People mistakenly assume that Zimbabwenomics is just about Mugabe Efficiency Theory and making supply cheap enough for demand to afford it, thus creating a Mugabe Optimal state. But the field has a lot more to offer whether it be by finding ways to make everyone a millionaire or to win elections you actually lost. Now that the mantle of Zimbabwenomic leadership resides in the US, we are seeing new applications of classic theories as the recent Affaire D’AIG (NYSE: AIG) demonstrated.
When the US was busy trying to rush the passing of a $700bn “stimulus” bill along party lines while selling to the public the fact that the world would end if it wasn’t passed, many wondered how the largest piece of non-budget Government spending in history could go through in a few days with little to no scrutiny. It was unpatriotic to question it or to ask for a time-out, which is exactly what I told my wife when I left work to buy our second mega-yacht (now repossessed) a few years ago.
The solution that the US executive and legislative branches discovered was on a page straight out of Mugabe’s Zimbabwenomic Text Book — fan the flames of populist rage against a rich minority target. Even better, a rich minority target who has nothing to do with the proposed legislation and, at best, represent an infinitesimal fraction of the greater concern. Facing (erroneous) allegations that his vision for Zimbabwe wasn’t working, Mugabe adopted a program of land reform and property reform which pushed out wealthy white farmers and south Asian businessmen. Zimbabewe grew its productivity by alienating (often physically) the rich elite, while its Government continued doing what it had been doing so well, as can be seen in Exhibit A.
In the US, the Government has fanned the flames of populist rage towards $160 million given to certain AIG executives under the terms of their contracts (which we are not privy to and thus cannot ascertain the validity of). At the same time, the stimulus bill calls for the spending of $600 million every day for the next 3 years and has received much less scrutiny, despite the fact that it is historically the single most massive transfer of wealth from the future into the current. Pure genius and we only hope the result to the productivity in the US will be as great as in Zimbabwe.
Recommendation: All things in proportion.
The next target of excessive compensation focus should be congress whose members have each made millions over the last four years, while being responsible for almost taking down the whole financial system. Out of greed and a lust for power, they recklessly misregulated industries and securities of which they had no understanding; the same politicians and officials who got us into this mess continue to take down salaries and overall compensation which is greater than 99% of the country. I’d like to see their contracts, I’d like to take a look at every legal way to stop the payments that are continually made to them by taxpayers, I’d like an excise tax of 95% levied against the salaries of senators and representatives to the extent those salaries exceed the minimum wage. If they had any pride or sense of responsibility, they would refuse their compensation or give it back.Related Reseach:
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