Mugabenomics!
May 20, 2012 6:45 AM Subscribe
Jehan, part of the problem with Mugabe's policies is they discourage foreign capital. Why buy into a company when the state might sieze your investment at any moment in the name of social justice? Then again I'm not sure ZANU would see lack of foreign investment as a problem; they're position is local ownership. Which is fine, but going alone in the world economy is difficult.
The results of the seizure of farms 10 year ago in Zimbabwe was an unmitigated disaster. Part of the danger there was they were messing with the food supply. It's a little less hard to get worried about an interruption in the flow of platinum out of the country and into the world economy. But to the extent that platinum exports are significant to the Zim economy and they need foreign investment to extract it, the current policy is not going to help. I don't see a lot of world companies being excited to invest in mining infrastructure in Zimbabwe if they're forced to give 51% ownership to Mugabe's cronies.
posted by Nelson at 7:13 AM on May 20, 2012 [4 favorites]
The results of the seizure of farms 10 year ago in Zimbabwe was an unmitigated disaster. Part of the danger there was they were messing with the food supply. It's a little less hard to get worried about an interruption in the flow of platinum out of the country and into the world economy. But to the extent that platinum exports are significant to the Zim economy and they need foreign investment to extract it, the current policy is not going to help. I don't see a lot of world companies being excited to invest in mining infrastructure in Zimbabwe if they're forced to give 51% ownership to Mugabe's cronies.
posted by Nelson at 7:13 AM on May 20, 2012 [4 favorites]
“Our contribution is the platinum they are taking from our soil,”
It sounds like that should be more than enough for the people of Zimbabwe to expect plenty.
posted by Blasdelb at 7:13 AM on May 20, 2012 [1 favorite]
It sounds like that should be more than enough for the people of Zimbabwe to expect plenty.
posted by Blasdelb at 7:13 AM on May 20, 2012 [1 favorite]
Jehan, part of the problem with Mugabe's policies...
I know, I acknowledged this several times, making it explicitly clear in my comment so nobody would think that I support him. Mugabe's regime is no good, why do you feel the need to explain this to me?
My point is that we don't let Mugabe become an excuse for exploitation, and that we ask that Western companies work in partnership with the countries they invest in. Okay? Zimbabwe's policy is no good, but the sentiment of partnership is correct. Partnership not exploitation, regardless of what Mugabe does. That's the key point of my comment.
posted by Jehan at 7:19 AM on May 20, 2012
I know, I acknowledged this several times, making it explicitly clear in my comment so nobody would think that I support him. Mugabe's regime is no good, why do you feel the need to explain this to me?
My point is that we don't let Mugabe become an excuse for exploitation, and that we ask that Western companies work in partnership with the countries they invest in. Okay? Zimbabwe's policy is no good, but the sentiment of partnership is correct. Partnership not exploitation, regardless of what Mugabe does. That's the key point of my comment.
posted by Jehan at 7:19 AM on May 20, 2012
It's definitely not a black and white situation.* The corruption at many levels of Mugabe's government discredits the concept considerably, and the process by which they're going about doing this is poorly thought out. However, making a stand against the western corporations which have a well documented history of moving into an impoverished country, taking their resources and giving very little back to the locals is in some ways admirable.
The principal problem with this scheme, and many like it, is that corruption destroys any good intent that it had. The solution for the "resource curse" seen by lots of countries in similar situations almost certainly has to come from their own governments, but sadly corruption and greed seems to overshadow any solution time and time again.
*Definitely not intended.
posted by leo_r at 7:23 AM on May 20, 2012
The principal problem with this scheme, and many like it, is that corruption destroys any good intent that it had. The solution for the "resource curse" seen by lots of countries in similar situations almost certainly has to come from their own governments, but sadly corruption and greed seems to overshadow any solution time and time again.
*Definitely not intended.
posted by leo_r at 7:23 AM on May 20, 2012
Jehan, can you point to some examples where partnership has worked? A big part of Zimbabwe's problem is they don't have a functioning government that speaks for its people. The country has been independent for less than 35 years, I'm trying to think of any example where a government so young didn't devolve to corruption.
posted by Nelson at 7:26 AM on May 20, 2012 [1 favorite]
posted by Nelson at 7:26 AM on May 20, 2012 [1 favorite]
The principal problem with this scheme, and many like it, is that corruption destroys any good intent that it had.
