Jacob Zuma's Re-Election at Mangaung

The re-election of Jacob Zuma has made a clear statement to the world.  The ANC has decided to choose the way of nepotism and corruption, and the total disregard for governmental incompetence, that has been the hallmark of that association since the replacement of Nelson Mandela.

What does it mean for South Africa?

One clear outcome will certainly be the further decline of the country as a meaningful player in the world, and probably at an increasing rate.  The hope that democracy will bring an improvement in the lives of all its citizens, a hope that was held by all in the country, must at least be placed on the back burner.  The more realistic believe that this re-election marks the second tipping point in the economy – the first occurred when Thabo Mbeki and his Cabinet chose the path of corruption in approving the Arms Deal and then silencing any attempt to question it.  That act gave a clear signal to the politically-connected that there would be no consequences to acts of blatant corruption, and the blind willingness of the ANC delegates to Mangaung to vote in a leader who has proved conclusively that he is willing to plunder the State coffers for his own benefit is a logical continuation of that.

A second clear outcome is the almost certain continuation of the drift of the country towards Stalinist Communism, a system under which cadres who have very little interest in performing their work in the public interest continue to pursue their own financial benefit.  This cannot avoid a further downgrading of the economy on world financial markets, as the Stalinist policies increase the domination of the State in practically every aspect of the life of the citizen, as the level of incompetence in Government continues to increase without consequence for those involved.  It implies an increase in the pay-offs for those who put Zuma into power again, those pay-offs coming at the expense, not only of tax-payers, but also of the poor, who will become poorer as the opportunities are squandered.

A further consequence will be the departure for countries with more honest and more competent Governments of the skilled people, those who are attractive to the countries that desire total growth of the economy more than they desire the enrichment of a few politically-connected people and their cronies.  The months leading up to Mangaung have made it clear that the country’s capable and skilled people saw it as a make-or-break for the country.  Many have made preparations to leave in the event that the outcome at Mangaung was as bad as it could be – they did not expect it to be good, as the ANC has departed so far from its professed ideals that practically no conceivable set of Party election results could have been described as ‘least bad.  Their fears have been realised and the new wave of departures will start shortly.

One further result of Mangaung was visible in the charges laid against a group of people who have been accused of treason.  Their claim is that the ANC is not the legitimate Government of the country.  This is one instance, but it is certainly not the only one.  The ANC is certainly aware of this trend, and the citizens can now expect a slow slide into civil war conditions over the forthcoming years.

It is perhaps relevant to point out that the ANC will, eventually, be held to account for its depredations.  That accountability may take the form of a revolution, with the leaders of the ANC being hung from the lampposts, in the tradition of ‘African independence’, or it may take the form of a new Government replacing the Party that has done so much to bring South Africa down and commencing a forensic investigation into who did what, and then charging them in the Courts.  It is the hope of all true patriots that the latter will be the case.

The ANC Conference - Mangaung

Malusi Gigaba, a member of the ANC NEC, made the proud announcement in an interview with SAfm, broadcast from Mangaung, that the Government has committed to the roll-out of a large infrastructure development program, explaining that practically no infrastructure development had been undertaken by the Government until 2004.

This confession, in any other democratic State, would have been coupled with a resignation of all senior members of the Government.  It is a clear admission that the ruling Party has failed abjectly in its responsibility.  It is, unfortunately, true.  Any observer of the economics of South Africa will have recognised that the collapse of the infrastructure that previously existed is a prime reason for the very high rate of unemployment presently existing.  Unfortunately, Mr Gigaba coupled that statement with another, that it is not necessary to have skills in place to enable the development of the infrastructure, claiming that the required skills can be developed as the projects proceed!  It is interesting to speculate how NASA would have put a man on the moon if it had chosen the route of developing the skills required as it went!  One wonders why the Government has actively pursued policies that have resulted in the exodus of so many of the skilled people in the economy.  It has always been clear that these people would have been in demand in the developing economy that all hoped would be the future.  It is sad that so many of these skilled people were not Whites, but also Blacks, Indians and Coloured professionals.  It would have been bad enough if the policies had driven only the White ‘colonists’ away, as seems to have been the policy of the ANC.

Mr Gigaba also explained that the rail network is being redeveloped, hopefully to bring it back to the state that it was in prior to the advent of the ANC Government.  He ignored the fact that the Government actively worked to dismantle the rail system, selling 3 000 goods wagons to China as scrap steel, before buying an equivalent number of new wagons, of quality inferior to those sold, from China, and closed down numerous railway lines, which now have to be reinstated at massive cost.  He ignores the fact that the ANC Government has achieved a lowering of the investment status of South African bonds on the world market, making it both more difficult and more expensive to raise the funds required for the developments.  He explains that the increase in the capacity of Eskom has resulted in increasing opportunities to BEE entrepreneurs to enter into supply contracts, ignoring that the BEE system has been exposed as a massive source of fraud, corruption and increased costs, all of which come out of the public pockets.

Mr Gigaba announced that the ANC intends to apply itself to improving the quality of education.  Apart from the fact that this promise has been made repeatedly over the years that the ANC has been in power with no result, one wonders why the ANC should now, after being in control of the economy for eighteen years, suddenly decide that education is both a priority and a problem!  The Government induced the problem in the first place, by retrenching thousands of well-qualified White teachers, by closing the Colleges that produced those teachers, by promoting the Trade Union stance that teachers should not be subject to the normal controls, both in regard to management of the schools and within the schools, and in regard to the evaluation of the performance of the teachers, to ensure that they are providing to the children what they are paid to do.  The program that the ANC now has in mind is no better than what existed prior to the ANC starting its depredations of the State coffers.  If it goes ahead, which is always doubtful in the light of the apparent almost complete inability of the ANC actually to carry out any plan that is not well supported by opportunities for corruption, one wonders whether those at the helm will have the competence and the will to bring the education system back to what it was, never mind what it should be.

While Mr Gigaba sounds earnest and convincing, unfortunately, a comparison of the actual performance of his Party with its plans and programs announced with much fanfare over the years, must surely bring any rational voter to the conclusion that the ANC is not, and probably never will be, a party that should be entrusted with the management of South Africa’s increasingly fragile economy.

