It’s up to citizens and various other institutions representing citizens to audit and assess how those funds were used.
But the important point is – they decided to use the force of law through Statutory Instrument 133 of 2016 Presidential Powers (Temporary Measures) Amendment of the Reserve Bank of Zimbabwe Act, which INSISTS that bond notes are acceptable legal tender, and that they have an equal value to United States dollar.
So, let’s take a step back!
Adam Smith laid the foundations of classical free market economic thought through his 1776 work called An Inquiry into the Nature and Causes of the Wealth of Nations [often referred to as The Wealth of Nations].
It’s important because exchange rates are indeed a function of the wealth of nations.
Through what he termed “the invisible hand”, Smith suggested that an economic system is automatic, and, given substantial freedom, is able to self-regulate and drift towards self-efficiency.
The self-regulation ability is of course limited by tax incentives, externalities, monopolies, political lobbying, and things like privileges given to one group of economic players at the expense of others.
The most relevant part of Smith’s work to my thinking is as follows: “As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.
“He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
“Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”
I got into an engagement with Busisa Moyo of United Refineries about parallel market pricing.
Continued next page