Behold the highest currency denomination ever issued by any country in the world; the Zimbabwe One Hundred Trillion Dollar note. This was not a joke; far from it. In 2008 when this "money" was issued, the country of Zimbabwe was in the midst of what is called hyperinflation, and was attempting to stay ahead of it. It failed and that failure should be a lesson to all.

The genesis of this note began in 1998 when Robert Mugabe’s government made the decision to enter the Second Congo War.  Zimbabwe was only 18 years old, and very much a nation trying to establish a thriving economic system, inspire the confidence of foreign investors and to build capital reserves. Zimbabwe did not have the extra capital needed to pay for the accoutrements of war, nor the ability to borrow the large sums needed to finance their war effort. To meet those obligations, Zimbabwe succumbed to the traditional (but short-sighted) method to raise money; they began to print it.

A country takes in money by taxing the output of it's citizens. Zimbabwe’s economy is made up, in large part, of agricultural based products; farms. So a large part of the taxes came from the output of farmers.

Let’s back up for just a moment. The country of Zimbabwe has it’s roots in the British colonial system. This means that by the time Zimbabwe was becoming independent, a small percentage of white, British descendents, owned and farmed the vast majority of the farmland in the new country. I am not here to debate the right or wrong of that situation, but when Mugabe took power in 1998, he undertook the task of changing that.

In 2000, Mugabe allowed the black veterans of Zimbabwe’s war of independence to invade the farms of the white land owners, and take the land by force. Right or wrong, the white landowners had been able to work the land to great advantage and were providing large amounts of money to the Zimbabwe treasury. When they were driven from the country, farm outputs were cut in half when comparing 2000 to 2007. Mugabe’s brutal action did not go unnoticed by the Europe and the United States. They instituted tough sanctions. That meant that outside infusions of capital through investment and capital dried up. 

With expenditures up, revenues down, and little means of borrowing money, Zimbabwe began to print money. Inflation, the decrease in the purchasing power of the monetary unit, was the result. Inflation comes about when there is more money (and credit) competing for the same or few amounts of goods and services. It’s like if you could use a scoop of dirt to buy a hamburger. Dirt is so plentiful, that the next person will offer two scoops for the same hamburger, so you end up having to offer three.

This is a gross oversimplification, but the principle is the same. To keep up with the increased demands of inflation, the Reserve bank of Zimbabwe printed more money, and then higher denominations to try to pay for their obligations, especially with other nations. Those nations who contracted to provide a good or service to a Zimbabwean for x amount of Z-dollars, found at time of payment, those dollars could buy much, much less. They would demand more Z-dollars in compensation. More Z-dollars were printed and the cycle repeated and intensified. 

There have been a handful of protests in the past two weeks that appear to be driven by labor unions. Their aim to raise the minimum wage paid to fast food workers in New York City, to $15.00 an hour. The protests have been endorsed by the Service Employees International Union (SEIU), who are undoubtedly looking for new members.

The website championing this movement, Fast Food Forward, lists four reasons why this new minimum wage is needed. They are all misleading or irrelevant. Stay with me for just a few lines while I deconstruct these assertions. It is important to understand how weak their arguments are, and then I’ll tell you what they are leaving out.

#1—“200 billion is grossed by the fast food industry annually”

This fact is misleading. They use the amount of money that flows into the industry without telling you how much flows back out, leaving a profit. It is the profit that is important. You can gross a billion dollars, but if you spend two billion in the process, you won’t survive. Their profit margin is in the 10% range. Labor costs are about 25-30% of the business expenses of a fast food restaurant. Let’s put this on the back burner for a just a bit.

#2—“$25,000 is the average daily salary of most fast food CEOs, over 2x what the average worker makes in 1 year”

This is likely not even a fact and it’s irrelevant. The website doesn’t quote its source, but these types of “facts” often include the stock options and bonuses paid that are based on the performance of a company. The company does well; the CEO gets a nice slice. The company tanks; the CEO gets canned.

It is irrelevant because most fast food restaurants are franchised. That means the real CEO of that company is making nowhere near the amount quoted, and is often the guy running the day to day operation.  It’s just a way to pit people against people.

#3—“Workers make only 25% of the money they need to survive in NYC while working at fast food companies.”

#4--$11,000 is average yearly salary of fast food workers in NYC”

These fast food jobs are entry level positions. These jobs were never supposed to be used to support a family. These are jobs you take to start a working career. They are equivalent to babysitting the neighborhood children on weekends. These are jobs traditionally filed by high school kids first starting out and working part time, (A reason why #4 is misleading) and still living at home. These are jobs that teach basic employment practices (show up each day, on time, and do what is asked of you and do it very well) and give kids a source of income.