Well, I have a dispute with my teacher about Zimbabwe. Most of us know that Robert Mugabe tried to remove the white ownership of farms with quite a lot of negative consequences. I'm looking for possible reasons for why he choose to do that. We both agree that one of the reasons is that he want to distrubute the income.
I say that another reason is becasue he felt that the white people who owned most of the coporations took too much profit. I said that it's not perfect competition since there are entry barriers, and I don't think there was a lot of competing coporations. Another thing that supports this idea is that you can't get supernormal profit in perfect competition. However, they were certinally able to do that when white people controlled the firms. Therefore, I said that most firms was Oligopoly, and used the same diagram as in monoplostic competition, which didn't completly profitmaximize.
However, he disagrees and think I should draw a diagram similar to perfect competition. Who do you think is correct?
Camlon:I say that another reason is becasue he felt that the white people who owned most of the coporations took too much profit.
Correction: he felt that he and his political constituency weren't getting too much profit. That is the sole reason he took over the farms. Of course, they're still unhappy because it turns out they don't know how to run farms.
I think using economic models that have no connection to reality (i.e. perfect competition) is moronic, and that he should educate himself as to what profit is. As a hint, it isn't interest returns on capital.
-Jon
To darkness I condemn you...
Well, we know that is probably the main reason. However, I have to look at the economic arguments for doing it.
Jon Irenicus: [or someone else] Can you elaborate a bit about that, since one of the main reasons I wrote this is to show him that he's wrong. I'm planning to show him this discussion. I need to do that or else my argument falls down and a lot of my essay is wasted. He won't believe me because I'm a student and have nothing to say, but he has to listen to people at his level or higher. I didn't really get your hint though
Perfect competition cannot exist in reality. It is an analytic tool that applies to a stationary equilibrium. The conditions it assumes: perfect information, no effect on prices by firms (i.e. firms being price-takers), homogeneous products, no barriers to entry &c. are all fictional. Very few of them exist in reality. There is, moreover, no reason why one should think they'd even be desirable. What mainstream economists do is they engage in conceptual realism, treating perfect competition as an actual goal as opposed to a conceptual tool. Austrians reject it as a desciption of how the economy ought to function, as it neglects the factors of uncertainty and time in action. The hint pertains to the fact that profits are an entrepreneur's reward for adjusting to conditions in the market (the opposite applies in the case of losses.) They're not, as is commonly thought, returns on capital.
The claimed reason behind that move was to provide poverty-stricken war-veterans with land to farm. If there was to be any income distribution, it was to be only among former guerrillas and soldiers. And he pretty much stuck to that claim: confiscated properties were handed out to present and former members of the military. Too bad they were not mutilated war-heroes but "generals" (and their wives... and sons... and daughters) with titles and decorations as ridicolous as Bokassa's. But that's another story.
About the competition bit. The old "too much profit" part has been widely discussed in a myriad of posts before and a quick search will help you out more than anything I can say. Also I would be careful about competition: if I remember correctly, again, Zimbabwe had very high tariffs on agricultural imports but tended to favor exports in many ways. So that would only leave internal competition. And here consider this: subsistence farming with Stone-Age technology (except the occasional iron implement) and no capitals versus commercial, scientific farming with advanced technology and capitals. Finally consider that most of the products grown on white-owned farms were usually cash-crops intended for exports, while subsistence farmers tended to concentrate on growing foodstuff to be sold on the local market.
Yes, it's time for the Dr Goebbels show!
Camlon: Well, we know that is probably the main reason. However, I have to look at the economic arguments for doing it.
Holy crap. Thank God I'm not in college.
Thanks for all the help guys. I'll report back on friday after his lesson.
Byzantine: Camlon: Well, we know that is probably the main reason. However, I have to look at the economic arguments for doing it.Holy crap. Thank God I'm not in college.
Hehe, what do you mean?
