Statistics and Lies

The Minister of Labour, Mildred Oliphant, has once again complained that companies are not adhering to the wishes of Government in the employment of Blacks and women in senior positions. She quoted a series of statistics, to prove that she really has no understanding of the situation, and that the expectations of businesspeople are being realized.

“According to Statistics SA’s 2016 third quarter figures, whites account for 9.5% of the economically active population (EAP) and black Africans 78%. The commission’s 2016-17 report says whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%. Males fill 78% of top management jobs. Whites account for 58.1% of senior managers compared to 22.1% of Africans. At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers.

“The continued high rate at which the white group appears to be afforded preferential treatment for recruitment, promotion and training opportunities at [top management] level is of concern. This trend renders it highly unlikely to achieve equitable representation at this level in the near future,” concluded the report [by the Commission for Employment Equity]. The situation is similar at senior management level.”

Frightening figures, when viewed from the point of view of the Government, figures which demonstrate the same lack of effectiveness as the Government under the ANC has shown in virtually every other sphere of the economy in which it has been active. However, when viewed rationally, the figures are both understandable and encouraging.

Let us look at some of the details, and really understand them.

Whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%, while Whites account for 9.5% of the economically active population (EAP) and Black Africans 78%.

Apart from the factually incorrect description of Blacks as ‘black Africans (which ignores the fact that numerous Whites are descended from families that have been in South Africa as long as most of the Black families), one must understand that a large proportion of the economically active Black population is engaged in work which has no potential to develop their education, knowledge and skills to the level where they can become effective top management. The statistics of that proportion are not presently available to the writer, but it is a safe bet to assume that, of the 78%, at least 50% are not qualified in any way and have little prospect of becoming qualified for a top management job, and another 20% of the remaining 38% are not yet old enough to have gained the experience required. Yes, top management requires many years of experience. If the Blacks who are educationally-qualified for the top management jobs had started their climb up the ladder in 1994 (assuming an adequate education), they would have gained 23 years of experience. How many of the top managers of large companies are aged less than 44 years? Again the statistics are not available, but the answer is certainly less than a handful. Why 44 years? Assume that an aspirant for top management completes Matric at 18, then a three-year degree, that person started work at age 21. Add the 23 years since 1994. He or she is now aged 44. Most of the Blacks who will become top managers of large companies are still working their way up the ladder, after gaining a good education and years of experience in many of the activities that are essential knowledge for the top job. In an interview on SABC this morning, the Minister of Social Security inadvertently confirmed this fact, when she stated that SASSA required at least five years to establish an in-house ability to pay social grants, after having worked on the problem since 2014 – a total of 8 years to do a project that a competent European or American company would certainly complete within 2 years (after all, CPS was able to develop the ability within less than a year!). She explained that the organization of SASSA, which was set up to do only the payment of social grants, consisted of low-level management. That statement is one of the few believable statements by the Minister, who has become known for obfuscation, circumlocution and even the use of Russian, in answering embarrassing questions. The simple fact, known to all of the companies burdened by the law requiring them to employ a certain ratio of ‘previously disadvantaged persons’. Is that there are simply far too few competent Black persons with the education, qualifications, skills and experience required to perform competently in a normal economy, never mind the minefield that the South African economy has become under ANC rule.

The situation on the ground is that a company’s prime requirement is to earn a profit for the shareholders. Once that is being done, the company has the freedom to comply with all the other nice-to-have objectives, such as Black Economic Empowerment. To do that, every top manager must perform at the peak level of performance expected from him or her. Where the profit flow is good, there is enough surplus cash to do the things that are required to meet the Government’s unrealistic expectation (that every Black is born with all the skills and experience to perform excellently – they are not, nor are Whites, Indians, Coloureds or Chinese), with a person being appointed to do a job that he or she is not qualified or experienced to do, supplementing his or her efforts with a skilled (probably White or Indian) who will filter out the gross mistakes deficiencies and add some on-the-job training in the process. That, of course, introduces managerial friction and inefficiency, and adds a considerable burden of cost, all of which weaken the market position of the company and detract from the attractiveness of the country as an investment destination. If you doubt this, ask why so many ‘proudly South African’ companies have largely withdrawn from the country (e.g. Anglo American, S A Breweries, Gencor) and others are doing whatever they can to minimize their exposure to South Africa. Ask why the economy is in a decline, where, previously, it was regarded as the ‘engine of Africa. Ask why the creditworthiness of the country has declined to the point where two of three Ratings Agencies have rated the country as ‘junk’. Ask why every Government-controlled business entity is in a state of collapse. Why cannot SAA make a profit, when the non-Government airlines do, why Eskom requires an ever-increasing tariff for the supply of the energy which, in the past, has been a major driver of economic growth, why the SABC requires additional funding every year, why SANRAL is rapidly approaching a fiscal cliff, even after a questionable accounting revaluations of its assets in order to maintain balance sheet solvency, could why PetroSA manage to deprive the country of its strategic fuel reserve? The root cause in every case is unqualified management. The compounding cause, corruption, is a direct result of the lack of moral honesty that is a prime element of a competent top manager, a quality that is built only by years of exposure to quality managers, absorbing their beliefs and morality.

“At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers,” the report continues. That again is no surprise. Although ‘Africans’ (correctly defined) occupy all but a tiny fraction of such positions, Blacks are severely disadvantaged in their capacity to occupy skilled or semi-skilled positions simply because the standard of education they receive is at an abysmally low level. The Department of Education systematically attempts to hide the real facts of this, by lowering the pass mark so that more ‘learners’ gain their piece of paper, but the truth is that an education at a level required to meet the minimum standards of most sophisticated employers is not available from the State schools. If there is any blame to be apportioned for this situation, it lies squarely at the feet of the ANC, which disrupted a proven skills-building system and introduced a system that had been proven elsewhere in the world to be defective. Once again, the ANC refuses to accept the advice of people who really know the truth, preferring to accept their ‘gut feel’ and the universally-disproven communist doctrine that they use as a master plan.

The figures issued, if correctly understood, are encouraging, in that they show that the Black citizens are working their way up the system, as any intelligent observer would expect. If we disabuse ourselves of the racist rhetoric spewed by the Government, it is clear that employers at all levels of the economy, would be delighted to find a qualified employee, whether at top management, skilled or semi-skilled, and would appoint such a person to an appropriate position. They would be pleased to provide the training, education and exposure that would maximize the value of such a person to the company. Every employer needs good people to sustain their growth into the future. Equally, every employer would be unconcerned that the best candidate for the job is Black or White, or any other race. Only the Government (and the few other Parties espousing similarly lunatic racial criteria, rather than promoting the economic growth that will create the situation where every person will have the job they want) would wish to push an unrealistic policy to the extent that the country’s already fragile economy will collapse.

The best thing that the ANC could do would be to expunge any reference to race from their lexicon, and that would be followed by getting out of the way of the hardworking people of all races who are working to make the country of Nelson Mandela succeed, for all its citizens.

