When does a press pass cost $27 billion?
When you’re a local reporter in Zimbabwe working for a foreign news outlet. Foreign Policy‘s Passport Blog reports that the government in Zimbabwe will begin assessing local journalists a fee of between $1,000 and $3,000 U.S. for the right to send news out of the country.
Considering the country’s 231 million percent inflation rate, $3,000 U.S. amounts to billions of Zimbabwe dollars.
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The Zimbabwean government blames all the economy’s problems on western imperial powers, yet its mismanagement is the only reason for the downward spiral. What hope is there of these politicians being prosecuted for, I suppose, gross negligence and corruption? Unfortunately, very little. They continue to consolidate their wealth as the country’s ordinary citizens continue to suffer, and it seems that there’s not much anybody can do about it.
$3,000 US is $27.3 billion Zimbabwe dollars.
oops…$28.6 billion
opps…$29.3 billion
oops…$29.8 billion
oops…$30.5 billion
Sorry got to go….
Not to be a doom and bloom type of fellow, but why can’t we take a hint when it comes to the dangers of inflation? We are well on our way to the same outcome due to our reckless monetary policy.
You know, I always hear these ludicrous inflation rates trotted out, and wonder if they even hold any meaning. Even if you take a more sensible number, say 10,000%, isn’t that still the same thing as calling a currency worthless?
There has to be some logical threshold where a currency becomes utterly worthless.
In the WSJ yesterday, there was a picture of a new $50bn note from the Zimbabwe Central Bank, which the accompanying article claimed was worth about one USD. Hence, a $3,000 USD fee would have been worth 150 trillion Zimbabwe dollars yesterday.
Now, add a day’s worth of inflation at 231 million percent, and you get the answer for today. It’s a high one.
Gross negligence and corruption aren’t the only things for which the Zimbabwean government could be prosecuted. Mugabe is accused of a small scale genocide that supposedly happened in southern Zimbabwe in 1983, involving the murder of hundreds of Ndebele people.
On more concrete facts, ZANU-PF has routinely beaten and killed members of the opposition party and a few years ago they enacted Operation Murambatsvina which was a veiled way of punishing hundreds of Harare residents who voted for MDC.
There’s not much people can do but I wish that Zimbabwe’s neighboring countries put more pressure on the government to cause some change. South Africa, especially could do a lot of damage should they stop supporting Zimbabwe. Much of Zimbabwe’s electricity comes from South Africa right now as do many imports. Their inaction is very confusing since due to the Zimbabwe crisis they have thousands of refugees in their cities (resulting in xenophobic violence mid last year) and now their are increasing cases of cholera which is also be spreading from Zimbabwe.
On Geoff’s comment, you’re right that the currency is essentially worthless now. Now everyone has switched over to using other countries’ currencies (USD, ZAR etc.) although I’m not sure how this long this can work. A few months ago though, as high as inflation was, it dictated when you changed prices. The difference between 10,000% and 10 million is the difference between changing your prices today or 5 days from now.
It’s easy to vilify Mugabe and ZANU-PF for what they’ve done since independence, but it’s also important to realize that serious land reform/redistribution was necessary. White-owned large scale commmercial farms dominated the best agricultural land in Zimbabwe after independence while the vast majority of African Zimbabweans were farming on tiny plots of marginal land. The Lancaster House Agreements largely tied Mugabe’s hands (though it’s worth noting that he did sign those agreements, so he was complicit in that) until 1990. Mugabe only really acted on land reform in the 2000′s as he shifted towards a radical populism in an effort to maintain control. Radical land redistribution was clearly a mistake — and a politically motivated mistake by Mugabe — but we have to realize that the roots of this current crisis in Zimbabwe lie in the failure of land reform and the blame for that cannot be fully placed on Mugabe.
Life under hyperinflation isn’t quite the way it’s portrayed by headline inflation numbers and tales of workers in the Wiemar era carrying their wages in a wheelbarrow.
The population falls into three distinct fractions: the economic elite, who have access to dollars; a mercantile class, who do deals with whatever currency is available – including barter – and who disdain the ‘official’ scrip but will use it under duress; and an underclass of civil servants who are paid in worthless scrip and rely on the informal economy for all their needs.
The latter class gradually abandon their official duties in favour of any activity that obtains the necessities of life and access to real money; in the case of essential workers like the police, this presents a real danger to the functioning of the state.
Russia presents interesting examples of workers – teachers being a prime example – who continue attending their formal place of work in towns where no wages are being paid, because the workplace offers a networking hub in the barter economy.
The question for an economist is this: what is money? Stating that a scrip which no-one uses has inflated by some factor of a million is nonsense: the medium of exchange is something else. It may be that the population are reliant on the happy accidents of barter; it is often the case that this, or some other credit-note system, are denominated at some level in dollars, filtering down the undocumented economy.