addition to the violence and human rights violations by a repressive regime,
Zimbabwe voters will take note of their
economic woes as they cast ballots today in a run-off election for
president. Over the past two years,
inflation has escalated to a state of hyperinflation, which economists suggest
can be curbed by replacing the country's central bank with a new monetary
system. That's the finding of a new
study by Johns Hopkins University economist Steve Hanke which has just been
published by Washington's Cato Institute.
Professor Hanke, who is also a senior fellow at Cato, says that the Reserve Bank of Zimbabwe is an inflation-fueling
money machine that should be abolished and replaced by a national currency
board that restore stability and growth to the country's economy.
"I've been involved in
stopping hyperinflations in the 1990's, and you can do this within 30
days. If you don't stop the
hyperinflation, you can't have economic stability, you can't have political
stability, you can't have any semblance of normalcy, so you obviously have to
have a politician with a will to do it," he said.
Professor Hanke argues that Zimbabwe's
central bank has been used to print money whenever the supply runs out and
provide jobs for supporters of President Robert Mugabe's government. He says the process, fostered by the
regime's determination to stay in power, continues to spiral out of control and
prevent opportunities for a return to economic growth.
"It's a terrible thing for
the people who are involved because the economy completely collapses and
they're just robbed of all means to sustain themselves," he notes.
Far from being a radical
proposal akin to American attempts to abandon the gold standard of currency
valuation, Hanke says that getting rid of the Zimbabwe Reserve Bank would
restore Zimbabwe's rich monetary tradition, under which a currency board system
performed efficiently and circulated currency without problems.
"There've been in fact very
few hyperinflations because the main monetary system there is historically the
currency board system, which is one of the systems I've recommended in the
Zimbabwe report and which Zimbabwe actually had from 1940 to 1956 and the thing
worked beautifully. So Africa was just
thoroughly covered with currency boards, and most of them were backed, by the
way, by the gold standard. So you had
generally stable money historically in Africa," said Hanke.
Although the chronic
economic woes have forced thousands of citizens into poverty, caused millions
to emigrate, and led to radical declines in health and the average Zimbabwean's
life span, the Cato Institute senior fellow says there are no guarantees that
resolving the hyperinflation will result in better government for
Zimbabwe. But he says any meaningful
political changes cannot be accomplished unless rampant rising costs are
brought under control, and that is what has enabled other former
hyperinflationary countries like Serbia and Bulgaria to take the necessary
steps to overcome their crises.
if you get into hyperinflation, you know that its life is limited because
people simply won't support a government in which hyperinflation is raging
away. So if that's the condition that
exists, the public is very much tuned into the idea that we have to get out of
this death spiral that we're in, and they're very willing to listen to
recommendations and adopt them. And
most of the cases I've been involved in, they have adopted them very quickly,"