The South African Ratings Downgrade

So it has happened.
The Ratings Agencies have started the downgrade of South African bonds to sub-investment grade, and the trickle that started more than a year ago, with the Nene Gate affair is starting to turn to a torrent. The government-friendly commentators have explained to the gullible public that the downgrade is of no great significance, and is, in any event, the result of a manipulation by White Monopoly Capital and the (unspecified) foreign ‘agencies’ that are working tirelessly to bring about ‘regime change’ in the country, a loathsome thought that is expressed by ANC spokespersons as akin to a ‘counter-revolution’. They completely ignore the fact that the downgrade implies that most of the largest suppliers of funds to the South African Government, and, by implication, any investment entity in South Africa, such as State-Owned Entities, banks and insurance companies, will be obliged to abstain from such lending and investment, cutting off a very significant part of the capital available to the country to support its programs, and also to dispose of any such investment before the next reporting time. The penalty for holding a South African investment is the substantial decrease in the valuation of such investment, in certain cases to zero, forcing the institution to provide additional capital to remain financially solvent. The only exceptions to this rule are the South African banks, insurance companies and pension funds, which have the right to value South African Government securities at 100% of face value. This right does not, however, extend to the valuation of their own securities by foreign investment entities, which will apply the valuation rules as though the investment by the South African entity was made by that body in the Government directly.

The effects of all this will take a short time to work through the economy. The first effect will be on the Rand, which has already started to feel the effect, within minutes of the announcement of the downgrade. The investors are taking into account the helter-skelter disposal of South African investments, almost certainly to South Africans, as there will be practically no other takers. This will be followed by a dramatic drop in the value of such securities as the investors unload them for whatever they can get, leading to a dramatic increase in the yield on the bonds. Practically no new securities will be able to be sold abroad, cutting off the lifeblood of the economy, and the interest payable on borrowings by the Government and others will increase dramatically, first because of the increase in the rate payable and second because the Rand exchange rate will move down, increasing the financial burden of such borrowers in servicing such loans. It is a not-so-slow earthquake of financial disasters for the country and its long-suffering taxpayers. The Government will attempt to compensate for this reduced flow of funding by imposing strict Exchange Controls, trapping the local wealth built up by years of hard work, imposing investment requirements on pension funds and insurance companies and, ultimately printing more money. The rate of inflation will skyrocket, with 25% pa being a desirable target, in contrast with the 3 000 000% of Zimbabwe, and South Africa will have no friendly neighbours to supply electricity without payment,, a factor which has gone a long way to support the Zimbabwe kleptocracy.

Zuma announced very arrogantly during his State of the Nation Address that he was not concerned by what the Ratings Agencies are saying about South Africa, because BRICS is about to establish its own ratings agency, which would support the BRICS nations. How meaningless that would be is apparently not apparent to the economically-illiterate President. A rating by a unit of a body consisting of South Africa (insolvent), Brazil (insolvent), Russia (Insolvent), China (in decline) and India, the sole rising star in this gang of dictators and economic incompetents is unlikely to carry any weight against the verdict of three established and respected Ratings Agencies. However, it suits his playbook of the evil, grasping capitalist nations of the West, and so truth is a secondary consideration, if it is considered at all by the ANC.

After the first effect has taken hold, the Government, still oblivious to the extent of the earthquake their leader has set in motion, will continue to buy votes by upping the social grants, already a subject of contention after the convicted criminal and incompetent, but favoured by Zuma, Minister Dlamini carefully ignored or three years the explicit Order of the Constitutional Court to develop a means of paying the social grants itself (response by Zuma: Crisis? What crisis? only two weeks before the payment system was to implode). The first days of payment in April resulted in many errors, including non-payment and short-payment to indigent recipients, notwithstanding that the payments were made by the same company using the same database as before, leading observers to ask how often that occurred in the past (bearing in mind that a non-payment for a month of ten per cent of the R1 billion per month – R100 million – invested at ten per cent per annum delivers a bonus of R10 million per annum to the paymaster and its associates). It seems unlikely that such errors were ever reported to Parliament or the oversight Committee, and it is close to impossible that the Minister or her crooked boss would have attempted to check on this. A continuation of this practice by these insensitive people is likely to precipitate an uprising by a large number of the now-sensitised recipients, and there are 17,5 million of them. This payoff by the ANC could easily turn into a huge millstone around the neck of a Party struggling to stay afloat. That risk will increase as the flow of funds to the cash-hungry ANC leadership, now desperate to rake off as much as possible before the crunch comes, declines.

At the same time as this problem starts accumulating to alarming proportions, companies – State-owned as well as private – will start to collapse, starved of cash. Jobs will be lost by the thousands, South African Airways will no longer get guarantees of any value from the Government and will default on its existing loans, some R17 billion of them, and defaults on essential maintenance, already in question, will multipy. The same will happen to the SABC, Denel, MossGas, Eskom, PRASA, Sanral, Transnet and all the others that have been playing fast and loose with taxpayer money, paying finder’s fees to the ANC and overpaying for contracts rigged by the dishonest and incompetent ANC cadres. The banking industry, much vaunted as one of the mainstays of the South African economy, although much vilified by the State President and his unthinking lackeys, will contract, selling off foreign subsidiaries to recover the cash value in them before their ownership brings them down, while increasing interest rates – 21% to 25% is not unknown in this country under a similar Government – and so bringing about a further collapse of the building industry, as well as a dramatic escalation in the number of borrower defaults, which will help to add steam to this perfect storm.

Within a year at the most, the South African government will be insolvent, with defaults on the payment of capital – previously easily rolled over – and interest becoming a reality. The hard work of Manuel, Nene and Gordhan in stabilizing the economy, to the limited extent permitted by their communist leanings, will be forgotten in this increasing disaster. The International Monetary Fund will be forced to step in to prevent the spread of the rot infesting first the rest of Africa and then the rest of the world. South Africa will, once again, become a pariah State, the vision and legacy of Mandela drowned under the discovery of the sleaze that was the ANC under Jacob Zuma. Strict austerity rules will be imposed. Everyone will become poorer, and the country will be set back at least twenty years in its economic development, the hopes of 1994, that the country will be a leader in Africa, will be forgotten for another five decades, and along with it, the struggle to keep alive will increase the racist divide that was anathema to Mandela, but was a hallmark of both the Mbeki and Zuma regimes. The spectre of civil war, on tribal and racial grounds will loom, with a high probability that either China or Russia will provide ‘peacekeeping forces’ in the achievement of the goals that Zuma has been pursuing so avidly.

The chance that Jacob Zuma will live to regret his actions is small. The likelihood is that he, in company with at least several of his co-conspirators, will be hanging from lampposts outside his compound at Nkandla. That is the African way.

Modern Myths

It seems that some political slogans and catch phrases, originally developed to garner votes from the classes affected, have become axioms, statements that are never questioned for truth or validity, and so acted upon without any real understanding of their effect or evaluation of their validity.  Many of them result in substantial structures affecting all citizens and shaping an economy being built upon a base of shifting sand.  The potential for a collapse of disastrous proportions increases as more storeys are added to the structure without any attempt being made to strengthen its foundations.  Some of these are discussed below.

The poorest of the poor.

A large proportion of the funds available to governments are allocated to projects, activities and policies to alleviate the suffering of the poor.  The argument is that the poor are not in that state because of their own fault, and so deserve to be given assistance by the wealthier in an attempt to give them an opportunity to enjoy what the rest of us do.  Funds are allocated to provide medical services, to support their children, to prevent starvation, to provide free housing, free water, free electricity, free or subsidised transport. 

These supports have, almost everywhere, achieved a proliferation of the poor, with exploding numbers of welfare recipients, huge amounts being spent on services, and a rapid growth of the poor population.  Morally, these expenditures appear to be justified, but are they really? 