College seems unbearably Marxist these days. It was already bloody awful when I was there in the late 80's. I imagine your assignment next year will be to analyze why Stalin needed to execute peasant farmers who withheld crops from the farming combine. Now, sure I can come up with a coherent-sounding justification for mass murder and theft, but in the meantime my brain is screaming, why isn't this assignment about the best way to put a bullet in a murderous tyrant's head?
Anyway, I talked to him and he seemed to accept it. I thought he was going to get mad, but he didn't and that was good. I also think that "too much profit" can be used in this case and yes, I took a look at the other threads. That's because this profit often went abroad to buy goods they couldn't get in their country, instead of going back into the country. This will cause GDP to further decrease and as unemplyment was allready large, then that's negative.
Camlon: I also think that "too much profit" can be used in this case and yes, I took a look at the other threads. That's because this profit often went abroad to buy goods they couldn't get in their country, instead of going back into the country. This will cause GDP to further decrease and as unemplyment was allready large, then that's negative.
And you were doing so well ...
How familiar are you exactly with Austrian economics?
Byzantine:Now, sure I can come up with a coherent-sounding justification for mass murder and theft, but in the meantime my brain is screaming, why isn't this assignment about the best way to put a bullet in a murderous tyrant's head?
Because then people might think such treatment applies to the tyrants they live under, not just those of people in far away lands.
If you find something evil that wobbles, push it. - Gary North
Byzantine: College seems unbearably Marxist these days. It was already bloody awful when I was there in the late 80's. I imagine your assignment next year will be to analyze why Stalin needed to execute peasant farmers who withheld crops from the farming combine. Now, sure I can come up with a coherent-sounding justification for mass murder and theft, but in the meantime my brain is screaming, why isn't this assignment about the best way to put a bullet in a murderous tyrant's head?
That's another assignment where you have to mathematically determine the utility brought from assassinating Stalin, the marginal cost of the bullet, etc.
Mises Community Natural Rights Discussion Group
Camlon: I'm looking for possible reasons for why he choose to do that.
Did the thought, "Mugabe correctly decided he could get away with it?" ever come up? This has nothing to do with the economics of anything. It is about naked power. Rothbard's dictum is once again proved: the State is no different than a criminal gang writ large. Any justification or discussion has to take this into account.
Byzantine:And you were doing so well ...
lol. That was my EXACT thought!
"The best way to bail out the economy is with liberty, not with federal reserve notes." - pairunoyd
"The vision of the Austrian must be greater than the blindness of the sheeple." - pairunoyd
Well, the only thing I know about Austrian Economics is that it's conservative. I didn't come here because you are doing Austrian economics, but because you talk economics and will not answer my question with arguments not based on economics. To say it another way. This is the only economic forum I have seen on the web.
I am looking at the economic arguments for doing it. Whatever, Mugabe had as intention isn't interesting, but you made me realize I should change my heading a bit. And I don't see why you suddenly think i'm stupid now.
Camlon:Well, the only thing I know about Austrian Economics is that it's conservative.
Camlon:I didn't come here because you are doing Austrian economics, but because you talk economics and will not answer my question with arguments not based on economics. To say it another way. This is the only economic forum I have seen on the web.
Camlon:And I don't see why you suddenly think i'm stupid now.
Well, the only thing I know about Austrian Economics is that it's conservative.
No, it isn't. The founding fathers of both Austrianism and neo-Austrianism were classical liberals, and repudiated conservatism.
I didn't come here because you are doing Austrian economics, but because you talk economics and will not answer my question with arguments not based on economics. To say it another way. This is the only economic forum I have seen on the web.
We consider theories of imperfect competition to be largely nonsense, even in the abstract. So no one here will argue based on such constructs. I'm not even sure you're correct within the confines of neoclassical theory itself.
We do?
You're correct, Camlon. The monopolistic competition model is more appropriate in this case than is the perfect competition one, exactly for the reasons you laid out. Has your teacher told you why he disagrees with you on this issue?
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