Zimbabwe economics 101

We are the local government-pay up!

Economics studies the allocation of 'scarce resources'. Modern economics, unlike classical economics, totally ignores the causes of scarcity. In modern economics, resources are allocated by the forces of supply and demand.

Zimbabwe has an economic crisis. In economics, and Zimbabwe, the central economic problem is  resource scarcity. Resource scarcity in Zimbabwe is worsened by corruption.Corruption has become the sole  resource allocation mechanism.

Zimbabwe has the worst wage system in the world. Employees go months on end without pay, whilst executives and directors reportedly live on millionaire salaries and benefits. Employees live in absolute poverty, working without pay, when they are paid they pay contributions to state organisations that fail to fulfill their obligations. These same state organisations pay large amounts to executives who are non-performing.

Sanctions are being blamed for Zimbabwe's economic problems. With the plundering of national resources, it is becoming clear the real problem is local in nature. Zimbabwe will remain in absolute poverty as long as individuals keep stealing wealth, through non-performing state organisations. Given the poor performance of parastatals and exorbitant payments to some individuals, it seems the sole purpose of these parastatals is to take from hard working underpaid Zimbabweans.

Currently, over 80 quasi-government state sponsored organisations exist with layers upon layer of bureaucracy. The majority of these institutions do not deliver services at all. Nearly all, 80 plus, parastatals are loss making. These institutions are extractive and have been since their initial inception in the 1980s. The whole thing looks like a mafia conspiracy set up to bleed Zimbabweans dry. Zimbabwe's political mafia puts the Sopranos and The Godfather himself to shame.

Zimbabwe has become a feudal economy. An institutionalised patronage system has been created to serve the interests of a few 'Lords'. The main cause of Zimbabwe's worsening scarcity is wealth extraction by these 'lords who run the show', totally mismanaging enterprise (supply and demand) to the point of national bankruptcy.

Any low level employee, who has served in a parastatal, will know they are powerless to deliver any credible change. Political interference and corruption have become the forces of demand and supply in Zimbabwe's economy. With no change in sight, a scarcity of cash and capital will continue to haunt Zimbabwe.