It is a fact that the numbers of poor increase considerably more quickly than the numbers of well-off.  While Africa has a birth rate in excess of 3,7%, Germany, a generally wealthy country, has a declining population, and the same phenomenon is seen within a country.  The problem that arises here is that the poor are the least economically productive, yet they consume a disproportionate (in economic productivity terms) share of the wealth produced by the society.  The allocation of a portion of the wealth of the society to the poor produces a lower economic return that the same allocation to the more wealthy, and so represents a drag on the economic growth of the society.  While the diversion of a part of the wealth of the country to the poor may be justifiable in different ways, from an economic point of view, the greater the proportion allocated to the poor, the more slowly will the economy of that country grow.  That allocation, in recent times, has increased because the numbers of poor voters have made them an irresistible pool for the governing Party, so that the hand-outs to them per capita have tended to grow, and the numbers have grown at the same time.  In South Africa, the number of recipients of social assistance far exceeds the number of taxpayers, and the ratio of recipients to taxpayers is growing.

If the total of the funds distributed by Government to the poor were to be diverted to investment to grow the economy, the effect would almost certainly be that the economy would grow sufficiently quickly to shrink the numbers of the poor.  Obviously, this could not be done, but the lesson is clear.  The growth of an economy is directly related to the funds invested in it, and the reduction of that investment has a profound effect on the rate of growth, and so on the creation of economic activity that will provide earned income to the participants in the economy.

The other aspect is that social assistance in the form of social grants, such as pensions, support to the indigent, support for children, free housing and services, and similar, provide a magnet to attract those who might have earned a living by subsistence farming, by selling their labour as farm workers, and in similar ways, to the cities, where they do not have the infrastructure or the job opportunities to live a ‘decent life’, requiring that the Government provide free or subsidised housing and services.  Living in this way tends to break down the fabric of the society, resulting in an increase in the number of children born to teenage mothers and to single-parent families, with the result that those children have fewer opportunities to work their own way out of the poverty trap.  An indiscriminate increase of support to the poor, usually undertaken by a Government as a means of attracting their vote, will almost always result in an increase in the number of the poor and so in an increase in the amount of funds, which otherwise would be applied to the development of the economy, being diverted to this economically unproductive use. 

The existence of a number of poor tends to attract an increase in that number and, if not harnessed at an affordable level, it will result in a slowing of economic growth until that growth starts to decline.

The concentration of the Government on the poor is misdirected.  In a team sport, there will be some effort expended on developing a selected group of players with potential, but the greatest pay-off for effort expended will be achieved by improving the quality of the performance by those players who have proven their capability.  So it is in industry and in business.  An undue concentration of effort and expenditure to develop people who have not proven their potential will distract from the development of those activities that are already producing results.  It is much easier to grow a proven business than to develop a start-up business, and the bang for the buck will be much greater in assisting proven businesses and people than in attempting to bring those who do not have any of the skills, experience, capital or developed abilities to the level of those who are already there.  Those with potential will tend to find a way to realise that potential, at least to the extent where the society will find it economically justifiable to expend scarce resources to develop that potential further.  An attempt to force the creation of a potential that does not inherently exist is doomed to failure.  This is even more so in an economy in which there the availability of investable funds is severely limited. 

 

Income redistribution is a moral imperative.

There is no natural law that entitles a person who produces less to take from the high producer.  In Nature, a lion that is an inept hunter starves: he is not subsidised by his more successful colleagues.  An antelope that cannot outrun the predator becomes a meal for the predator:  his colleagues do not attempt to block the efforts of the predator if the result will be that they are eaten.  So it is in less developed societies.  Only when the democratic system comes into play does the need to protect the weaker arise, largely because the people who hold the purse strings realise that, by encouraging the potential voters by transferring some of the wealth of the more successful (and generally fewer in number and so less vote-strong) members of the society to the economically lower performers, those lower performers will vote them into power to continue the redistribution of wealth that they would not otherwise enjoy.  The wealthy generally go along with the redistribution, happy to share their good fortune to a reasonable extent, encouraged by the religious and moral attitudes they absorb as part of their culture.  However, a limit to this largesse is reached when the demands grow to the point that the economic success of the wealthy is threatened by the diversion of too much to the poor, and, often, by the development of a belief by the poor that they are entitled to more as a right based on nothing more than the fact that they are poor.  At that point, the means of transferring the wealth, taxes, becomes oppressive and something to be avoided by any means possible.  At that point, generally, the numbers of the poor are such that the wealthy have effectively lost control of the ability to limit the politicians who use the redistribution to shore up their pool of voters, and so the wealthy are forced to find other means to hold onto what they earn.  This may take the form of tax evasion, of setting up businesses in other jurisdictions in which the rules are more friendly to those earning their wealth, rather than being the recipients of redistribution of the earnings and wealth of others, and, ultimately an emigration of the business to such a jurisdiction, to the loss of the country which believed that the wealthy represent a tied pool of largesse.  This process started in South Africa with the departure of some of the mainstays of the economy, such as Anglo American, SA Breweries and Gencor, as well as the emigration of many skilled professionals, businessmen and industrialists (e.g. Egon Musk of Tesla fame), all of whom could see the writing on the wall.  In many cases, the real reasons for the emigration were not stated, in order to protect what remained behind from the wrath of the politicians, but the result becomes clear over time.  Anglo American is a prime example.  In the past, this company was a driver of industrial development, with a strong interest in more than half of the industrial companies listed to the Johannesburg Stock Exchange.  Now it is in the process of downsizing its South African operations to a tiny fraction of what it used to be.  The loss of those companies and people should be a matter of serious concern to the Government, and urgent action should have been taken to stem the outflow, but the imperative to secure re-election by number of votes, rather than by quality of economic performance was too great, and the result is now clear to see – a declining economy, a skills-base wasteland and an economy in crisis.

 

Apply the Land Redistribution Policy to the US and EU

Imagine a situation in which the Government of the United States, or of the European Union, passed a binding law requiring that the land owned by the farmers be ‘redistributed’ to the poor, a term which they defined by implication as the voters for the ruling Party.  The logic behind the law was that a human was not complete without ownership of the land.  Huge amounts of money would be applied to the purchase of the land in the first few years, then, when the farmers who remained on the land indicated that they were reluctant to sell their farms, the next law was passed, giving the Government the right to expropriate the land, paying an amount of compensation decided by a Committee consisting of Government supporters.  The farmers then fought the law in Court, claiming that it was contrary to the Constitution and damaging to the food security of the country, as 90% of the farms that had been ‘redistributed’ until then had failed.  The Government then retaliated by passing another law requiring the farmers to transfer 50% of their farms to the workers on the farms, an amount of compensation being paid into a fund ‘for the betterment of the farm workers’. 

Impossible?  An insane thesis?  Economic catastrophe in the making?  A Government losing grasp of reality?

Of course.  No sane person in the Western world would support such moves.  Every sane voter would vote that Government out of power at the next election, if they survived that long.  Except that exactly this process is under way in South Africa today.  The State President has been seen in fawning admiration of Robert Mugabe, last year the President of the African Union, and is following the examples this man has set, including the land redistribution policy.

