Wednesday, January 30, 2013

Failed States (or, I, for One, Welcome Our New Chinese Overlords)

When American states fail, people move out. But when nation-states fail, people are trapped.

Zimbabwe is down to $217. I think we have more than $217 as cash on hand in the house right now. (Maybe not; Articulate Joe blew a bunch of money on Legos last week.)

What is the source of Zimbabwe's problems? Policies based on aspirations rather than facts. It was hoped that land redistribution would be nice, and productivity dropped. Without productivity, there's no income, and with no income, there's nothing to tax, so the government had to meet its bills with ever-increasing inflation, expropriating the wealth of the people instead of reducing its expenditures. It all started when "hope" beat "reality."

Oh crap.

NB: In the extreme, government insolvency leads to government insovereignty, so to speak.

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