There was never any good intent in this case. Mugabe and his ilk are among the biggest pieces of shit to draw breath in this century. Any political cover obtained by appealing to the "partnership" sentiment is just an especially appealing fringe benefit.
posted by Inspector.Gadget at 7:28 AM on May 20, 2012
There was never any good intent in this case. Mugabe and his ilk are among the biggest pieces of shit to draw breath in this century. Any political cover obtained by appealing to the "partnership" sentiment is just an especially appealing fringe benefit.
posted by Inspector.Gadget at 7:28 AM on May 20, 2012
Jehan, can you point to some examples where partnership has worked? A big part of Zimbabwe's problem is...
Why? I'm only asking that we don't harp on about how Zimbabwe is so corrupt and useless, and so laugh at the very idea of partnership because they're using the sentiment to cover their policy. Exploitation is built on the idea that There Is No Alternative in how we shape economies, and that there is no better way to develop and grow. What better way to slander an idea than to put it in the New York Times as coming from the mouth of Mugabe?
posted by Jehan at 7:44 AM on May 20, 2012 [3 favorites]
Why? I'm only asking that we don't harp on about how Zimbabwe is so corrupt and useless, and so laugh at the very idea of partnership because they're using the sentiment to cover their policy. Exploitation is built on the idea that There Is No Alternative in how we shape economies, and that there is no better way to develop and grow. What better way to slander an idea than to put it in the New York Times as coming from the mouth of Mugabe?
posted by Jehan at 7:44 AM on May 20, 2012 [3 favorites]
Jehan, can you point to some examples where partnership has worked?
Well, obviously I ain't Jehan, but just looking in Zimbabwe's neighborhood, you have Debswana, which is not only a government/private partnership, but the private partner is no less evil and exploitative entity than De Beers. I won't say they're anything close to perfect - their human records towards the Bushmen is quite poor - but they're not really corrupt, and they've done an unusually good job of distributing the income from an extractive industry to the population at large, and given Botswana some of the highest GDP growth in the world.
I would say the ownership structure of such entities is not nearly as important as the level of corruption in the host government's regulatory regime - past a certain level of corruption, all different ownership structures are doing is slightly changing the exact financial mechanics of how all the money is skimmed off.
Of course, none of that really answers the question of why Botswana is so much less corrupt than Zimbabwe, which, history not being a repeatable experiment, who knows. Maybe Sertetse Khama was just a man of better character than Mugabe. Maybe it has something to do with the differing levels of violence and consensus by which the two countries were decolonized.
posted by strangely stunted trees at 7:48 AM on May 20, 2012 [1 favorite]
Well, obviously I ain't Jehan, but just looking in Zimbabwe's neighborhood, you have Debswana, which is not only a government/private partnership, but the private partner is no less evil and exploitative entity than De Beers. I won't say they're anything close to perfect - their human records towards the Bushmen is quite poor - but they're not really corrupt, and they've done an unusually good job of distributing the income from an extractive industry to the population at large, and given Botswana some of the highest GDP growth in the world.
I would say the ownership structure of such entities is not nearly as important as the level of corruption in the host government's regulatory regime - past a certain level of corruption, all different ownership structures are doing is slightly changing the exact financial mechanics of how all the money is skimmed off.
Of course, none of that really answers the question of why Botswana is so much less corrupt than Zimbabwe, which, history not being a repeatable experiment, who knows. Maybe Sertetse Khama was just a man of better character than Mugabe. Maybe it has something to do with the differing levels of violence and consensus by which the two countries were decolonized.
posted by strangely stunted trees at 7:48 AM on May 20, 2012 [1 favorite]
But what if there really is no better way to develop an economy than tolerate some foreign exploitation? I mean that's an awful thought, but what if it's true? We can't just dismiss the example of Zimbabwe. I'm happy to discuss other places, but Zimbabwe is important. It's a big economy, and a significant country, and it had so much promise in the 80s when they first became independent. The country is wealthy with natural resources. It has some advanced infrastructure from the colonial period. If they can't figure out a path to functional independence, who can?
The alternative to outright seizure of foreign assets is some managed foreign investment, a contract made between the government of the country and outside investors. An agreement that benefits everyone. Zimbabwe says they're trying to get there but is failing miserably. Argentina and Venezuela are trying their own approach and it's pretty rocky, but they may be far enough long that all the nationalization of foreign-built infrastructure will work for them. Brasil is pretty well off but they've had quite a head start.
