, when one hears from The New York Times about how not raising taxes will "cost" Americans tens of billions of dollars, it's difficult to contain the guffaws, sighs, and chortles of irritated, depleted bemusement.

There are economic lessons from history, including contemporary history, that left-wingers-- almost unanimously-- do not seem to grasp. Or even care to attempt to grasp. Tax relief, property rights, GDP growth, and economic freedom mean nothing to these socialists, if the menace of "inequality" persists.

America is the greatest nation on the planet because we have been one of the freest countries (politically, culturally, spiritually, economically) on the planet for such a consistent and enduring time.

Previous Trivia Tidbit: Surpluses On Their Way.

Posted by Will Franklin · 11 May 2006 11:27 AM

Comments

Posted by: Justin B at May 11, 2006 12:13 PM

Posted by: Hoodlumman at May 11, 2006 12:52 PM