Subsidising Steel - Will it Work?

 

The South African Government has been engaged in the pros and cons of subsidizing the production of raw steel, even going to the extent of suggesting the possibility of providing preferred access to electricity for the purpose.  The discussion raises a number of fundamental questions that need to be answered before the Government takes this step of skewing the economy to a much greater extent than it has already done.

Steel production, like mining, is one of those activities undertaken by an economy in its early growth phase.  In a rational economy, the capital generated by the production and sale of raw steel is invested in plant to take the downstream manufacturing of the steel to ever-further stages.  Typically, the next phase is the production of tractors and ships, then the output of the manufacturing capability becomes increasingly sophisticated products, such as machine tools.  These more sophisticated products lead to the next stage in industrial development in a rapidly increasing upward spiral, until the advanced electronic controls become the main product, with the steel products being hung on them.  A BMW, in the words of a senior executive of that company nearly two decades ago, is a fancy computer system with automotive parts bolted on.  The original steel plant is no longer necessary, but is a useful facility.

Of course, this progress relies on a number of factors occurring at the same time.  It cannot happen at once, or even very quickly, and certainly not to order  The production of steel requires a low-cost, low-skilled labour force.  As this labour force becomes more sophisticated and skilled, and, of course, productive, so it becomes increasingly capable of the work required to be competitive in the higher-value add products.  The increasingly skilled labour force becomes better educated and better skilled, and the educational institutions, in the broad sense, become more effective in taking the better-educated labour potential and skilling, and up-skilling, it to meet the increasingly sophisticated requirements of the market and, of course, of the economy..  It is a mutually supporting progression, requiring that all parts of the economy move in the same direction at roughly the same speed.  And as it moves, it automatically takes the wages upward with it.

What has happened in South Africa is that the legislative framework, the labour cost add-on attributable to legislation, the Trades Unions influence, the guilt complex imposed on the successful industries, the hopelessly skewed transport system, the collapsed educational system, from schools through to technical training institutions and systems, all have moved in different directions, to put the country into a state of having high-technology labour costs and Third World infrastructure in the broad sense.  Any attempt to fiddle with the underpinnings of this unbalanced economy is bound to have surprise effects, similar to those that even the State President has admitted to in his State of the Nation addresses.  This is particularly so if the theory behind the fiddling is founded in the Communist Marxist-Stalinist principles of a centrally (mis‑)managed economy, as is so evident in South Africa. 

The Government should be told as forcefully as possible to keep its hands off an element as large as the steel industry, or the agricultural industry, or any of the other foundations of the economy.  The country cannot afford another round of bungling such as has been seen in ESKOM, SAA, Alexcor, Transnet, Spoornet, Education, Health, SANRAL, the South African Police Services, Local Government and all the others.  It cannot withstand the disasters that continue to pop their heads up wherever one looks.  Sooner or later, the economy will throw up its hands in despair, or, even worse, simply slide under the mud

There are some very clear priorities for the Government, and, in any rational society, those priorities would enjoy the entire focus of the Government.  It has an absolute obligation to work on these, and these alone, until the average thinking citizen would agree that the problems have been largely solved. 

·         These include Education, from early childhood to post-graduate and encompassing every aspect of a modern economy, skilled trades-people included.  There can be little doubt that this is the most pressing need in the country.  What we are trying to do in South Africa now is to run a Silicon Valley microchip plant with a rockdrill operator skillset.

·         They include Health, the proper and efficient operation of the public hospitals, before any thought can be given to smearing an expensive and almost certainly highly inefficient National Health Insurance scheme all over the cracks that now exist.  Mr Mantashe proudly claimed in his eulogy to Jacob Zuma that South Africa has overcome the AIDS crisis.  That is quite a statement, in the light of the country having only 1,3% of the world’s population and 17% of the AIDS victims!  Perhaps one may excuse Jacob Zuma for part of this situation – he was not the President who declared that AIDS is a syndrome, and syndromes don’t make you ill.  However, he did nothing to disabuse Thabo Mbeki, although he did take a shower after sex!

·         They include a Police Service that assures all citizens of safety and security in all normal conditions, without tens of billions being paid in each year as compensation for wrongful arrests, while the country suffers the highest rape and murder statistics in the world. 

·         They include an efficient transport system, including rail transport at an affordable cost, a road system that costs as little as possible to provide the road transport companies with reliable, good-quality and safe roads for transport where rail is not effective, and a public transport system that permits the voters to reach their places of employment without exposure to the daily carnage on the road caused by the taxi system.

·         They demand a Local Government that provides people with the opportunity to invest the money that they earn in houses that they build on land that has adequate services. 

 

There are other priorities that almost any responsible citizen will be able to identify without too much thought. 

There are also many activities and policies that seem to have become standard.  Every action of Government that we, the Citizens, permit the Government to do in our name must be subjected to careful scrutiny in the light of the basic priorities and their requirements.

·         They do not include frequent visits to foreign capitals by thousands of politicians and civil servants, none of whom seem to have much clue about how an economy works, and none of whom seems to return with new knowledge from the vast expenditure. 

·         They do not include hand-outs for the purpose of gathering votes, or palaces in the country, or huge purchases of munitions that have no greater purpose than providing a means to funnel large sums into the Swiss bank accounts of favoured politicians and their cohorts.

·         They do not include demanding that the platinum mines pay massively-increased wages and benefits to low-skilled mineworkers, simply because ‘they need more.’  A need for more payment is never a good reason to pay more, unless the increased payment will ensure that the underlying business is improved.  Failure to understand and observe this basis principle of economics will inevitably lead to a reduction in the labour force, as well as in the investment flowing into that activity.  The platinum mines and Goldfields recent move to separate its South African activities from the economic world mining are stark statements of a losing gamble, by the mineworkers and by the Government, against the world economic order.

