The absurdity of these controls
By Vincent Kahiya
IN August 1971 US President Richard Nixon declared a freeze on wages and prices. Legislation authorising the freeze had sailed through congress the year
before, with little controversy.
The freeze evolved into a bureaucratic mangle of formulas about who could get paid what.
There were requirements about filing forms with the government and keeping records and posting notices, all enforced by a growing network of wage and price cops.
In effecting the measures Nixon promised: “While the wage-price freeze will be backed by government sanctions, if necessary, it will not be accompanied by the establishment of a huge price-control bureaucracy. I am relying on the voluntary cooperation of all Americans.”
Last Friday President Mugabe decreed wage freezes to add to a gamut of self-defeating policies that are designed to extend controls and, unlike in the case of Nixon, usher in a bloated state bureaucracy consisting of price cops, monitors, taskforces and commissions whose operations will see the country immobilised in a time warp.
Our rulers believe the economy will come out of its cocoon stronger. The task to hand is huge for the price cops.
They have to monitor prices of goods and commodities throughout the production chain and on shop shelves. They are being asked to set and monitor tariffs, rentals, service charges profit margins and so on.
The cops — some of whom cannot even interpret a balance sheet — have been thrown into the fray to monitor operations of large corporates.
Implementation of policy on the ground depends to a large extent on what the cops know or their level of ignorance.
At the top, where policy is made, flip-flops in the last two months are sure signs that the freeze cannot hold.
The cabinet taskforce on price monitoring, while working to ensure that the economy remains entombed in frigid policies, has also been lighting fires under the frozen mass to effect thaws that have resulted in serious price distortions.
Picture this: a single egg is selling for $30 000 while 10kg of mealie-meal is priced at $40 000.
This means that a dozen eggs now cost the same as 90 kg of maize meal — only in Zimbabwe!
The old commodity price distortions which central bank governor Gideon Gono complained bitterly about at the beginning of the year are back.
The government is importing maize at cost price from Tanzania and Malawi and selling it to millers for less that $3 million dollars a tonne.
In fact a tonne of maize costs about the same as the government approved price of a pair of Bata shoes.
There are always dangers associated with turning an already inefficient civil service into price cops.
A government which fails to carry out basic tasks like issuing birth certificates, national ID cards and passports will always be found wanting in policing the economy.
The thousands of applications for price reviews sitting at the Ministry of Industry bear testimony to the functional delinquency of our system.
Those determining prices are yet to explain to the nation how they determine which company is granted the right to raise prices or charges.
Seed houses for example have been crying out for a review to enable them to produce seed maize before the onset of the rains now less than two months away. That has not come through and the nation faces a serious shortage of seed.
Proposed tariff reviews by Zesa have generally been ignored yet the parastatal is key to industry and farming.
Low electricity tariffs are not helping anyone. Consumers are prepared to pay more for electricity than to spend a fortune every month on firewood, candles, diesel and gas.
The price cops do not appear to have the capacity to control the prices of these energy sources. This is sure evidence of bureaucratic bungling that afflicts the poor.
Back to President Nixon’s US. When the price freeze was eventually lifted, labour unions raised questions like: You mean, anyone can just charge whatever they want? They had gotten used to controls.
They believed that the right to price wasn’t as profound as the right to express one’s political opinion and yet when price controls were removed, freedom-loving Americans didn’t even miss them.