The title is a sentence from one of the emails from Zimbabwe that the Beeb is running. These notes give a view into the growing disaster of Zimbabwe’s economy.

For another view, Sokwanele has been tracking changes in business for some time now.

Factories continue to shut down and warehouses are being depleted and the last stocks of manufactured goods have all but disappeared from the shelves.

Of course, the country’s own propagandists (and for those of you who think that American media are lapdogs of the administration, I submit that you don’t have the proper respect for our free press), see the situation differently. The support for Mugabe is unwavering, as is the call for price controls.

President Mugabe, in his stewardship role of the nation, has never failed Zimbabweans in their hour of need. We now have our land through his principled leadership.

The Indiginisation Act beckons for the majority to destroy the remaining vestiges of economic deprivation.

But the enemy is on the prowl, seeking to devour us, aided by the weak and corrupt amongst us. This explains why provisions of the Control of Goods Act are being invoked with full vigour to protect consumers harassed, nay haunted by a profiteering business community and marauding illegal regime change activists masquerading as business persons.

Which, while it’s awfully nice that the noble Mugabe is protecting Zimbabweans from the prowling enemy that is harassing, nay, haunting them, the idea that price controls will somehow stop hyperinflation is idiotic. Moneyweb has a clear view:

Mugabe’s government has reacted to the sapping effects of hyperinflation in the same way that many others have reacted: it has sought to implement price controls, fixing the prices of goods at so-called reasonable levels. This seems to make sense. Prices are rising very fast, so decreeing that they stop should solve the problem. Unfortunately, it doesn’t work this way.

Prices, in a market economy, reflect the value that people assign to a good. Consider the oil market. When demand for a limited supply of oil rises, the price rises. This encourages oil companies to invest more to produce more oil. It enables more expensive oil resources, like Canada’s tar sands, to be exploited.

By fixing the price of goods, the Mugabe’s government will effectively short out this relationship between supply and demand. The effects of this are depressingly familiar. Shops rapidly sell out of goods, and have no incentive to restock. People who produce goods no longer have any incentive to continue producing. Massive shortages result. This has happened again and again. In Zimbabwe, shops are emptying rapidly, and will not be easily restocked as long as price controls remain in place.

Price controls have been tried many times, and have always failed. Consider the Roman emperor Diocletian. When he ascended to the throne in around 200 BCE, the empire was a mess. Civil war, politically motivated land confiscation and looting had sapped the economy. Inflation was rampant. Virtually all the tax money collected went straight to the army, leaving nothing for government to spend on other projects. The government reacted by “printing money”, which pushed inflation ever higher. Diocletian tried to solve the problems by fixing prices, issuing the “Maximum Price Edict” which was supposed to end inflation. Instead, goods were driven to the black market, and large parts of the Roman empire reverted to a barter economy.

No period of hyperinflation has ever been ended by price controls.

All that Mugabe will do, with his strict price controls, is make the underground economy more important and, in my view, raise the likelihood of violence in Zimbabwe. When the official economy is so broken that it doesn’t match the realities of the citizens, then one of the threads that binds a government and the governed is severed. When faith that the government represents the people reasonably and fairly fails, then another of those threads is gone. When people stop believing that peaceful methods--voting, non-violent protest, open and frank discussion of grievances--can cause change, they will ultimately turn to violence.

In Zimbabwe, faith in government is mostly gone and the official economy is near irrelevance. The stories of violence, protest, repression, and corruption are growing; Zimbabwe is near collapse.  The only questions remaining in my mind are just how bad that collapse will be, how much bled will end up shed, and what will replace the government when it finally fails?