Command Economics has never worked anywhere 

Source: Command Economics has never worked anywhere – NewsDay Zimbabwe October 19, 2019

Editorial Comment

PRESIDENT Emmerson Mnangagwa’s presidency continues to deflate ordinary people’s hopes as he appears completely out of touch with what is happening on the ground as seen by the unwarranted threats he issued to business.

Zimbabwe is currently an unfavourable place to do business because of Mnangagwa’s “trial and error” economic policies that have not done anything to improve the country’s economy, which is now far worse than when he swept to power on November 27 after a military coup that ejected the late long-time ruler, the late Robert Mugabe.

Business people do not just wake up and arbitrarily increase prices, as these are determined by market fundamentals. The threat to “whip business into line” is not going to improve the economic situation in the country. It will, in fact, worsen it. The Mnangagwa administration needs to depart from its “command” approach because it will not work — just like it never worked under Mugabe, but only impoverished the population more.

Mnangagwa’s admission that he did not understand why there was continuous rise in prices, simply shows he is either lights out on economic fundamentals or his ministers are misleading him.
Prices are determined by market forces. If those selling goods have to import them and cannot access foreign currency from the banks, they will do so on the black market to keep their business afloat, and that consequently means they would factor the cost of the foreign currency in their pricing models.

Government simply needs to admit that the local currency has failed, just like they were warned when they first introduced the bond note. And as long as they do not attend to the fundamentals, threatening business will only trigger shortages of basic commodities. Business will simply close shop because they cannot be forced to sell their goods at sub-economic prices for political expediency.

Confidence plays a huge part in people making business decisions and it is without doubt that Zimbabweans from all walks of life have no confidence in the local currency or this administration’s ability to deal with the current economic crisis. All this means Zimbabweans have to pay for the risks businesses are taking to do business in this country. It means higher prices.

It is common knowledge that corruption has been a major drain on the economy, and government efforts so far to fight it have not proved genuine, especially because some of those fingered have very close ties to the President.

It is strange that Mnangagwa’s presidency is associated with threats and the striking doctors are his latest victims. It is now obvious that the government’s failure to grasp basic economics stems from Mnangagwa’s inability to understand that he doesn’t have the power of God to perfect situations by command and that he needs the finesse of a diplomat.

Every day and with each new crisis, Mnangagwa’s reformist mask slips away and the true colours come out. Doctors do not need external forces to incite them to demonstrate for what they think is right.

We do hope Mnangagwa’s forthcoming meeting with the business community will help him appreciate the challenges they are facing and that the buck stops with him.

COMMENTS

WORDPRESS: 3
  • comment-avatar
    ace mukadota 1 month ago

    Zimbabwe never takes advice from anywhere. In fact ZW is like a small child growing up – never listening to advice so in life ZW has to do everything & hopefully learn from its mistakes. So in about the year 2100 we might know that command agriculture does not work when you have only subsistence farmers as the workforce comrades

  • comment-avatar
    harper 1 month ago

    I spent much time over six years helping Russian manufacturers and those of other former Soviet Union Countries recover from the dead weight of command economics.
    China only started to boom when factory managers were given a high level of independence from tight government control.

  • comment-avatar
    Tendai 1 month ago

    There is no US$ currency available anywhere this weekend not in Harare , not in Jhb , not even ONE US$ for sale

    There is Rand available at Musina and Bulawayo and also FRANCISTOWN but the asking price is ZW$250 for R100 and the sums availed are very small with no traders offering more than a few Hundred Rand