·         They do not include a dramatic increase in the wages paid to agricultural workers without good reason.  The statement by Tony Ehrenreich to the effect that South African farmers must match world wages for farm labourers is an extremely simplistic, and, one suspects, dishonest, political stratagem by him.  True, South African grape pickers are poorly paid when compared with the United States, for example, but one can see why this is so when one watches the grape harvest on a 3 000 Ha wine farm in California, where a total of twenty workers, using expensive and highly sophisticated machines complete the harvest in six days!  Is this what Mr Ehrenreich is telling his ‘working class’ allies when he exhorts them to strike?

 

Given a Government that concentrates on doing its job correctly, honestly and efficiently, South Africa has the potential to become a world player.  You, Mr  and Mrs Citizen, have an obligation to hold them to that.

The ANC Elective Process

 

The saga continues.  The ANC is demonstrating very clearly its inability to manage a kindergarten, never mind a country.  Despite denials that anything is going wrong in the Committees and Conferences leading up to Mangaung, reports stream in of violence, vote rigging, rent-a-crowds, and killings as the passionate ANC ‘democrats’ show the world how the ANC really works.  The denials that anything is wrong, the repeated assertions that the ANC is demonstrating an internal democracy that ‘should be an example to other Parties’, are in stark contrast to the reports that show clearly a Party in the first stages of collapse.

The farce has stirred up a new wave of discomfort, among the investors who are staying away from the country in droves, and among the skilled people within the country, who are moving out again in numbers that are heading towards the worst the country has known.  These are not deserters, they are survivors.  The shenanigans of the ANC have given rise to the concern that the country is heading towards a Communist-style ‘democracy’ in which the political structures are decided at a small table, and the results of the elections are locked away in a safe until the people have voted and they can be released. 

One may be forgiven for wondering how a country that had so much hope only twenty years ago could have deteriorated to this state in less than twenty years.  The country is slipping back from its dominant position in Africa to become just another Banana Republic, the education system is continuing its collapse while the Minister for Basic Education announces that the disastrous mathematics examination results (a key for advancement of the nation) will ‘be examined to inform policy decisions in the future’, while the Rand collapses in slow motion, while the ANC in the Western Cape is promoting industrial unrest in order to promote its political standing.  Numerous signs are visible to show those who look that the slip is heading towards a landslide.

One may be forgiven for wondering when the citizens will wake up to realize that the corrupt and incompetent Ministers that pervade the Government must be thrown out, not merely reshuffled, that a competent and honest President must be put into office and his performance assessed, that the continuing statements by the President and his Ministers that ‘the previous Government’ (i.e. the ANC Government!) made mistakes but we are now introducing measures to correct them i.e. introducing new and untried experiments to correct the disastrous outcomes of previous new and untried experiments) show clearly that the ANC does not, and never did have, the capability to manage as complex a country as South Africa.  When will the country start the slow climb upwards from the ravages wreaked on it by Thabo Mbeki, Jacob Zuma and their communist Comrades?

Job Creation - the Reality?

 

The report by the Jobs Creation fund, that the Fund had created a large number of jobs at a capital cost of R17 000 per job, has been subjected to considerable skepticism.  Creating jobs is a science, and one may be entitled to wonder what knowledge or experience an ex-Trade Union Leader could have in the field.  Any sustainable job that involves more than pick-and-shovel work would seem to require a greater investment than the claimed figure, just in the salaries of the people to be employed.  A business doing business with the Government, the easiest way of doing business for a Black person in this economy, would need, say, a month to arrange the business – you can’t start even a building business without any track record, unless, of course, you have the sort of connections that Julius Malema seems to command – and then a month to do the work.  Submit your invoice at the end of the second month and hope that the Government pays it at the end of the third month, or, possibly, at the end of the fifth or fifteenth month – much more likely, according to history – and the working capital fund required simply to pay salaries will amount to at least three to five months’ of salaries.  Let us estimate an average wage to the worker of R8 000 per month with five workers, the salary of the top Manager at R30 000 (equivalent to a share of R6 000 per direct worker), and an overhead, to take into account bookkeeping, transport, transport, leave pay, levies and contributions and all the numerous costs required to run any business, of only ten per cent of the above values.  That gives a total of R15 400 per job per month!  If the carry has to be at least three months, the working capital requirement alone is at least R46 200 per job, somewhat more than the proud boast of R17 000 per job funded, or that estimated R40 000 per job in total capital contribution.

That analysis indicates that the jobs so created are almost certainly mainly in the service sector, which is notoriously subject to quick failure, and are likely to have a very low Multiplier Effect factor.

One is tempted to suggest that the Jobs Creation Fund would have been better served in accepting the offer by a substantial expert in the field of Job Creation, to deliver 350 000 jobs within three years at a total contribution by the Government of only R7 000 000.

The Limpopo Department of Health

An interview with representatives of the Government on the state of the Department of Health in Limpopo Province raises questions about the SNC Government that go far beyond the Province of Limpopo.  X–Ray machines were bought five years ago, and have not yet been commissioned, because they do not have the required certifications.  In addition, they were purchased without Import Permits being required, and, presumably, without many of the other requirements of the public sector.  Thirty-four boilers are not operating in Limpopo hospitals, due to lack of maintenance.  The Government representative revealed that no long-term contracts for maintenance were entered into, leaving maintenance work to be completed on a break-down basis by ‘people who don’t know how to do the work’!  Medicines have been pilfered from the hospital pharmacies on a large scale, leading to huge shortfalls in necessary medications and other supplies.

The spokespersons for the Government were at pains to point out that the delay of many years in correcting these disastrous situations occurred ‘because we have to diagnose the cause before we treat the symptoms’!

This interview continues the long recital of ANC incompetence, admitted by ANC Government representatives at all levels, from the State President down.  This is no surprise to the long-suffering public.  The state of the country, in complete contrast to the rosy picture of wonderful ANC achievements regularly painted by the President in his State of the Nation addresses, is one of continuing and worsening disaster.  It is perfectly normal to meet people who are emigrating, after many years of hoping that the Rainbow Nation would start to achieve its potential.  These people, Black, Brown and White, have given up on the idea that democracy would bring improvement.  They are exporting the one thing that the nation cannot afford – the skills and experience of the most competent people.  They are leaving behind the incompetent and the corrupt, to carry on the new tradition that the ANC has established – the tradition of serving themselves, while leaving the public to suffer.  The writer has personal experience of having offered the services of a group of very highly qualified Management Consultants at no cost, to diagnose the problems and implement appropriate solutions that are comparable to the best in the world.  Apparently the Government is committed to the idea of ‘African solutions to African problems’!  The ANC Government does not want proper controls, the sorts of controls that practically every business employing more than five persons use as a matter of course.  One is tempted to ask why!  The only answer would seem to be that corruption has become such an integral part of the working of Government that it can not be rooted out.