Thanks for posting about Botswana, trees, I know absolutely nothing about it but would like to learn more. Presumably Lesotho is an interesting comparison too? I'm no expert on developing nations, even less so post-colonial Africa. I'd love to read something that puts all this in context as gives us more hopeful examples than Zimbabwe.
posted by Nelson at 7:53 AM on May 20, 2012
The alternative to outright seizure of foreign assets is some managed foreign investment, a contract made between the government of the country and outside investors. An agreement that benefits everyone. Zimbabwe says they're trying to get there but is failing miserably. Argentina and Venezuela are trying their own approach and it's pretty rocky, but they may be far enough long that all the nationalization of foreign-built infrastructure will work for them. Brasil is pretty well off but they've had quite a head start.
Thanks for posting about Botswana, trees, I know absolutely nothing about it but would like to learn more. Presumably Lesotho is an interesting comparison too? I'm no expert on developing nations, even less so post-colonial Africa. I'd love to read something that puts all this in context as gives us more hopeful examples than Zimbabwe.
posted by Nelson at 7:53 AM on May 20, 2012
The country has been independent for less than 35 years, I'm trying to think of any example where a government so young didn't devolve to corruption.
Luxembourg became independent in 1890, Norway in 1905, Finland in 1917, Cyprus in 1960, Singapore in 1963, Malta in 1964, Bahamas in 1973, Namibia in 1988, the Baltic states in 1991. Have these countries been more successful than Zimbabwe?
posted by iviken at 8:02 AM on May 20, 2012 [4 favorites]
Luxembourg became independent in 1890, Norway in 1905, Finland in 1917, Cyprus in 1960, Singapore in 1963, Malta in 1964, Bahamas in 1973, Namibia in 1988, the Baltic states in 1991. Have these countries been more successful than Zimbabwe?
posted by iviken at 8:02 AM on May 20, 2012 [4 favorites]
The gold standard for partnership between the state and foreign capital when it comes to extractive industries is Norway.
Its corruption at the state that matters most. I guess the question is why Botswana was lucky and has politicians who prioritize the state over the bank accounts.
posted by JPD at 8:06 AM on May 20, 2012
Its corruption at the state that matters most. I guess the question is why Botswana was lucky and has politicians who prioritize the state over the bank accounts.
posted by JPD at 8:06 AM on May 20, 2012
Certain minds believe the reason why Botswana is so stable is that the population is more uniform culturally (79% Tswana, 21% everything else) and geographically isolated to an area the Tswana traditionally controlled. In comparison, Zimbabwe was ruled by an outside minority group, the Matabele, put in power by the S. African government until independence forced elections.
Essentially, the success of Botswana is more an example of how imperialism screwed up Sub-Saharan Africa. If random ethnic groups weren't placed in power over tribes they traditionally had no contact with, if whole populations weren't moved into unstable areas to minimize the chance of uprisings or if migrant tribes weren't separated from their traditional routes, all of Africa could have been like Botswana. Or so I like to think.
posted by fiercekitten at 8:36 AM on May 20, 2012 [1 favorite]
Essentially, the success of Botswana is more an example of how imperialism screwed up Sub-Saharan Africa. If random ethnic groups weren't placed in power over tribes they traditionally had no contact with, if whole populations weren't moved into unstable areas to minimize the chance of uprisings or if migrant tribes weren't separated from their traditional routes, all of Africa could have been like Botswana. Or so I like to think.
posted by fiercekitten at 8:36 AM on May 20, 2012 [1 favorite]
Above all, what should be kept in mind is that installing government cronies as "partners" in extractive industries is more likely than not to make them more exploitative, not less.
Firstly, because they are as many additional snouts at the trough, and, by Jove, they do usually take quite some feeding.
Secondly, because this further aligns the interests of the powers-that-be with those of the extractive industry. If the president's nephew sits at the board of mining company X, and pockets 20% of its profits, do you think that the regime is going to do much to protect neighboring villages from toxic tailings, or to ensure fair working conditions for the miners?
Just because they are Zimbabwean, or because they are black, doesn't necessarily make those cronies more likely to care for their countrymen's plight than outside professional managers. Patriotism is indeed the last refuge of the scoundrel.
When the government installs friends in corporations, it usually isn't the corporations which are co-opted, but the other way around.
posted by Skeptic at 9:06 AM on May 20, 2012 [4 favorites]
Firstly, because they are as many additional snouts at the trough, and, by Jove, they do usually take quite some feeding.
Secondly, because this further aligns the interests of the powers-that-be with those of the extractive industry. If the president's nephew sits at the board of mining company X, and pockets 20% of its profits, do you think that the regime is going to do much to protect neighboring villages from toxic tailings, or to ensure fair working conditions for the miners?
