Oct 2, 2020
Lofty Minimums
Needed to keep Zanu PF’s dictatorial system intact
Lofty is a fancy word that refers to something tall. Something that has risen to a high level. In this context, Lofty Minimum refers to a very high minimum level of resources needed to keep a repressive system in place.
When I wrote about how the Zanu PF Empire will fall in Zimbabwe, I stressed emphasis on the ever-rising break-even point.
A break-even point is a concept in accounting and economics. At the break-even point, costs are equal to revenue. If costs are higher than revenue, a company can survive in the short term but eventually collapses in the medium to long term.
The concept has been adopted in systems analysis with a focus on system stability.
The same concept can be applied to governance. The break-even point in governance would be a point where a system of governance collapses totally.
It’s a point at which the costs of maintaining the system far outweigh the revenues generated by the system. The break-even point is not applied on a personal level but on an entire system level.
Even though a particular person (say an army general) or a particular group (say a cartel) might capture so much value for themselves (say 40% of the revenue being generated), the total revenue being generated by the system will not be sufficient to match the total costs incurred by the system in maintaining itself.
In a dictatorship, the upper echelons of the system capture much of the value generated by the economy at the expense of the lower majority. The dictatorial system itself is not run for free. It needs resources to keep going. It needs maximum force to suppress any revolt. It also has to supply basic services so that the people it is enslaving do not die from hunger and disease. Every master needs to expend a certain minimum level of resources to feed his slave, otherwise, the slave can die working. Without the slave, there is no master.
These costs of keeping the system on, running costs, have to be incurred. They cannot be totally avoided. The dictatorial system in Zimbabwe is faced with rising costs of maintaining the system. The system needs increasingly more resources to maintain itself.
Rising Costs
1. How many teachers are needed to keep the education system alive?
2. How many nurses are needed to keep the clinics and hospitals open?
3. How many police officers are needed to keep law and order?
4. How many government officials are needed to run the gigantic bureaucratic machinery?
5. How many CIOs are needed to terrorize the populace and force them into docility?
6. How many soldiers are needed to keep a strong state-presence and be ready to defend the state in cases of a revolt from the enslaved citizenry?
The truth is, in a democracy, where corruption is bare-minimal and state resources are not diverted for personal use, you would need fewer workers to keep the system up and running. But in an extractive system full of corruption and inefficiencies you need an ever-growing headcount and resource count to maintain the system.
The system has no Margin of Safety
Any further collapse in revenue leads to a collapse of the entire system. There is no margin of safety protecting the system from a sudden collapse. Teachers can choose not to turn up for work at any time. The same goes for nurses and doctors. The soldiers can run amok any given day that the system fails to supply food at the barracks.
The gap between revenue and costs is very small. The system can collapse any given day. Declining revenues makes the system so fragile like eggs that can break if not handled well.
Who is Responsible for Keeping the system together?
Contrary to popular opinions, it is not the cartel nor the military that is a key ingredient in keeping the system together. The most important element is the masses whose blood, sweat, and tears are milked to support those occupying upper echelons of the system.
In order of importance, these are the elements that keep the system running:
- The Masses that pay taxes, extortionate fees, bribes, and whose resources are being stolen.
- The non-security civil servants — teachers, doctors, nurses,
- The Security Complex — The Police and the Army
- The politicians and military chiefs
They cannot let revenues decline
There is no prize for guessing the direction of revenues when the economy is dying. In real terms (USD terms) revenue collected by the system has been enduring downward pressure. Keep in mind the costs have been going up.
Because declining revenues increase system fragility, those at the top of the system have to come up with different forms of taxing the people. Mthuli’s 2% IMMT tax is a perfect example. Other examples include the very high import duties, absurd forex retention ratios, and inflation. Yes, inflation is a tax on everyone.
The kingdom has to generate revenues. This the naked truth. Everything else is just spin and propaganda.
“We need high import duties to discourage imports, we need the 2% IMMT tax to curb electronic money supply, we need the retention ratios in order to generate forex for critical payments and we need to print our own currency so that we can be cost-competitive. This is done by every country, we also need to do it”, that’s what they say. Lies and propaganda. They need to generate absurd revenues in absurd ways just to save the system from collapsing.
At height of revenue-generating excesses, Russian Czar Peter the Great taxed beard.
Walking Away — The Final Collapse
The collapse will be the unwinding from the unsustainable heights. The system wants to retain itself but cannot. The collapse is involuntary on the part of the system but it's voluntary on the part of the participants.
The voluntary exit starts from the bottom going up.
The mass immigration that we have witnessed is an unwinding of the system as those responsible for feeding the system simply walked away, literally walking away from Zimbabwe. When everyone leaves, the system ceases to exist. The people are the real government. The government is being carried on the shoulders of the millions of hard-working Zimbabweans. Without them, government ministers and military officials are nothing. They have no power.
Most of those who were in a position to migrate have already migrated. Many more will try their luck. People voting with their feet. Voluntarily opting out of the system.
The masses feel trapped. They cannot easily walk away. But they do not have to literally walk away. Walking away means voluntarily choosing not to continue feeding the trough.
The recruitment of doctors via the military is meant to thwart any protest action from the doctors. This might work for a couple of years. However, over the long term, it cuts off the supply of medical practitioners. Students simply decide not to pursue medical studies. That is a system shooting itself in the foot. Swapping a minute short-term gain for a supersized long-term loss.
When students perform a cost-to-benefit analysis and decide not to study medicine, they are effectively walking away.
The system increasingly needs more resources. The extractive system’s growth squeezes the economy. As more police officers are employed for peanuts, more officers need to raise their salary from corruption and bribes since the state cannot afford to pay them meaningful salaries.
As more police officers flood the streets in pursuit of salary targets, vendors get squeezed. They have to pay more bribes and spot-fines. The vendors cannot fight against the police. They can try but will obviously not be successful. Eventually, the vendors will walk away, because they have to.
It’s a choice of either paying all your profits to the police or staying at home. Most will choose to stay home, literally walking away. Thus, the police will have to find other ways of directly taxing the people as a way of self-constructing a remuneration package. Extreme avenues include confiscating private property. When all avenues have been explored and income still remains low, the police officers will walk away too.
When people walk away from their livelihoods, they are faced with hunger and death.
Dying is also an unfortunate act of walking away.