There can be no longer any doubt that the present Government is competent only in one area – the area of looting the assets of the State for personal benefit.

The only question is: How long will the average voter continue to idolise the theft?

The Motion of No Confidence and the ANC

 

The refusal of the ruling Party to allow the scheduling a Vote of No Confidence in the State President confirms a trend that has become glaringly obvious in the past year.  There can be no doubt that the bosses of the African National Congress and its partners have no intention of handing over their privileged position to any other Party, under almost any circumstances.  This trend is one that should set off alarm bells, not only amongst those in South Africa who hold democracy in its true meaning dear, but also amongst those people throughout the world who have been witnessing the descent of this African nation, started less than two decades ago as the Rainbow Nation, the nation that epitomized the hopes of the world that at least one African nation could break free of the shackles of corruption and the incompetence inherent in nepotism that has bedeviled almost every other African nation that has gained its ‘freedom from the colonial masters’. The claim by Gwede Mantashe that the question is not one of refusing to permit the vote, but rather of ‘programming’ that vote, is typical of the ANC’s tendency to mush any question into insensibility. 

There can be little doubt that the right to hold a vote to censure the State President is a matter of the gravest urgency and importance.  A vote of this nature that is passed by Parliament will result in the removal of the State President from that high office.  That is the clearest manifestation of the right of the people to hold those in high office accountable for their actions.  The refusal to permit such a vote at short notice is tantamount to an admission that it has a more than negligible prospect of being passed.  An immediate agreement by the ruling Party to such a vote would have shown the public that the ANC has confidence that the subject of the vote is without foundation.  A fumbling refusal to permit the vote is a clear statement of their lack of confidence, and should be seen as a clear cause for concern by the voting public.  Given the almost universal disapprobation of the thinking, non-ANC-leader public of the conduct of the State President, a man who, apart from Robert Mugabe, is probably the most heavily-criticised State Presidents of the recent past worldwide, it appears that the proposed vote, if it is secret, as it should be, has a real prospect of unseating Jacob Zuma.

And therein lies the problem.  The ANC and its partners have gone on record in the recent past to call on the public to take every step necessary to retain its hold on power, even to the extent of ‘giving up our lives’ if necessary.  That sort of call goes well beyond the boundaries of democracy in any definition of it, other than that given by such laughable republics as the ‘Democratic Republic’ of East Germany, a State that could by no stretch of the imagination be classed as democratic in any way.  They have taken steps to expand and reinforce their hold on the Army, a traditional means of retaining power when the vote goes the wrong way.  They are proposing to disarm the citizenry even further, by expanding the controls of Government over the security industry.  They have already taken steps to remove any form of threat of armed resistance by the citizens.  They have failed to adhere to the underlying principle in the Constitution that there shall be a neutral investigatory body capable of investigating the actions of men of power, and, apparently contrary to a Court Order, and certainly contrary to the wishes of the representatives of a large proportion of the voters, they have refused to hand over documents that might enable Parliament and the public to understand why criminal charges against the impending State President were withdrawn so precipitately.

It is clear to any thinking person that the dark clouds of despotism are gathering on the horizon.

It is rapidly becoming clear which way the ANC is taking the country.  It is rapidly becoming clearer that urgent action is required by all who love this new country of South Africa if they are to preserve what little good is left of the work of Nelson Mandela.

Nicole Stuart - Author

In addition to my blogs, I write full-length books, many dealing with situations that we all face at some time, or might face, if the conditions that exist develop as scientists predict they will.  The idea is to give each reader an opportunity to get to know some real hard facts, and to think about what might happen.  Many of my books are based on current situations that cause many of us some concern, and analyze them, possibly in a new way.

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Israeli Strikes in the Gaza and South Africa

 

In recent days, a series of strikes by the Israeli military, including air strikes and military bombardment, have claimed the lives of some 83 people.  There is an outcry in South Africa against the ‘barbarity’ of these attacks.  Of course, there are arguments on both sides, but the argument of the Israelis, that they cannot simply stand by as the Hammas terrorists (give them their true description!) consistently rain rockets on Israeli cities, cannot be ignored.  The Israelis must respond, and, in true Israeli fashion, they have chosen to make targeted strikes against relevant targets – the leaders of Hammas.  There can be no doubt that Hammas must have expected that reaction, just as the ANC must have expected the reaction of the South African Police when they sent the young Black students against armed Police lines in their fight against Apartheid.  The real criminals are the leaders of Hammas, who set up the population of Palestine as targets.

In comparison, the strikes at Marikana in South Africa, resulted in the death of at least 47 people.  The strikes in the Hex River Valley have resulted in at least 2 deaths so far.  The question of political Party involvement in Marikana is not as obvious as it is in Gaza, but the ex-ANC Youth League President, Julius Malema was clearly visible exhorting the workers to ‘demand their rights’, and the actions of various Cosatu and SACP leaders subsequent to the riots have been notably on the side of the workers.  In the case of the Hex River Valley, there have been warnings by the ANC Youth League that it would ‘make the Province ungovernable’, warnings that echo the tactics of the ANC during the years of the ‘Struggle’.  This comparison seems to imply that South Africa is still locked in a war, undeclared, and fought without any clear rules, but with thousands of victims each year.  Can it be that this war is being fought out between Capitalism and some other system?  Certainly the response by the Government has been clearly that the fault lies at the feet of the White Capitalists, the mine owners, the farmers, those people who control the capital of the country and who deny a ‘reasonable living’ to all of the oppressed workers.  This argument overlooks the fact that the vast majority of the workers who are, apparently, so deprived, have chosen to do the work that they now claim pays so poorly!  No-one forced the Zimbabwean workers to take the seasonal fruit-picking jobs.  No-one forced the migrant workers on the platinum mines to travel from Lesotho and the Eastern Cape to take the badly-paid jobs in Rustenburg.  Surely they made the choice themselves, taking into account the advantages and disadvantages of that job compared with all the other alternatives.