Just because they are Zimbabwean, or because they are black, doesn't necessarily make those cronies more likely to care for their countrymen's plight than outside professional managers. Patriotism is indeed the last refuge of the scoundrel.
When the government installs friends in corporations, it usually isn't the corporations which are co-opted, but the other way around.
posted by Skeptic at 9:06 AM on May 20, 2012 [4 favorites]
Right - has to be done as arms lengths transactions where the government has no interest in the returns to the holders of the private capital above the rate they need to earn to keep investing.
posted by JPD at 9:49 AM on May 20, 2012
posted by JPD at 9:49 AM on May 20, 2012
Part of the problem here is the narrowing definition of the word "exploitation". If the definition is always evil, nobody ever advances without the objections of the well intentioned. A country that has nothing to exploit also has no chance at progressing.
posted by 2N2222 at 10:24 AM on May 20, 2012 [2 favorites]
posted by 2N2222 at 10:24 AM on May 20, 2012 [2 favorites]
Part of the problem here is the narrowing definition of the word "exploitation". If the definition is always evil, nobody ever advances without the objections of the well intentioned. A country that has nothing to exploit also has no chance at progressing.Yeah, clearly a country with no natural resources will never advance very far. Just look at Japan, for example!
In reality, the opposite is true. If you have a lot of natural resources, the government and powerful can make money without the help of much of the local population. All you have to do is take it out of the ground.
On the other hand, the if a country has limited natural resources, they have to develop industry, educate their population and have them create wealth that can be taxed.
posted by delmoi at 8:23 PM on May 20, 2012
There Is No Alternative in how we shape economies
There is no alternative in Zimbabwe. What the hell are you going to propose? Economic sanctions? Something else?
Hell, they are on the US dollar there (read: they don't have their own currency, the whole damn country uses brown, ratty USD) because they've proven incompetent to even run a currency, much less an economy.
As long as Mugabe remains, there is no alternative. There is only corruption and greed and the starving of millions.
There is no hell hot enough for men like him and those complicit in what he is doing.
posted by allkindsoftime at 1:23 PM on May 21, 2012
There is no alternative in Zimbabwe. What the hell are you going to propose? Economic sanctions? Something else?
Hell, they are on the US dollar there (read: they don't have their own currency, the whole damn country uses brown, ratty USD) because they've proven incompetent to even run a currency, much less an economy.
As long as Mugabe remains, there is no alternative. There is only corruption and greed and the starving of millions.
There is no hell hot enough for men like him and those complicit in what he is doing.
posted by allkindsoftime at 1:23 PM on May 21, 2012
"Jehan, can you point to some examples where partnership has worked? A big part of Zimbabwe's problem is they don't have a functioning government that speaks for its people. The country has been independent for less than 35 years, I'm trying to think of any example where a government so young didn't devolve to corruption."
This is exactly how foreign investment works in many countries. And business is booming in Asia, and companies are still clamoring to enter their markets under very unfavorable conditions.
In fact, even in the USA we have foreign ownership restrictions for certain industries like media and telecom.
How would you feel if virtually of of America's wealth was owned my a handful of Japanese who came here 50 years ago and took over all the best land and industries with the help of a puppet government? It's hard to rectify past injustice without creating more injustice.
I've had a chance to travel all around Zimbabwe and the situation sucks. It is very hard to eliminate corruption once it takes hold. But somehow, I'm more bullish on Zimbabwe than on RSA. There is lots of entrepreneurial and hard working spirit there, in contrast to some other African countries overrun by NGOs handing out freebies that turn poor people into beggars with no motivation.
posted by Witold at 3:55 PM on May 21, 2012
This is exactly how foreign investment works in many countries. And business is booming in Asia, and companies are still clamoring to enter their markets under very unfavorable conditions.
In fact, even in the USA we have foreign ownership restrictions for certain industries like media and telecom.
How would you feel if virtually of of America's wealth was owned my a handful of Japanese who came here 50 years ago and took over all the best land and industries with the help of a puppet government? It's hard to rectify past injustice without creating more injustice.
I've had a chance to travel all around Zimbabwe and the situation sucks. It is very hard to eliminate corruption once it takes hold. But somehow, I'm more bullish on Zimbabwe than on RSA. There is lots of entrepreneurial and hard working spirit there, in contrast to some other African countries overrun by NGOs handing out freebies that turn poor people into beggars with no motivation.
posted by Witold at 3:55 PM on May 21, 2012
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"Mugabenomics" might be stupid, but it's no excuse for exploitation.
posted by Jehan at 7:01 AM on May 20, 2012 [6 favorites]