The land redistribution policy of Robert Mugabe took place, and the collapse of that economy followed, as surely as night follows day.  The world saw it happen, saw the White farmers being removed by teenage thugs who claimed to be ‘military veterans’ of the ‘struggle for freedom’, even though most of them had not been born at the time, and even though it was clear that the land grab was done to benefit the cronies of the insane dictator of that land.  The competent farmers, who had produced the food that kept so many of the newly independent African countries fed, were thrown off the land that they and their forefathers had developed from bare veld over many years and with huge effort, often being beaten or killed in the process, along with their faithful workers, who knew that the new owners would not employ them to farm.  Agriculture, a mainstay of the Zimbabwe economy, crashed, and the West had to provide food aid to the starving citizens of this ‘new democratic economy’.  Mugabe refused to allow the grain to be imported in bags emblazoned with the notice “A Gift of the American People – Not for Resale”, and supplied his own bags to the company receiving the bulk grain in Durban.  The anonymous bags were then transported to depots nominated by Mugabe, and sold to his Party supporters, care being taken to prevent any of this vital food aid reaching Opposition supporting areas.  Thousands of Zimbabweans starved or fled as penniless refugees, and Mugabe grew wealthy on the back of the largesse of the American people, while his people descended into penury.

The example is clear, and no European or American would tolerate the introduction of such a policy in their own countries.  They all know that the worth of a person cannot be related to his ownership of land.  Why do they permit it in other countries?

South Africa is presently engaged in the redistribution of land in exactly the way described.  The Government has supported the process of killing White farmers since 1994, with an average of 1 500 farmers being killed each year, five per day!  The Government has disbanded the Rural Policing Units, designed to protect farmers against crime, and the Police have changed the reporting of crimes against farmers to hide the fact that they are being slaughtered wholesale.  A report was prepared on the farm killings and handed to the State President, who responded by saying, “I can do nothing with this.  Rewrite the report to state that the killings are not politically motivated, but simply random crime.”  The result has been that the number of farmers has declined from 64 000 in 1994, when the ANC Government came to power, to 24 000 today.  Huge tracts of fertile land lie fallow.  Hundreds of previously active farms, redistributed to inexperienced and unmotivated Black farmers (who have no skin in the game to drive them to better efforts) and are no longer producing.  The Government is in the process of passing a law to prevent ownership of land by foreigners, giving them instead the possibility of leasing the land, claiming that the land must belong to the people of South Africa.  They are not able to answer the question “how will that benefit South Africa or its citizens?”, deflecting the question by claiming that it cannot allow the decision of whether or not to produce crops to be in the hands of foreigners!  Of course, they have no knowledge of the process called ‘law’, as used almost everywhere else.

The policy of land redistribution is an act of unreasoned and unreasoning populist insanity, with the sure outcome that South Africa will become the begging recipient of food aid from the West.  Is this what the people of Europe and the United States want?  Is this what they would want in their own countries?

In the interests of sanity, it is the duty of every thinking person everywhere to warn the Government of South Africa that the path they are on now will surely lead to the collapse of the South African economy, and to the death by starvation of millions of its people.  Unless, of course, the ANC and its favorites are able to pull off the diversion of the food aid to be provided by the West, distributing it, at a large profit, through its own trading entities to the faithful voters, to be paid for out of the Social Grants it will make available from Government coffers for the purpose, and claiming the glory of providing food to the citizens.

If you are reading this and have any interest in keeping the people of South Africa from falling into the pit of starvation occupied by so many other independent African countries, spread the word now.

Zuma is not to blame.

Anyone who has a degree will have undergone the unpleasant experience of being told, by someone without a degree, that his education is worthless, that life’s experiences are more valuable than book learning, that people who come out of university are worth much less than those who took the opportunity to experience the real world while the university worm was locked away in valueless lectures.  One learns to ignore these stupidities, gaining the understanding that the un-degreed critic simply does not have the understanding to realise the value of the educational experience,  Trying to convince such people of the value of learning to think in a structured way, integrating learning, experience, observation and the valid views of others is a waste of time.  Some un-degreed people have the ability to break out of the mould they have been born into, but, unfortunately, many of them are unable to stretch their minds beyond the slogans, the sensational statements of others of their ilk, the tee shirt summaries, the sound-bite statements of ‘absolute truth’, and actually apply their minds to a situation.  These people are fated to remain ignorant of the realities of life, to be uncritical of ‘what they know’ without ever questioning the validity of it, and unable to go beyond what they were born into.  They are not innately evil, but they are ignorant, and they choose to remain ignorant.  The evil ones are those who use that propensity not to want to know, to gain their personal objectives, to use those people for their own ends.

Jacob Zuma is a product of his background.  He grew up as a herd boy, watching the animals in a field, without ever having had the mental training or the accumulation of knowledge to be able to apply his mental capabilities in a rational way.  He saw the wealthy and powerful people of his environment as models of the life and lifestyle to aspire to.  The village chief in his community was a man who exercised unlimited power, using his hereditary position to influence the recommendations of the elders.  His wealth, although modest in absolute terms, was huge to the eyes of the simple herd boy, whose family could not afford the economic cost of allowing him to gain more than a rudimentary education.  He was influenced by the village thinking, which saw the White man as an oppressor and could not understand how that White man gained his comparative wealth through directed work and the application of learned skills.  To the young boy’s mind, the wealth displayed by the White man was enormous, and was to be gained by the use of power, as was that of the village chief.

The young boy, growing up in the back of beyond in Zululand became imbued by the Black ‘leadership’ belief that the best opportunity for him would be to aspire to the ideals of communism, which held that the assets of the community should be shared by the community, which is, after all, only a slight extension of the tribal system, in which the land is the property of the community.  When he was old enough to act on his own, but not yet old enough to have gained the wisdom, experience and thinking capability of a mature adult, the young Zuma joined the ‘liberation movement’.  Using his native cunning and, no doubt, the inherent ruthlessness of the young, Zuma rose in the ranks of the ‘freedom fighters, to become the head of Intelligence in the liberation army, a position which entitled him to enjoy the benefits of senior rank.  His indoctrination by the Soviet masters of his movement made him more capable in the skills of manoeuvring and manipulating, and his position gave him an ability to gain knowledge of the doings and desires of his peers that would stand him in good stead in the years to come. 