And that is where the real question lies.  Do the workers who wind up in the mines in Rustenburg or on the farms and packing plants of the Hex River Valley have any alternatives?  The answer must be that there are no alternatives.  If there were, those workers would not have taken the jobs that are now so disparaged.  They would have had the chance to decide between the jobs they now have and other jobs, rather than between those jobs and starvation. The free market would have acted to balance the demand and the supply.  The real fault, the blame for the poor pay and the bad living conditions, lies in the abject failure of the Government to ensure that the jobs to provide the alternatives to those workers do not exist.  The fault lies with politicians, like those in the Eastern Cape, who believe that an unemployment rate of ‘only 69%’ is not a cause for concern.  It is more important for the South African Communist Party leader to condemn the criticism of a State President who has clearly demonstrated his lack of suitability as well as lack of capability to manage a complex economy such as that of South Africa, than to make proposals to alleviate the massive unemployment that forces the millions of workers into poorly-paid and unpleasant jobs, rather than to suffer the privations that are the daily fare of so many South Africans.  It is more important for Cosatu to consolidate its control over South African industry that to stand aside to permit more people to work.  If there is a war in South Africa, it is a Cold War between the investors, who create the jobs, and the Tri-Partite Alliance, who are interested in doing something only when there is a benefit in it for themselves.

The State of the Nation

The latest survey of FutureBrand sets out the annual Country Brand Image Index.  The bottom line of this survey, which looks at the brand recognition and image of countries shows that South Africa does not figure in the top twenty-five countries.  ‘The Future Fifteen, a ranking of 15 country brands on course to transform the global landscape economically, politically and culturally in years to come’, equally fails to mention South Africa.

It is frightening that a country with the financial and technological pre-eminence that the country had at the start of the ANC rule, has fallen so far in practically every aspect that should have made it a leader in the continent, if not in the world.  However, when one hears the President, Jacob Zuma, stating baldly that ‘many mistakes have been made, much needs to be corrected’, one comes to understand that the ANC does not, and never did, have the capability of managing a country as complex as this.  Every aspect of what the ANC has done appears to have been a failure.  Education, the mainstay of a country’s development and the driver of its prosperity, has been a disaster under ANC rule, from the abject failure of the ‘Outcomes Based Education System’ that left two generations of pupils uneducated, through the fiddling of the Matric and University results, that has made a South African degree a worthless piece of paper, to the continuing failure to do even the smallest things correctly – to deliver text books on time – has not even achieved the admission by a Minister of Basic Education that her tenure was a failure – ‘I did nothing wrong’ could, perhaps, have been replaced by ‘I did nothing’!  In any advanced country, a Court judgement compelling a Minister of State to do his or her duty under law would have been a compelling reason to resign. 

The statement by the Minister of Public Enterprises that the resignation en masse by the Board of Directors of South Africa Airways, to the effect that it did not signal a crisis in the company was a similar example of singular ineptitude.  When a Board of Directors resigns, it is signalling to the shareholders – in this case the public of South Africa – that something is seriously wrong.  A Director resigns because he or she feels that a situation is present or developing that he or she cannot control and cannot condone.  The blithe comment that ‘there is no crisis’ is a clear indication that the Minister has no clue about the responsibilities that have been entrusted to him.  It is a clear call for the resignation of that Minister.

The application by Eskom for tariff increases of 16% p.a. for the next five years is another clear indication that the Government has failed abjectly, either in its management of the utility, or in the appointment of people to undertake that management.  Electricity is such an imperative for development of the nation that Eskom should have been high on the list of priorities for the Government back in 1994.  The fact that it has gone so badly wrong is in itself a reason for the Government to resign.

The massively high rate of unemployment – over 25% - is another indictment of the ANC’s incapability to manage as complex an economy as South Africa’s.  There are constant claims that the South African economy is doing better than most others in the current circumstances are blatantly untrue.  If unemployment in Germany were to reach 10%, the Government would fall, yet the German economy continues to mark up good scores on every front, and the Chancellor does not boast of the achievements of her Government, as the ANC so constantly does.  When the Premier of the Eastern Cape was warned in 1996 that the rate of unemployment was unacceptably high, the response of ‘but it’s only 69%!’ by the MEC for economic Development did not elicit any response from the Premier!  Another two resignations that should have happened!

The case of two men wrongly convicted for murder, and spending nineteen years behind bars was referred to the Minister of Justice in 1999, after the Truth and Reconciliation Commission found that it was unable to grant amnesty ‘because the two men did not admit that they were guilty and seek pardon!’  Yet at the end of 2012, the Deputy Minister for Justice was seeking to explain away the incompetence of his Department and promising to attend to the matter immediately!  One wonders why the matter has not been dealt with during the nearly three years they have been considering the matter.  One also wonders how it was possible for Presidential Pardon or early parole to be granted to 25 000 convicted criminals, yet two innocent men, who were not in any way unknown to the Government, should be forced to continue serving a sentence that was proven many years ago to be unjust.

The matter of the Arms Scandal still lingers, staining the reputations of the many ANC politicians who were party at least to the cover-up of this monumental misappropriation of public money, yet the misuse of public funds continues unabated, as seems to be demonstrated by the expenditure of more than a hundred million Rands and the refusal by the Minister of Public Works to inform Parliament of the amount, the reasons and the justification in law for the expenditure.  Yet the players known to be involved in that ignominious phase of South Africa’s decline to the level of the typical Banana Republic remain prominent amongst the lead members of the ANC.

