Free economies work, the others don't

February 14, 2013

What’s the end result of socialism and overreaching government? The tiny African nation of Zimbabwe recently found out.

The nation’s finance chief reported that after government workers were paid, there was $217 left in the treasury. Not $217 million, or even $217,000. We’re talking $217.

Zimbabwe used to be part of Rhodesia. It gained its dubious independence in 1980 under the lifetime rule of President Robert Mugabe, who like many African potentates believes in government — and lots of it. Mugabe seized farms from the “rich” and redistributed the land to the “poor,” who were also apparently poor at farming. Zimbabwe soon went from an exporter of grain products to an importer, and then to the verge of famine. Most of the rest of government revenues go to fund pensions and perks for Mugabe’s past and present government employees.

The country also sits atop large diamond and platinum deposits, but of course the government owns it all. As a result, production is weak and much of what gets mined is stolen by Mugabe and his henchmen. And don’t try to start a business in Zimbabwe. Oppressive regulations, and no doubt the widespread extortion and bribery so common to third world dictatorships, will siphon off all your capital — and then they’ll likely nationalize and seize anything you build anyway.

Socialist Zimbabwe has experienced unemployment rates approaching 80 percent and hyperinflation that at one point caused prices to double every other day. What a socialist paradise! Of course, now Mugabe wants more foreign aid.

Zimbabwe is a model of how not to run a country or an economy. Now its entire national treasury amounts to about as much money as some Americans spent on a Super Bowl party earlier this month. Lesson? Free economies work, the others don’t. Fortunately, it’s a lesson many policymakers in the United States — see this Wall Street Journal story featuring Kansas Gov. Sam Brownback and Oklahoma Gov. Mary Fallin — have learned.