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Price Control Chaos

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Tags The Police StateCapital and Interest TheoryInterventionism

From the Times:

Price inspectors and police, sometimes armed, descended on supermarkets in the Zimbabwean capital to enforce price controls. Their intervention followed the order issued by Mr Mugabe last week in an attempt to get to grips with rampant inflation.
The result was chaos. Bags of sugar burst open in struggles between shoppers who had streamed into supermarkets. Computerised checkouts jammed, unable to cope with the rapid price changes. There was further confusion when officials forced their way into storerooms and declared stock items to be "illegal hoarding," and ordered all goods to be moved on to supermarket floors.
At one store where the manager tried to restrict sales to two of each item, one worker was seriously injured in the mayhem. Annual inflation reached 4,500 per cent in May, the result of nearly three decades of economic policies devoid of prudence or forethought.
Economists estimate that the real figure is closer to 10,000 per cent. Prices are more than doubling every month as suppliers and retailers struggle to keep up with the decline of the currency, which at lunchtime yesterday traded at Z$260,000 to £1.
With hard currency earnings now almost negligible, the central bank buys foreign currency at black market prices from finance houses and prints mountains of increasingly worthless currency to pay them.
Mr Mugabe, however, asserts that inflation is the fault of "profiteering" by retailers in league with the British Government to oust him.
Last Tuesday the Government published an edict cutting the price of 26 essential items by up to 70 per cent. Two days later another edict imposed price controls on a much wider range of goods. "Reports are that some businesses are resisting this order," said Obert Mpofu, the Industry Minister. "We will arrest them."
Mr Mugabe's attempt to crush inflation reflects a growing sense that economic collapse will bring about the end of his 27-year rule.
The Government has been enraged by remarks by Chris Dell, the outgoing American Ambassador, who predicted that Mr Mugabe would be out of office within six months. No regime "has survived five-digit inflation", said Mr Dell. The Government was "affecting regime change on itself," he added.
Mr Mugabe issued a warning that violation of price controls would be dealt with forcefully. "This nonsense of price escalation must come to an end," he said. "We will never admit to defeat by British tactics."

Jeffrey Tucker is Editorial Director of the American Institute for Economic Research. He is author of It's a Jetsons World: Private Miracles and Public Crimes and Bourbon for Breakfast: Living Outside the Statist Quo. Send him mail.

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