The continuing failure of the Government to ensure that its own commitments to the poorest of the public, such as the provision of housing, the supply of water and sewerage to poor communities, is a factor that has led those affected by the poor performance to resort to violent protests, including stoning of cars on national roads, burning of Councillors’ houses, and even murder of public and Party officials, a disturbing new trend that leads one to think of the days when the ANC still behaved as a terrorist organisation.

Given these many failings and shortcomings, and the candid confession of the State President that the Government continues to make the mistakes and is searching for yet another fix, it is no surprise that the country’s ranking in almost every field of assessment continues to slide – education, honest Government, transparency of law enforcement, ease of establishment of new businesses, ability to retain business and technical competence, and many others.  There can be no doubt that the slide will continue, and the rate of decline will steepen.  There can be no doubt that South Africa will continue its almost inevitable course towards a collapsed economy.  There can be no hope that South Africa will recover its standing as the dominant economy of Africa.

All concerned citizens should now take note, and understand that the ANC is not capable of providing a decent, honest and competent Government for the country.  Action must be commenced now to replace the corruption and incompetence with any Government that does not include the ANC bed-fellows. 

The opinion is diverse on who will provide the leadership that the country so desperately needs.  Several Parties have credentials that are good in this regard.  However, the ANC has proven conclusively in the most decisive way that they are not the Party for the future.

 

A New Idea for Democracy

Democracy has a number of failings.  That does not mean that it is a bad system.  There can be few people who have enjoyed the benefits of democracy, and also experienced the other side of the coin in Muslim theocracies or Communist dictatorships, who would want to change the system, unless, of course, they stand to benefit from the imposition of the different system.

However that may be, there is one failing of democracy that has come with absolute, frightening clarity to the fore in South Africa.  That failing lies in the fact that, in a country with huge income disparity, the people who elect those who deal with the money are not the people who earn and pay over that money to the Government.

A Government is elected by the majority of voters.  In South Africa, with very few taxpayers putting up the money, those voters cannot, by any stretch of the imagination, have a meaningful representation in the ranks of voters at least equal to that of the beneficiaries of Government largesse.  To put it simply, the Governing Party uses the money of the few to pay to the many with the hope that it will persuade them to vote for that Party.  The taxpayers have, practically, no real say in how their money is being put to use, and the Government has no real obligation to use that money in the interests of those who earn it.

In any civilized society, most taxpayers are willing to contribute a reasonable portion of their income to ‘good causes’ which may include relief of poverty conditions for those who are, realistically, unable to fend for themselves.  Most taxpayers are willing to contribute to the education of the young of the society, to the maintenance of law and order, to the provision of infrastructure, to the development of the country.  However, most taxpayers are reluctant to support a system where tens, if not hundreds, of billions are stolen each year, where huge contracts for items and services of no value to the public are doled out with the main objective of benefitting those in power, where more billions are wasted by incompetence in Government, where policies are put in place to make it harder each year to earn the money that is taken by Government.  Unfortunately, the many who are supported by Government largesse are not so discriminating in who they put into power.  They see their greatest benefit as lying on the side of the Party which promises the largest hand-outs, or supports the highest wage payments, however destructive of the economy this might be, the greatest number of highly-paid civil service jobs.

Would it not be a better system where, for example, one-half of the politicians are elected by everyone old enough to vote, and the other half are elected by those who can prove that they paid income tax of, say, more than R5 000 in the average of the three past years?  In that way, those who pay the money that the ruling Party uses to bribe the voters could really believe that they had some say in where their money went, that the Government had their interests at heart.

There will be an outcry against this proposal, but it is not as silly as it seems.  The taxpayers who believe now that they are not getting a fair deal from Government are voting against that unfairness even now, the important factor being that they are voting with their feet and with their wallets. 

There is, at present, a large and increasing number of high-earning South Africans, Whites, Coloureds, Indians and Blacks, leaving this country to earn an income somewhere else, somewhere where they can believe that they are likely to get a fair return for their tax Rand.  They are leaving because they do not believe in democracy, South Africa style.  They are concerned for their future, and the future of their children.  They are adding their efforts, their skills, their capabilities and their tax Rands to another country.  These are the future hope of South Africa, the people who will bring development, wealth, expertise.  Surely it would be better for all concerned, with the possible exception of sleazy politicians and incompetent Government employees, to retain the services of those people in South Africa.  In earning the additional money that would generate the tax that is presently going missing, they would be creating the jobs that would remove the need for Government hand-outs.  The Government would become more efficient and effective, simply because the elected representatives of the people would become responsible for their actions to those who pay the bills, and so want value for their money.  The cake would become bigger for all, and the slices being doled out to the unemployed, as well as disappearing under the table, would become smaller.  Everyone would benefit, and democracy would become an institution more attractive to most of those affected by it.

Wage Regulation in Industry

 

One of the consistent demands by workers is for wages that are ‘decent’, ‘living’ or similar terms.  Employers are consistently criticised for paying wages that are too low.  The use of Labour Brokers is viewed as evil and anti-democratic, primarily because a part of the cost to the ultimate employer accrues to the broker, rather than to the worker, as it would in a direct employment relationship.

One of the very important factors that appears to be forgotten in this discussion is that workers have a right and an ability to select their employer, and one might reasonably believe that those workers do so rationally.  An employee has the right to terminate the employment relationship in a way that is not open to the employer.  The employee can decide to move to another employer without giving any reason, and with a short notice period.  The employee is not obliged to pay compensation to the employer for such termination, even though the employer might have invested a considerable sum in the training and development of the employee.  It is not unusual for an employer to carry the cost of the employee for some time, ranging from a couple of months to a couple of years, before the employee reaches a level of capability to actually earn the wage he or she is paid.  The employer, on the other hand, cannot simply terminate the employment relationship without cause.  It is usually obliged to pay some compensation to the employee for the termination, usually based on the length of the employment.

The corollary of the freedom of movement of the employee is that he or she has the ability to leave an employer to seek employment with another employer for any reason, including the level of wages paid, the benefits, the working conditions or any other imaginable cause.  In these conditions, the probability exists that the wage paid will amount to what the workers’ contributions are really worth.  Stability, in an economic sense, will be achieved.  Employment will, once again, represent a situation in which Party A trades what he or she is able to offer to Party B.

