The Economist Magazine Remains Confused On Zimbabwe Inflation

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Economist magazine remains confused. The November 4th issue of The Economist carried reportage on the ever-more acute economic disaster that grips Zimbabwe: “Surviving under Mugabe: Zimbabwe’s Deepening Crisis.” While the broad outlines of this reportage are correct, one reported “fact” in particular is simply wrong -- a real howler that any good fact checker should have flagged as an error to be corrected. The Economist writes: “…hyperinflation that peaked at 500,000,000,000%.” Well, that’s a big number. But, it is way off – way too low. The actual peak of Zimbabwe’s hyperinflation episode generated an annual rate of inflation of 89,700,000,000,000,000,000,000%— a figure I and my team at Johns Hopkins estimated, and one that is widely recognized in the scholarly literature on hyperinflation. The Economist error, which they have repeated again and again, is huge: 89.7 sextillion percent is 179 billion times greater than the figure presented as a “fact” by The Economist. 

I pointed this out most recently in my Forbes Column of November 14th. In “response,” The Economist had this to say about Zimbabwe’s hyperinflation: “Inflation reached 500 billion percent, according to the IMF, or 89.7 sextillion percent, according to Steve Hanke of Johns Hopkins University. (Measuring hyperinflation is hard.)”

The Economist should receive an “E” for effort, but remains confused and in error; the magazine is comparing apples to oranges. The 500 billion percent figure from the IMF is for the end of September. My 89.7 sextillion percent figure is for the peak, which occurred on November 14th. This November date is a month-and-a-half later than the September date, on which the IMF made its estimate. 

The Economist claims that the IMF estimate and mine are comparable numbers. What nonsense — a simple oranges vs. apples problem. Moreover, The Economist’s claim that “measuring hyperinflation is hard,” is unfounded. After suitable study and preparation, measuring hyperinflation accurately is actually rather straightforward. At present, my team at Johns Hopkins calculates Venezuela’s and Zimbabwe’s annual inflation rates each morning. 

Kevin Spacey Popped The "House Of Cards"-Bubble In Baltimore, Wiping Out Over 2000 Jobs

Last Tuesday, Media Right Capital and distributor Netflix announced the suspension of the American thriller, House of Cards, days after Anthony Rapp alleged Kevin Spacey, the executive producer and star had made ‘sexual advances’ towards him in the 1980’s, when he was 14-years old.

Then last Thursday, Netflix cut ties with Spacey, a day after CNN published an article circulating new allegations of sexual misconduct from several current and former members of “House of Cards”.

Since then, a long impressive list of actors, bartenders, a military advisor, and mostly men, 13 in total, are accusing Spacey of sexual misconduct from the 1980’s to present day.

Unbeknownst to many, House of Cards was predominantly filmed in Baltimore, Maryland for all five seasons making it Maryland’s largest film production. In season 4 alone, almost 2,700 cast, crew, and other support teams were hired from the Greater Baltimore region, and the production alone used local services from more than 2,000 Maryland vendors.  Maryland as a whole proudly flaunts itself as the home of the production, which earned more than $128 million in 2015 from season 4’s production.

According to The Baltimore Sun, more than a half billion dollars flowed into the local economy through many businesses during the production of ‘House of Cards’…

Caterers and fast-food restaurants, carpet and furniture outlets, music and antique stores, warehouses, auto parts dealers and paint suppliers - all are included among the show’s hundreds of Maryland vendors during more than five years of filming, often in and around Baltimore, at locations including the Peabody Institute of the Johns Hopkins University, the Baltimore Museum of Art and The Baltimore Sun.

With the firing of Spacey and the entire production in limbo. There is major doubt the production will continue and could create a headache for Baltimore’s local economy.

Already, local vendors are “already feeling the loss of a deep-pocketed customer and the cachet of being associated with a hit series”, as the suspension of the production inches towards its first full-week.

Meanwhile, the crew is still getting paid says The Baltimore Sun, but many are casting doubts the production will continue.

The 4-5 year economic boom in Baltimore from a big-budget production has likely popped. The economic ripple through the community and many small businesses could be devastating, especially for the state, who has welcomed the the production with enamors tax credits over the years.

Jena Richardson,28, a crew member on House of Cards, said “if the show leaves, that means that a lot of my friends who have become my set family will have to leave to find work as well. So if we can keep the work here, then everybody can stay here and provide for themselves and their families throughout the holidays.”

Another crew member, Roger Voter,27, a tech assistant, said the loss of  the show would be a “huge detriment. Having Baltimore locals being trained in these jobs under the masters of LA is great for their careers”, but as we point out Kevin Spacey has popped the filming bubble in Baltimore and it could mean newly created film techs will have to revert back to the bartending life or even return to their parent’s basements.

Bottomline: with the House of Cards bubble popped, Under Armour meltdown, and a homicide rate doubled Chicago’s. Baltimore’s outlook heading into 2018 is bleak.