Out of the Rabble: Ending the Global Economic Crisis by Understanding the Zimbabwean Experience

OUT OF THE

RABBLE

Ending the Global Economic Crisis by

Understanding the Zimbabwean Experience

David Chiweza

iUniverse, Inc.

Bloomington

Out of the Rabble

Ending the Global Economic Crisis by Understanding the Zimbabwean Experience

Copyright © 2013 David Chiweza

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews.

iUniverse books may be ordered through booksellers or by contacting:

iUniverse

1663 Liberty Drive

Bloomington, IN 47403

www.iuniverse.com

1-800-Authors (1-800-288-4677)

Because of the dynamic nature of the Internet, any Web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

ISBN: 978-1-4759-7385-3 (sc)

ISBN: 978-1-4759-7386-0 (hc)

ISBN: 978-1-4759-7384-6 (e)

Library of Congress Control Number: 2013902497

iUniverse rev. date: 3/19/2013

Contents

Table of Figures

Acknowledgements

Introduction

1.   Concept and Methodology

2.   Zimbabwe’s Economic Situation Today

3.   Zimbabwe’s Economic Problems and Their Connection to Regional and Global Economic Factors

4.   Globalisation and Its Impact on Zimbabwe

5.   The Bush Administration’s Strategy for World Markets

6.   China’s Emergence as a New Global Economic Power

7.   The Role of Markets in Industrial Growth

8.   The Foundations of the Chinese Economic Miracle: A Personal Experience

9.   The Zimbabwean Economic Context: A Contrast

10.   Contradictions in Zimbabwe’s Economy

11.   Markets and Prospects for an Economic Miracle in Zimbabwe

12.   Zimbabwe in Global Competition: Free Trade or Protectionism?

13.   Deploying the Factors

14.   Democracy or National Interests?

15.   The New World Economic and Social Order

16.   Conclusion

17.   The Blueprint

A Final Word

Table of Figures

Figure 1: Prediction of Global Recession

Figure 2: Zimbabwe’s Migration Pattern

Figure 3: This 1998 Article Shows We Had Taken a Dive before ESAP Overcame Us

Figure 4: China Invested All Her Export Earnings in Productive Assets

Figure 5: Zimbabwe’s Imports by Country, 2011

Figure 6: The Combination Key for a Successful Manufacturing Environment

Figure 7: Typical Positioning of People inside Factors of Production

Figure 8: Strategic Relationship between People and Their Environment

Figure 9: Typical Domestic-Based Supply System

Figure 10: Typical Domestic-Driven Economic System

Acknowledgements

I am most grateful to God the Almighty, Father of my Saviour Jesus Christ, and to God the Holy Spirit for a personal revelation of truth and for His love of all nations and all His people. Because He is the way, the truth, and the life, I have been particularly committed to the truth without favour. For the truth will set us free. How can we escape from the truth without being in bondage ourselves?

I am also grateful to the nation and people of Zimbabwe. This is the nest and beautiful garden God chose for me. It has given me all the lessons I need in life. I look back and appreciate every hardship, every circumstance, and every experience, for it has contributed to my understanding of my world and what the world could be.

There are many people I am indebted to, directly or indirectly, for their contribution, motivation, and inspiration. I am reluctant to mention each by name, merely because I do not want them to be guilty by association. Special mention though goes to my commander-in-chief and my former commanders in the armed forces, who raised me from a teenager through to my adult life. My greatest training and experiences came through the nurturing mirror of military life.

I am grateful to my pastors, present and past, for their spiritual input, counsel, prayers, teaching, and motivation. It has not been easy for me to go public and display my foolishness. Everybody has the fear of failure, but their message has been consistent: in order for humans to progress, there must be somebody prepared to make a fool of himself.

I am grateful to friends, the home group, the accountability group, and the Winning Team for their encouragement. What could I do without the warmth of their friendship, care, and support? To the founder, chairman, and members of Victory Business Fellowship, I am grateful to them for opening their platform to me. Their comments and support continued to ring in my mind, and because I wanted to do well for them, I was very motivated to finish the book.

To my family, thank you for your perseverance. This journey has been marred by strange happenings, tough economic conditions, and painful situations. It almost seemed as though I should not proceed with writing, but you carried me along. To my wife, Kumbula, and children, I say thank you.

To my editors and reviewers of my manuscript, I am grateful for all the comments and critique. Each of the reviews helped me clarify and improve on my content. They did a great job of trying to make an author out of a messenger.

Finally, I am grateful to this information age. Through it, I see that the economic struggles of people all over the world are common, and by implication, there is hope for a common solution. I dedicate this book to all seekers of truth and to all those affected by the global economic crisis. May there be revelation!

Introduction

The world economy is in a crisis. Europe is burning. People are on the streets. The powers are looking for answers. Everywhere from the United States to Europe to Africa, there is growing uncertainty over the future.

But in the middle of all this, some nations are thriving. As the world is being initiated to the reality of an economic crisis, the small African nation of Zimbabwe has lived it all in the last two decades. It is a crisis arising from the free-market tsunami that crashed into her economy. She went into a tailspin, but now that the tide is coming back on shore, understanding the Zimbabwean story provides answers to how the world can come out of its crisis.