Of course, the ideal market will quickly show up the advantages or disadvantages of each participant.  Labour will flow to the employer able to extract the greatest utility from it.  Workers with greater capabilities will be paid more than those with lesser capabilities.  The market will force each participant to maximise its’ or his or her, benefits to the other.  Higher qualifications, including education, training, skill, willingness to put in an honest day’s work, will be rewarded, and lack of those qualifications will be punished by lower rewards.  That is how the world works, on a scale of countries, and on a scale of person to person, even at the housewife-maid level.  Any action taken in an attempt to enforce different rules will ultimately result in a flow of economic activity away from that market inefficiency to a more economically beneficial place.  The introduction of a minimum wage for household workers resulted in a massive loss of jobs in that sector.  The imposition of high wages for miners has resulted in the number of mining jobs halving within a decade.  The dominance of Union-inspired wage and working conditions has resulted in South Africa becoming one of the slowest-growing economies on the continent.

The origins of the Trade Unions lie in the old conditions, in which the employee was comparatively immobile and the employer was, in all likelihood, one of a very few employment possibilities in the area.  The employee was, in all probability, bound to a particular employer.  It was necessary to regulate the conduct of the employer, to ensure that the employees had a reasonable deal. 

Those conditions no longer apply.  Employees have a wide variety of employment possibilities and opportunities.  If there are not enough such opportunities in the area in which the employee lives, he or she is free to move to another area, as is frequently done.  There has been a massive migration between employment areas.  Half the population of the Northern Cape has migrated away from that Province in search of employment.  A large proportion of the Eastern Cape has moved to Gauteng or the Western Cape in search of employment.  The problems at Marikana and numerous other mines have illustrated how many workers come from other areas, even other countries, to obtain employment at those mines.  This is not the fault of the mining companies.  They fulfil their economic function in making employment possibilities available.  If a worker migrates from another area to take up those opportunities, it is at the choice of the worker.  It is a clear indication that the worker is not able to find a comparable employment opportunity in his or her own area.  The mine owner cannot be blamed for that condition.

The emergence of Trades Unions was justified in the circumstances of the time and place.  Over time, they became a business, generating a good income for the management of the Unions, and they evolved ever more clearly to becoming organisations for the protection of the members, not for the advancement of society.  By virtue of their size, they became a more dominant force that the businesses that gave their foundation cause – there are dozens more employees of businesses than there are business owners – and they have used that dominance to exert influence on Governments and on society.  In a way, the myths that they perpetuate have become something of a religion.  Very few people ever question them or their real purposes, and it is easy to justify their existence to the members – they are preaching to the converted.

However, in this day of rampant DEMOCRACY, it might be wise to question some of the fundamentals of the current order. 

Unions do not create jobs.  In many ways, they destroy them, and by so doing, they act against the fundamental interests of society.  Businesses create jobs. 

The unions have achieved a situation of crass inequality vis a vis the employers.  When did you last hear of business owners marching to demand lower wages and better work contributions by employees?  When do businesses simply walk out on their employees, except in conditions in which the businesses are no longer viable (often because the cost of labour and their associated expenses have become prohibitively high)?  When a business fails, who enjoys preference in payment from the assets?  The business owners are the last to stand in the queue for distribution of assets, while the employees enjoy preference second only to the South Africa Revenue Services, a parasite that made no contribution to the existence of the business in return for the blood it sucked out of that business.  And then, to cap it all, Patrick Craven, the spokesman for Cosatu, claims that the employees carry a much greater risk than the business owners!  If he was saying what he and his organisation believe, it is a frightening thought that the organisation that claims to provide a reasonable interface between employers and employees can have so little understanding of the reality of the economic situation. 

It is worth stating the facts again.  Businesses create jobs.  Employees do not.  Without businesses, there would be no employees, no tax, no Trades Unions.

Is it not time to reconsider the balance of the relationships between labour and employers?  Is it not essential to give businesses an equal say, and equal force, in the relations between them and employees?  If the mutual conditions were to become more fair, there is a good possibility that the potential for conflict between the two groups will be reduced, and that will be good for all, except, possibly, the Trades Unions, which would find that their role will be reduced to what they claim it to be – reducing the imbalance between employers and employees.  It would also act to ensure that businesses remain in South Africa, or come here, to create the jobs that are needed, rather than seeking an environment abroad, where they will be rewarded for the risk, the capital investment and the contributions of skills, innovation and effort that they make.

It is essential for the South African economy to become more free, more fair, and more democratic if the South African citizens are to enjoy the sort of growth that is an absolute essential.

The Salaries Freeze

A call on the executives of the country by the President of South Africa, to freeze their salaries in the interests of ‘reducing the gap between the rich and the poor’, misses the point entirely.  The problem in South Africa is not that the top executives of the country are earning too much – it is that the workers and the unemployed are earning too little.  Their earnings are probably above the economic level at which they should be paid.

Before we go into this, let us redefine some terms.

‘Earning’ means just that.  It does not relate to the amount paid (which can be referred to as the ‘wage’ or ‘salary’), but much more to the input that the worker makes in order to justify the amount paid.  That, in the long term, can only be determined by the market.  If a worker increases the value of his or her input to the enterprise, the amount paid for that input will increase, assuming that the demand for that input is not limited in some way.  Because of this reason, the amount paid to top executives is high in comparison with that paid to other workers – ‘other’, because contrary to political and labour union rhetoric, top executives also work.  They are not parasites on the system, as the Union bosses seem to believe (consciously ignoring their own participation in this capacity!).  If a particular contributor of labour is part of a scarce group, the payment for that input will rise, and if the value of the input is high, the payment will rise.  On the other side of the coin, if the supply of a particular category of labour is abundant, the payment for that input will tend to be lower, and if the value of that input is low, the reward will be low.  That applies within an economy, and between economies. 