The ‘revolution’, a rewritten statement of the real history of the acceptance by the Apartheid (a word that, even now, Zuma mispronounces in a way that suggests he did not understand that the policy was one by which the separate racial groups in the country would be free to determine their own separate futures) government that the Soviet threat no longer existed after the ignominious collapse of the Soviet empire in 1989, gave Zuma the next opportunity to achieve his aspirations.  The adoption of the principles of communism by the Black movements had given rise to a fear in the minds of the Whites that their way of life, their very religion, would be destroyed by the accession to Government of a Black majority dominated by Soviet thinking.  The Soviets had no real interest in the form of government that would be adopted when their puppets came to power in the newly decolonised African countries.  Their sole interest was in dominating that country and depriving the West, specifically the United States, of any influence in those countries.  They were not benevolent benefactors of those countries, as is clearly seen in the oppression they imposed in their vassal States in Eastern Europe.  They were colonisers in a different form.  The ‘education’, particularly the ‘political education’ they provided to their ‘friends, the freedom fighters’, was necessarily indoctrination in the thinking of the Marxist-Stalinists who were in control, and that thinking has endured in those people and in those who have been influenced by them.  The lack of logic in that thinking, the absolute, unthinking conviction that what they were told is right, can be seen in the strict adherence to Soviet economic theory, regardless of the fact that experience has shown convincingly that it cannot succeed in the modern world.  There is no Communist State that can be deemed successful in economic terms, unless, as in the case of China, there is a liberal admixture of capitalism to the control elements that the Communists developed.  The fact that the collapse of the Soviets in 1989 convinced the Whites that there was no longer a risk and so created the possibility of a rapprochement to the Black movements has been ignored in the modern history of South Africa, with the story of a ‘glorious revolution’ being more palatable to the political leaders of today. In truth, Mkonto we Sizwe was an abject failure in military terms.  The transition from the Apartheid Government to the democracy we have was based on the realisation by the Whites that the policies were wrong and unjust, a realisation that built on a long-held belief expressed in the fact that the National Party was never able to gain the two-thirds majority necessary to change the Constitution, even though the leadership of the Opposition Party was markedly incompetent.  The Black governments throughout Africa have almost all adopted the Soviet thinking in their policies, and they have all experienced the lack of success that thinking was bound to bring.  Those that have been fortunate to gain leadership by capable leaders have adjusted those policies, some obviously, such as the new leadership of Tanzania, some surreptitiously, to avoid being seen to admit to a huge mistake that cost their people dearly.  South Africa was fortunate to have a leader in Nelson Mandela who was able to use his mind effectively, although he was constrained in this by those around him who were less fortunate in this regard, and he espoused Western thinking, modified by the need to correct the failings of the incompetent Apartheid governments which became more and more fanatical in their application of the lunatic theories developed by Hendrick Verwoerd.  When Mandela departed the scene of government, he was replaced by more devout and unthinking communists, and South Africa is now led by a man who applies his communist training and tribal thinking without the benefit of education, exposure to modern thought or criticism, one who has surrounded himself with others of the same persuasion, the same moral standards and the same indoctrination.  Zuma is reported not to read newspapers or books, both essential to the development of the capability to think in a structured way and with input from numerous other thinking people.  He runs on autopilot, a set of ideas derived from his tribal, herd boy and terrorist training, and applying the principles absorbed from his Soviet puppet-masters.  It can come as no surprise that he is obsessed with the building of wealth through manipulation and intrigue, the building of power by pay-off and blackmail, and that he has no conception of how a modern economy can provide an improving life for all citizens.  In Zuma’s book, the gain by one implies the loss by another.  The essential requirement, in his mind, of a decent life is the ownership of land, although it is clear that he has no idea of why that should be so.  The construction of a huge mansion by the theft (to call a spade a spade) from the ‘endless’ coffers of the State is a statement of his personal value, regardless of the fact that this symbol of ostentation is located in one of the poorest areas of his homeland, in which it was necessary to build a fire pool because the average citizen lacks an adequate supply of water sufficient to put out a fire, and the level of criminality is high enough to demand the construction of a Police Station dedicated to his protection.  The purchase of a fleet of aircraft dedicated to his personal (and family) use is essential to satisfy his pretensions to glory as the Head of State of a country which can pay for them (in a continent where the average Head of State has difficulty in affording a car equivalent to one of the fleet available to him), regardless of the fact that the economy of his country is performing so badly that its debt instruments hover barely above junk status, and its economic performance puts it firmly in the company of the worst-performing economies in the world.  He has a need to emulate, or even outperform, Robert Mugabe, who still spouts a line of racist hatred and economic garbage as bad as any terrorist organisation, and whose reign of terror and economic incompetence has brought his once-strong nation to its knees, with millions of its citizens either dead of starvation of economic refugees in other countries. He admires Hugo Chavez of Venezuela, who has also brought his country to destitution by the application of policies similar to those in which Zuma believes.  He has a desire to name the streets after the great leaders he so admires, such as Stalin, Lenin, Mao Tse Tung, Samora Machel, Fidel Castro, Julius Nyerere, all of whom are textbook examples of abjectly poor governance, terrorism of their own people and rule by force.  He uses the tool of adulation of dead freedom fighters to inspire hatred of the Whites for their success when contrasted with his failures, without emulating any of good the qualities they may have had.

Taking his background and the self-imposed limitations on his own thinking, one cannot blame Jacob Zuma for the abjectly poor leadership and economic management that have been hallmarks of his terms of Presidency.  Knowing the man and his background, South Africa should have expected those results of him.  After all, one cannot expect a nation in one generation to produce two persons of the class and qualities of Nelson Mandela.  The transition from Mandela through Mbeki to Zuma clearly demonstrated a slide from the top end of the good-bad scale.  We can only hope that Zuma represents the stop mark at the bottom end of the scale, and that his successor will start the climb again.

Zuma still does not get it

All knowledgeable observers are in agreement.  South Africa is in the early stages of a financial crisis.

Business confidence has collapsed, and is still heading south at an increasing rate.  The investor world is in agreement that the country is one tiny step away from junk status.  Economic growth has collapsed, with the World Bank and the IMF in agreement that growth this year will be considerably less than 1%, less than half of last year.  The Rand is testing new limits against all other currencies.  The cost of living is skyrocketing, with prices moving up on a daily basis.  Local companies are looking elsewhere for new areas of investment, with the assurance that the South African market is close to dead.  Inbound foreign investment is dying off rapidly, and existing foreign direct investments are fleeing the country.

The only body that sees a different world is the ANC.  Gwede Mantashe, after the State of the Nation fiasco, stated in a TV interview that we are not in recession.  ‘Recession,’ he said in an arrogant tone, ‘requires three quarters of negative growth, and we have not had that yet.’  His one concession to the truth was that telling word ‘yet’.  Even Mantashe apparently knows that South Africa is on a slide under the leadership of the ANC.

Zuma read his normal SONA speech, apparently oblivious of the fact that he now is acceptable as a leader of the nation to fewer than 16% of the population.  He spoke passionately about how some Black soldiers had died at the Battle of Delville Wood, a hundred years ago, after they had been badly treated by the Government.  He raised the point that, fifty years ago, the residents of District Six, which was a slum, were moved to another area to make way for Whites, a development that never took place.  He also referred to the school riots in 1974, including the killing of Hector Pietersen, riots which were instigated by the ‘freedom fighters’ in order to create martyrs in the fight against Apartheid and have since been sold by the ANC as spontaneous outbursts of student anger.  He referred to the fact that the University of Fort Hare, a Black university attended by Nelson Mandela and Chief Buthelezi, is celebrating a hundred years of existence, conveniently ignoring the mantra that the Apartheid Government refused education to the Blacks.  All of these references were undoubtedly a snide racist attack on the Whites and the Party he claims to be White-dominated, the DA, and then he went on to denounce racism and announce a campaign against racism.  It is a sure sign of the duplicity of the man, a clearly racist attack followed by a denial that he meant it.

The speech made the apparently important point, reiterated in his post-SONA interview a day later, that Government plans to cut the costs of international travel while Zuma’s travel budget has been exceeded by sixty million Rand), the size of international delegations (only a fortnight after an eighty-man delegation attended the World Economic Forum at Davos, during which Zuma failed to attend a panel discussion on Africa), the after-budget parties (although SONA is preceded by a praise singer extolling the virtues, imagined or otherwise, of the Great Leader of the Nation) and similar petty cash items.  Mantashe made the point after SONA that not all of these were new.  After all, he pointed out, there had never been any rule regarding the size of delegations!  Really?  Any competent businessman imposes limitations on expenditure, and demands accounting of the results of the expenditure, which has never been done by the ANC Government!