Since 2008, the global financial crisis has spread throughout the Western world, from the United States to Europe. It has seen high levels of company closures and unemployment. Companies and individuals are in debt. Banks are sitting on poorly performing loans, and there has been a wave of housing foreclosures. A number of banks faced collapse, and governments doled out billions in bailout funds. The European Union responded with austerity measures, and they are coming down hard on a people accustomed to good living. EU’s gritty leadership seems determined to end the crisis.

But everywhere, news headlines display a common word: a deep recession, a stubborn recession, and a recession that keeps coming back.

This is a paradigm shift. The West will have to do new things to address it. In all affected nations, financial solutions were thrown at the problems, in a move that was designed to stimulate the economy. Beginning in the United States, the bailout solution model was extended to the crisis-ridden Eurozone, where nations like Portugal, Greece, Spain, and Italy face similar problems. While the stimulus packages represent some form of market creation, can the West continue to throw money at the problem by creating artificial market conditions, without creating sustainable markets for their economies to grow?

As Greece moved into another round of bailout money, it became apparent that the Eurozone’s austerity measures were not a permanent solution to the financial crisis. While the focus is on banking sector irregularities, this book draws the attention of readers to markets as the real battleground and cause of the financial crisis. It challenges the notion of a global financial crisis and claims that there is an element of dishonesty about the crisis; financial and banking executives are blamed when in fact they are also victims of a tough new paradigm. The real problem appears to be the loss of markets through the emergence of Asia as an industrial power on the world scene.

This book originated in a prediction I made on 10 April 2000.¹ In an e-mail to Bill Brown, the founder of Thinkers International, I foresaw the development of the global recession and the need for bailout packages, which has now been fulfilled. In my communication to Brown, I predicted that the next global recession would be difficult to come out of, with strong nations having to bail out weaker ones in order to encourage trade. Now that the United States and Europe are in a deep crisis, my thesis has been proved. In a world that is grappling for answers to the financial crisis, this book helps you understand the real causes of the financial crisis and presents likely scenarios for the future.

Learning how the lessons of an economic crisis in a small third-world country like Zimbabwe led to my accurate prediction of the global recession can improve your understanding of the principles and factors behind the crisis. This book is based on Zimbabwe’s experience, which can help provide solutions for the current global recession. It has wider implications for the current global economic crisis and the new economic order beyond the crisis. This book’s thesis emerges from the economic experiences of Zimbabwe over the past forty-five years in relation to global environmental forces. It is the synthesis of historical and current experiences under global market forces and applies lessons from these microcosmic events to explain the global economic crisis. As the saying goes, what is good for the goose is good for the gander. Zimbabwe’s circumstances are akin to clinical trials on an experimental mouse whose lessons can now be applied globally.

The crisis of markets begins with the understanding that companies thrive only when their goods and services find a market. While this looks like common sense, few have seriously weighed the reasons why the United States deploys the full might of her defence and foreign policy to guard free-market policies. Markets are the foundational basis for production, and when production occurs where there is no return, entrepreneurs lose their investment. It is precisely for this reason that lenders in the financial sector find themselves sitting on non-performing loans. While the financial sector is part of a nation’s investment value chain, its fortunes are tied to the success of those institutions, companies, and individuals it lends money to. It follows that a financial crisis has its origins in investment and return theory. On the basis of this understanding, the author has been able to accurately forecast the deep recession and provide fresh insight to the future direction of and solutions to the global crisis.

This book begins with an analysis of the Zimbabwean economic situation today. Zimbabwe, once referred to as Africa’s jewel, has, for thirty-two years since independence in 1980, orbited in economic mediocrity, having repeatedly failed to grow her economy. To some extent the situation can be likened to the current global situation of a recession that has been variously described as deep and recurrent. Zimbabwe failed to break out into an economic growth trajectory, falling behind Singapore, Malaysia, and Kenya, countries that used to be in the same development league.

At the top of its economic problems was a declining manufacturing industry, leading to unemployment, budget deficits, and a financial and banking crisis. The consequent social problems led to the infamous land redistribution programme, leading to a political crisis and international disputes that have lasted more than a decade. The world-famous land crisis featured a black majority population, led by President Robert Mugabe, allegedly seizing land from a small white farmer population of about four thousand. While this was seen as lawlessness, it can be likened to the aspirations of the 99 per cent movement that, as a consequence of the crisis, sees the rich 1 per cent as a target of dispossession. Once again, this brings to the fore the social implications of having a few thrive while the majority suffer.

While Zimbabwe’s social and political upheavals never registered as anything more than tyranny, the world can be better enlightened to close ranks to deal with a global governance problem that can no longer be addressed in isolation. It has become clear that Zimbabwe’s political crisis would not have occurred had economic conditions remained stable. Similarly, as anger rises over austerity measures in the West, Zimbabwe’s case study presents lessons from a crisis that results from declining industrial performance, something that the West is now experiencing.

This book’s thesis also claims that the existence of markets directly influences industrial performance. This book links Zimbabwe’s economic decline to Economic Structural Adjustment Programmes dictated to it during the years 1992–1998.