‘Competition’ is another term that needs to be understood.  It implies that there is a demand for a good or service that is supplied to the market and purchased by the market.  In a free market, competition ensures that the good or service flows from the most efficient producer or provider (read ‘lowest price or highest utility’) to the user that is able to use it to the greatest benefit.  Once the demand is satisfied, the price settles at that level that will meet the needs of all who can use it at that price.  If the price increases, or the utility decreases per unit of price, the off-take will reduce until a new point of stability is achieved.  If the price is increased artificially (by factors that are not directly involved in the supply-demand interaction, such as Government, Trade Union or similar) this adjustment will take place.  A perfect example was the imposition of Rent Control on accommodation, with the objective of ensuring that ‘affordable’ housing was made available to certain classes of people.  The move had the effect of preventing the rental price of the affected properties from increasing.  That was in the short term.  In the longer term, however, the price able to be demanded by the providers of capital was insufficient to attract new capital to the construction of low-cost housing units.  The move was self-defeating.  The supply of rental housing plummeted and the rental soared.  Another example is the increase in the cost of labour to the mines.  As the cost went up, the numbers employed (‘able to sell their labour units to the mines’) declined.  An industry that previously employed 1 200 000 workers only a decade ago now employs only about 500 000!  The drive to higher wages (cost of labour) without a higher input value (productivity) at least sufficient to compensate for the higher cost will inevitably result in a lower demand for that labour.  That is exactly what has happened in the mining industry.

The same applies to the cost of doing business in a country.  If the total cost increases without a comparable addition of utility, that country will fail to attract the capital necessary for expansion of the activity base that provides the jobs.  Jobs provide wages, wages provide economic activity, and economic activity provides tax revenue on the one hand, and reduction of Government support for unemployed people on the other.  The textile industry in South Africa is a good example of economics in action.  No amount of posturing or threatening by the Trade Unions and the Government was able to do anything to save the jobs.  Only lower wages could do that.

In a country in which 6 000 000 taxpayers support a bloated and inefficient Government, a huge corruption bill, and 16 000 000 people on social support, one would be forgiven for assuming that the leaders of the nation would be doing everything in their power to ensure that every job is retained, that every cent of investment capital is attracted.  Unfortunately, one would be incorrect in making that assumption.

In an industry in which there has been such a dramatic loss of jobs due entirely to the effects of the demand-supply linkage as has taken place in the mining industry, one could be forgiven for assuming that the Trade Unions would ensure that their members understood the linkage, that they did whatever was necessary to upgrade the skills and productivity of their members (increase the utility of their contribution to at least match the increase in the cost of that contribution), thereby protecting the interests of the workers, which, in the long term, amounts to no more than them receiving a level of wage that correctly compensates them for the value of their input.  Again, sadly, that assumption would be far from accurate.

It is a fact that market forces always work to ensure that the supply-demand linkage in the long term.  Those market forces can be ignored, or acted against in the short term, but they will always win.  Even in the socialist ‘workers’ Paradises’ that appear to be the basis of so much of the thinking of our Government and the Trades Unions, the supply-demand linkage operated, and the result of the desire of those in power in those economies to ignore the linkage is clear to see.  Most of those countries no longer exist, having collapsed ignominiously and catastrophically, leaving the rest of the world to rescue the remnants, and those few that remain can certainly not claim to be models of how any civilized nation would want to exist.  The only one that might be argued to have survived – China – has done so only in a very mutated form, and with the virtual slave labour of its multitudes of citizens who will certainly not continue to tolerate the conditions under which they exist for many decades more.

The South African Government and their close associates, COSATU and the South African Communist Party, obviously believe that they are exempt from the laws of supply and demand, and they appear to be intent on proving that, even though it must be clear to even the most obtuse of them that they will bring down the country in which they operate.  They have failed abjectly in doing what they claim to desire – creating more jobs – simply because it is not possible to heap costs and taxes onto the employers without ensuring that they value of what those employers receive in return is increased commensurately.  The signs have been clear since 1997, when those in power decided that ‘South Africa belongs to Africa’, when the lure of the vast amounts of wealth they were shuffling proved to be too attractive to ignore, so turning the country into a kleptocracy to rival any one of the newly-independent African States, when the harebrained theories of Marx and Stalin were turned loose on a nation once powerful in economic terms.  Their efforts have now succeeded in bringing South Africa to its knees.  The increasing wages of the workers are beneficial to them only for the short time before they are eaten up by rampant inflation they will cause. 

The financial power of the nation has been stolen and squandered to the extent that the Ratings Agencies are downgrading the country.  The previously dominant position of the country in Africa is not only sliding, it is collapsing at an ever-increasing pace.  The standard of education of its citizens is declining, both absolutely and in relation to its African peers, while the Minister of Basic Education declares that she ‘did nothing wrong!’  The Courts are increasingly being called upon to correct the actions of the Government, or to force the Government to do what it is obliged in terms of the Constitution to do.  (Potential investors from Germany, Britain and the USA constantly express amazement that there is such a high incidence of Court intervention in forcing the Government to obey the Constitution – they see it as a clear sign of the Wild West thinking that characterises the activities of the Government.) 

And through it all, the Nero-surrogate, Jacob Zuma smirks as he fiddles while the country burns, making one meaningless pronouncement after another.  He calls on top executives in the country to make salary and bonus sacrifices, while he arranges for another R258-million rip off of State funds to pass into his hands.  He hints that, if those top executives do not play according to his wishes, at best the country will fall apart and at worst his Government will pass another law compelling it.  This, of course, continues to ignore the economic reality that any such process will result in an acceleration of the brain drain at a time when South Africa can least afford it.  If a top manager can earn R20 million per year in South Africa, there is at least a good chance that he can earn R25 million per year elsewhere in the world, and particularly where the Government understands the economic rules that say he is earning that, not simply being paid that.  There is a difference!

If the ANC continues to follow this line of economic insanity, by re-electing Jacob Zuma as President, and by choosing (in a wholly undemocratic way) the same people to set the policies for the country in the same way as they have so clearly demonstrated in the past eighteen years, to be incapable of doing anything other than continuing along the same route to total collapse, any sensible investor, any top executive, any worker who has a skill that can be sold in a country that values their contribution, will be well advised to seek their fortune elsewhere before the stampede that is surely coming. 

Let us hope that this will not be the way to go.