Zuma carefully avoided any mention of:

• the hijacking of the Government by the Gupta family, together with his own family,
• his admission to the Constitutional Court that he had breached the Constitution and his Oath of Office in regard to his own plundering of State resources and in contravention of a binding Finding by the Public Protector, rumoured to be in excess of R150 000 000,
• his subversion of the rule of law in co-opting the Minister of Police to produce a fictitious report exonerating his boss from any liability for repayment of the stolen funds used for Nkandla, using the flimsy excuse offered by all evil men, including the Nazi war criminals at Nuremburg, that he was following orders,
• his blunder in replacing a standing Minister of Finance with a failed nonentity, which was followed three days later by an about face, all without reason (other than an outright lie) or explanation, although it cost the economy an immediate R500 billion with much more to follow in the form of dramatically-increased cost of borrowing,
• the downgrading of Government securities by the Ratings Agencies, taking them to one tiny step above junk status, which will remove them from the list of permissible investments for most of the organisations that have provided funding to the country and to its banks,
• his breach of a High Court Order that the Government enforce a Warrant of Arrest of al Bashir, permitting him to flee the country while telling the huge untruth that ‘his name was not on a passenger list (!), an outright breach of the legally-binding Treaty of Rome and a flagrant statement of support for a terrorist leader accused of genocide,
• the fact that South Africa’s economic performance alone brought the economic growth of the African continent down from 7,4% without inclusion of South Africa to 4,3% with inclusion, stating that the country faced difficult external economic conditions, of which, apparently, the rest of the continent was unaware,
• the continuing brain drain, of all racial groups, fleeing the disastrous conditions in the country to seek their fortune in other economies, all subject to the same economic conditions,
• the collapse of the mining industry under the weight of trade union demands for uneconomic wages, supported by ruinous strikes accompanied by extreme violence,
• the abject failure of the education system to provide an acceptable education to millions of children, even at the highest cost in the world as a proportion of GDP,
• the continuing disasters in State-Owned Entities, such as Eskom, SAA, SABC, PetroSA,
• the worst drought in fifty years, exacerbated by a total lack of preparation of the necessary supportive infrastructure, even though the drought was known to be on the cards for several years, and by a lack of foreign exchange and economic strength to import the necessary food to prevent widespread starvation,
• the status of South Africa amongst the lowest in the world on indices of
• transparency,
• corruption,
• education,
• attractiveness as an investment destination,
• security of investment, after the country cancelled Treaties in this regard with European countries, the source of most of the foreign direct investment,
• ease and speed of starting a new business.

Zuma read his speech, badly, as though he was going through the motions.  He believes that his hold on the Party is strong enough to enable him to muddle through to the end of his term (remember the FBI’s Mc Carthy and his famous files on Congressmen?) and possibly even longer, by use of his seven thousand-strong personal security force.

After witnessing Zuma’s State of the Nation address, one can be left with only one thought.  Zuma really does not get it, and the ANC will continue to support him for as long as they can, to continue their depredations.  They have no interest in governing the country.  Their only interest is what they can take from it.  Joe Slovo, the leader of the Communist Party responded, in the early years of the ‘new South Africa’, to a question why he believed that the proposed form of government would succeed when all others that had tried it had failed.  “Communism needs capital, and South Africa has that capital.”  “And when the capital is exhausted, what the?”  His famous response was “Then we’ll try another system.”

Cry the Beloved Country.

Getting Back to Basics

Pravin Gordhan led a campaign to improve the Public Service by ‘getting back to basics’.  There is some merit in this thinking, and it could well be applied to Government as a whole.  Here are some suggestions for doing this.

1. Bring a realisation to all levels of Government that the Government is owned by the people, works for the people and is responsible to the people.  This includes everything from the start of the State President’s speech on the state of the nation when he spends many minutes greeting the Speakers, the Members, the guests and, last of all, the people.  This is wrong.  The State President is primarily responsible to the people, and the people should be the audience.  All others are incidental.  When this realisation is firmly implanted in the minds of the politicians and the civil servants, they will understand that arrogance has no place in their actions.  It must be replaced by humility.
2. Make the workings of State accept that what is done can only be done in the interests of the people who are paying for it.  There is place for secrecy in the formulation of policies and laws only in very limited circumstances.  Everything else must be open and above board, with no allowance for closed door meetings, policy formulation by elite groups of Party apparatchiks, no permissions for lobby groups to influence policy formulation without full disclosure and the right of reply by any interested citizen.  There is no place for the preferment of a particular group unless the principles of such preferment and the objectives of it are clearly stated to the public and accepted by them.
3. Gain an understanding that everyone in Parliament is representing all the citizens, not only the voters who support them.  A policy must be beneficial to all the citizens, and must gain the acceptance, at least in principle, of all of them if it is to avoid resistance by those who are disadvantaged.  The readiness of the Whites, for example, to accept measures that will bring others to the same standard will probably surprise the legislators, as will the willingness of the wealthy to assist the poor, if the group that is to be disadvantaged can be brought to believe that it is in the interests of all for the economy to be fully inclusive, and the collective skills, intelligence and experience of all can be concentrated on achieving the accepted objectives.  The current method of blaming the Whites, including Jan van Riebeeck, for all the ills of the country achieves only the alienation of that group, manifested in resistance to the policies and the emigration of skilled persons of all races, depriving the economy of their capabilities.
4. Establish a rule that corruption of all kinds and at every level is not acceptable, and will be revealed and punished.  By its nature, corruption involves at least two parties, and, in many cases, one of the parties is using his or her position of power to offer an advantage to the other party if a payment in one form or another is made.  The only way to prevent that would be to establish a policing and investigative unit under a person of undoubted integrity who does not consider himself beholden to any person for the position, such as the present Public Protector.  That person should be empowered to offer immunity to prosecution to any person who is involved in such corruption if they give evidence resulting in a prosecution, and there must be no holds barred in actions to be taken against those involved in such corruption.  Included in this package could be an increase in the penalties applied against guilty persons who have used their positions in Government to facilitate the corruption, possibly as much as double the penalties otherwise applied.
5. Make the Executive completely accountable to Parliament, with an unlimited question time, an exclusion of prevarication and avoidance of questions, and a requirement that full documentation may be required to support the answers given.  This requirement would include the right of Parliament to give or withhold approval to the appointment of every Minister, Deputy Minister and Director General, or senior executives of State-Owned Entities.  Every responsible Minister must account for reasons for the failure of any entity subject to his or her control to meet its plans, to gain a clean audit report or to issue final accounts timeously.
6. Make the Speaker of the House fully responsible to the House, with the prime purpose not to rely on the Rules, but to give full expression to the principles of democracy and accountability.  This would include banning any preference being given to any member of the Executive or to any Party.
7. Institute a rule that every member of the Executive and every MP must use the facilities provided by the State to the public, including using public hospitals and public transport.  They should, as far as possible, use the same facilities as are used by the public.  Their salaries should be increased by the same proportion as is experienced in their income by the average of all citizens.

Only by breaking down the perception that politicians, MPs and ‘the leaders’ are above ordinary citizens, and that they have responsibility to their sponsors that are greater than those to the citizens, will it be possible to realise the basic principles of true democracy in an economy that is managed in the interests of all citizens.

Business must work with Government to Save the Economy

The State President has had an insight into some of the conditions that underlie growth in jobs, taxes, foreign exchange earnings and, presumably, corruption opportunities.  He is now calling on business to cooperate with Government in growing the economy.  It might be instructive to him to learn Lesson 101 in Economic Management of an economy, a lesson which the ANC Government has either forgotten or never learned.

