IN THE PRESS

IN 1967, an American professor of law and economics, Gordon Tullock, originated the simple but powerful idea of rent seeking.

Several other academics were to expand the idea in succeeding years with more prominent characters like Anne Krueger and Adam Smith coming to the fore.

These scholars agreed that rent seeking involves an individual or business which seeks to make money without putting its capital at risk or rather, without producing any goods.

This happens when one increases their share of the economic pie without increasing the size of the pie.

This behaviour dovetails well with what is happening in the country.

We have hundreds of people seeking to make millions of dollars through illegal trade in foreign currency. These charlatans have unilaterally devalued the bond note. By the end of last week, the currency illegal traders had pegged astronomical exchange rate as they push their profits to unimagined margins.

This is the kind of rent seeking behaviour that Tullock was referring to. Something must give. The Reserve Bank of Zimbabwe and the law enforcement agents should not watch helplessly as the illegal foreign currency dealers destroy the economy.

Why not lock up all those dealers along Fourth and Fifth Streets?

Last week, these rent seekers were circulating messages on social media platforms to create panic over shortage of basic commodities.

The RBZ governor Dr John Mangudya came out to condemn this. “Zimbabweans should refuse to be hoodwinked by fake social media statements designed to increase premiums on the parallel markets by misguided rent seekers.

“The Reserve Bank of Zimbabwe would like to advise the Zimbabwean public to dismiss the social media messages that are circulating and suggesting that there is going to be a shortage of basic commodities. These messages are meant to cause panic and despondency and mayhem to the unsuspecting and peace-loving members of the public. All such and other statements should be dismissed with the contempt they deserve.”

Zimbabwe needs to fight against this. The illegal foreign currency dealers must be confronted head-on.

The abuse of social media must also stop.