The lesson is simple.  Everything in an economy depends on business:  taxes, exports, jobs, all of economic activity depends on businesses of different sorts and sizes.  They might be multinational companies operating huge industries or mines, employing hundreds of thousands of personnel at all levels, or they might be one-man shows manufacturing bead jewelry.  They all have several factors in common.

A business needs labor at a reasonable cost.  If the cost is too high, the business will close its doors, or find a way to do what it does with fewer or cheaper employees, or relocate to a country in which the cost of labor is more affordable.  The Government’s populist stance in promoting ‘worker rights’, a ‘living wage’, compulsory adherence to trade union enforced wages, the promotion of ‘human rights’ which have no relevance to the real conditions on the ground, and its failure to provide qualified employees, in terms of education, skills training, reliable quality of qualifications and similar factors that gain votes but do not help employees to contribute to the activities of the business are all factors which strangle or kill businesses, and keep foreign investors from making an investment in the country.

A business needs to know that it is welcome in the country.  This does not mean that the President should spout his insincere slogans, while undermining ‘Capitalists’ or, even worse, ‘White Capitalists’ at every Party congress.  It means that the Government must make a thorough evaluation of every law and every policy that might deter businessmen.  It must remove the possibility (probability?) that some Government body will act against the business in order to coerce the owner/shareholder into parting with a slice of it in favor of a Party favorite.  It must remove the silent white anting of the business by requiring placement of cadres in senior positions, where they can set about the process of silencing comment from the business about things that the Government might view as unfavorable to it.  It must remove the corruption practiced by SOEs such as SAA and Eskom in demanding a shareholding in the supplier company in order to gain a supply contract.  It must remove the possibility of large fines or penalties being imposed on a company in order to allow a favored entity to acquire the business at a fire-sale price.  It must ensure that no penalization of the company can occur in its dealings with a Government body for any but the most valid economically-driven reasons.  It must cease holding the view that a business is a legitimate target from which to suck the blood in order to advance Party ends.

A business must believe that the costs of doing business are reasonable in the light of the facilities and benefits offered to it for that cost.  The high fuel levy was intended to ensure the availability of good roads, not to supplement the cost of social grants.  If the policy is that the ‘user pays’, that policy must be implemented even-handedly.  That means that taxis must not be exempted from the road tolls, and that the cost of such tolls must be applied to the specific purpose of the users, not to subsidize the living of Party favorites.  The costs of doing simple things under Government regulation or with Government imposed bodies must be reasonable.  This includes such things as registering a company, submitting returns required by Government or paying the numerous levies, fees, costs and other matters, including the cost of land taxes, electricity, water, rail or road transport, or even employing workers.

A business must believe that the assets that it builds up will continue to be available to it, not to fill gaps left by Government incompetence or corruption, such as the attachment of farm dams to supplement the water supply to the areas in which no provision for continuing water supply has been made, no regulation may be passed to require a farmer to hand over half of his farm to wage employees without any effective compensation.  If there is no such assurance of property rights into the future, the business man will either not invest or withdraw from the investment, to the cost of all.

How does the Government find out what business wants? 

The answer is not that it turns to the Russians or Chinese for advice on how they do it.  The answer is to ask the businessmen!  And the first step to getting a real answer is to ensure that those businessmen trust the Government and the representative of the Government.  It may come as a rude surprise to the dearly beloved President, that businessmen and –women do not trust either the President or the ANC Government.  Most businessmen have experienced the duplicity of Government, the doublespeak and the outright lies.  They have suffered under the campaigns against them to vilify the Whites and the Capitalists in order to curry favor with the trade unions, the SACP and the ‘poorest of the poor’.  Most know that their desires will not really be heeded.  Most know that the speeches that Zuma is now making are no more than lip service, a normal method of sideling the people who are the absolute foundation of the economy while the Government pursues its own desires of enrichment and reelection.

Unfortunately, all businesspeople know from experience that the pious protestations of Zuma are without substance or true intent.  A leopard does not change its spots, and more than the ANC will suddenly put the interests of the people first.

Why is South Africa Failing?

The question that is being asked seldom attracts a complete answer.  While the reasons given below are not complete, they are more accurate than the Government is willing to concede.

The Government blames all the problems on three main factors:

1. The collapse of the world commodity market.  This is a factor that any competent market observer could have foreseen two years ago, or even longer.  It has been clear for a long time that the Chinese economy was reaching a turning point in its headlong growth of expenditure on infrastructure.  New buildings were being completed and remaining unoccupied, the market for its exports was reaching a peak or even starting to decline, and the centrally-planned economy was showing signs of strain, which were not being addressed, adequately, or sometimes at all, by the government.  In the case of South Africa, the policies of the Government and its inability to restrain the excesses of the trade unions have been having the effect of holding back the ability of South African businesses to capitalize on the boom conditions, and setting the ground for the current economic decline long before it started. 
   Not only did the Government fail to foresee this development, it failed to maximise the benefits to the economy of the boom while it ran, and they frittered away what little cash it produced in pork barrel political investments, hand-outs to the ANC voter base, abjectly poor management of whatever it did, corrupt practices which involved opting for large bribe-producing projects rather than run-of-the-mill maintenance, rather than making the strategic investments, often at small scale, that would help to develop the industrial, agricultural and mining base of the economy.
2. The evil White capitalists, who have withheld from investing the large sums of capital they have accumulated on their balance sheets.  There are three main faults in this reason.  The capitalist system is blamed for not doing what the Government wants it to do, but capitalists will refrain from making investments unless they are assured that the investment will pay off in the form of increased, or at least stable profits in the long term.  The ANC Government has failed dismally in this.  It has, instead, assured the capitalists that committing themselves to the South African economy is an almost sure way of inviting the ANC to raid their fixed assets by means of laws to demand the donation of shares of their businesses or costly employment of unqualified people as Directors, managers or simply employees under the disguise of racial equity, and it has invited the trade unions to hold them up, like highwaymen, demanding ‘protection money’ in the form of excessive wages and benefits demands in order to avoid ruinous strikes and violent confrontations, often leading to murder and arson.  These tactics work, in the short term, because the fixed investment is too valuable to abandon, but they teach the capitalists, who are neither short-sighted nor stupid, that South Africa is not a good place to invest.  Those who can, move to another investment destination, withholding any further non-essential investment in the local economy, and those who do not have this option available to them, simply sit back, to ride out the storm with as little exposure as they can manage, in the hope that a new Government will be in place within the foreseeable future.
   The fact that many of the capitalists are White is a result of a long history, not the least of which is that the European nations that founded the economies of Africa were capitalists for centuries in the past.  They do not suffer the negative effects on investment that the tribal structure of much of Africa remains saddled with, and they have not had to undergo the long learning process that many of the leaders of the ANC do not appear to have completed.  The recent rambling speeches of the State President bear testament to this.  He appears to believe implicitly that the market price for a good is determined by a meeting of all concerned parties, apparently without regard to the realities of input costs, the value of innovation, the scarcity of the good or its components, the price offered by other potential purchasers, reward for risk-taking, or the myriad other factors that go to influence the final price.  Of course, his limited understanding of how the world works is based on the education and brainwashing he received from the Soviet Union and its lackeys, and remains influenced by the Communist ‘brothers’ around him, many of whom continue to hold high positions in Government.  None of these people appear to understand that the ignominious collapse of the Soviet Union was caused, among other reasons, by the failure to understand the workings of the market economy, and not by the nefarious schemings of ‘capitalists’, who, seemingly, had nothing better to do than spend three-quarters of a century in plotting to bring an end to the ‘worker’s paradise’ that was responsible, under Josef Stalin alone, for the killing of sixty million of its subjects and the subjection of hundreds of millions to abominably poor living conditions and education.  Of course, not all capitalists are White.  There are many Black, Coloured and Indian capitalists in the country, and, remarkably, most of them do not support the ANC.
   The belief that White capitalists are all evil is equally without foundation.  Many White capitalists have gone along with the stated motivation of the Government, in supporting the training of the previously disadvantaged, in supporting charities to help the (predominantly Black) poor, in providing assistance to the Police, the Education Departments and to other worthy causes.  Their actions in this regard have been damaging to their own businesses and to their long-term interests, and have been undertaken almost solely to benefit their fellow man, and not in the belief that this benefit would accrue to themselves, except in the broadest possible way.  It is a fact that a large proportion of the donations that have brought about the partial recovery of the AIDS disaster caused by the ANC denial that AIDS was a disease (remember Thabo Mbeki’s humiliating speech that ‘AIDS is a syndrome, and syndromes don’t cause diseases’, and the equally humiliating pronouncement by his Minister of Health that onions and garlic cured AIDS, not to mention the comment by Jacob Zuma that he showered after having sex, and so could not have contracted the disease?) is provided by the (predominantly White capitalist) United States, and that 60% of US citizens regularly make voluntary donations to charities.  Neither Whites nor capitalists are inherently evil, nor is the United States, as propounded by Zuma’s idol, Robert Mugabe, and hinted at by Zuma and many of his stooges.
3. The unwillingness of the Press and other media to support the ANC, confounding every attempt by the noble ANC, the champion of the people, to bring an understanding to the mass of South African voters of the benefits of ANC actions and policies.  Unfortunately for the ANC, the free media has within it many astute, educated and knowledgeable people, who are able to pick out of those actions and policies the likely unrealised potential effects of what they are doing and plan to do, as well as to come to the truth of the many acts that the ANC seeks to conceal under the many words which shower on the public to withhold from the public what is really happening.  The media are, if they are truly free, the champions of the public, the poor and ignorant ANC voters as well as the jack-booted evil White capitalists.  They are able to take a transcript of a Jacob Zuma speech and point out to the public the abject lack of understanding and comprehension contained in it.  They can analyse the probable results of a proposal, such as the recent one by the Minister of Water Affairs to steal the privately-owned dams of White farmers in the Northern Province and distribute the water contained in them to ‘the poor’, at the almost certain cost of the demise in short order of the farmers who built those dams, at high cost to themselves, to ensure that they are able to survive the sort of drought conditions that now pertain and that were foretold at least several years ago, without the ANC Government doing anything to forestall the almost certain results.  Bringing this knowledge to the attention of the public is their duty, as it is of the Government, and the fact that they are critical of the Government in doing that is not disloyalty, as the ANC claims, but the unbiased performance of that duty.  The fact that the ANC is shown to be lacking, in foresight, in intelligence, in moral standards and in the expected level of integrity in the performance of their duties is the fault of the ANC, not of the media.

The truth of the matter is that there are many reasons behind the collapse of the economy.

The collapse of the commodity markets is a factor, but this was a probable event, able to be understood and acted against in the decades prior to the present.  South Africa failed miserably to take advantage of the boom conditions while they pertained, because the Government saw the private business sector as a cow to be milked as much as possible, without making provision for the future.  It encouraged the wildly excessive demands of the labour unions, because the increased affluence of the workers was sold by the ANC as a direct result of the efforts of the ANC.  It was not.  It was a result of the success of the capitalists who had built those businesses to the level of success they enjoyed, offering increasing numbers of jobs to a poorly-educated and –trained workforce, and making up the deficiencies of those workers at the cost of the investors.  Those businesses were operating in the real world, where the price of an ounce of platinum is determined by the forces of supply and demand, not by negotiating by unequal partners across a table, and where supply is determined by whether a mine can produce those ounces of platinum at a cost that will enable the company to reward the capitalist investors for the risk and the time they wait for the reward, and the demand is determined by how many ounces are needed by the users, by the cost of alternative ways to meet the need, and by how many ounces can be purchased at a particular price.  There are no secret negotiations involved in the process, no bribes being passed under the table, no consensus of like-minded parties, only the setting off of needs, demands, supply and costs to reach a coldly-calculated value.  There is no space for consideration of the needs of the ‘poorest of the poor’, for the wish to placate a demanding Government or trade union.  If the cost is too high, the sale will not be made, the production will reduce and, with it, the demand of the labour required to produce.

Part of the cost of production is every element of direct and indirect cost that is required to make that production.  The direct costs include wages, benefits to labour, levies to Government at all levels, including the compulsory payments to the Companies Office, to the Ombudsman, to the adjudication of labour disputes, to Sanral for toll fees, the cost of electricity paid to Eskom and incurred by the need to have and operate stand-by generators when Eskom fails to supply, for fuel to transport the products out and the raw materials in, including the levies paid to Government, for SETA levies, to provide for the training of the potential workers to the point where they might become productive, and all such similar costs.  The indirect costs include the loss of earnings on the shareholding transferred to non-productive shareholders under the BBEEE schemes, as well as the loss of earnings caused by unjustified strikes in support of demands for excessive wages and benefits. 

Contrary to Government view, the cost of transferring a shareholding to a Black shareholder, even if it is paid for at an agreed price, is the loss of earnings to the original shareholders who would have earned that share of the profit.  If a company earns R100, and a shareholding of 26% is transferred to a Black shareholder who played no part in bearing the risk or the capital outlay of setting that company up and putting it in business, then the original shareholders have lost R26 per year.  Paying them a price of R260, probably over five or ten years, is far from adequate compensation for the profits and capital growth they expected, and even paying interest of 30% p.a. would, in most cases, not compensate for the loss.  If that investment is coupled with representation on the Board by persons who would not, in the ordinary course of events, have been chosen for that role, it compounds the problem, because the original shareholders, who have clear ideas of where the company should go, now have to accommodate the wishes and desires of people who, in most circumstances, have little understanding of the business and, probably, considerably less capability to make the business succeed than the original shareholders.  If they were the equal of the original shareholders, the chances are that they would have set the business up for themselves!  Again contrary to the deeply-held belief of the ANC, a business is not a training ground for less-skilled operators, certainly not at the top management and Board levels.  That is a fact that is implicit in the fact that progression to those top ranks has always been accompanied by years of exposure, development of skills and capabilities and experience.  The ANC has attempted to upset that natural order by the legal requirement to bring in people at top level who have none of those qualities, and the result has been a catastrophic collapse of the competitiveness of South African businesses, accompanied by the brain-drain of skilled Whites, who could have sustained those businesses but who have seen the writing on the wall – qualified Whites have no future in South Africa.  They have taken their skills, knowledge and experience to foreign climes and, understandably, have seen that their South African competitors are now soft targets.  The foreigners who might have added their capital and skills to the country have also recognized that, unless they are Chinese, Russian or Guptas, they are seen by the ANC Government as legitimate targets.  They have seen numerous examples of the Government bodies working in illegitimate and internationally unacceptable ways to squeeze them, and they have pulled back from the country to await a more honest and more perceptive Government.  The losses to the ‘poorest of the poor’ have been huge.  Tens of thousands of jobs have been lost directly, and hundreds of thousands of potential jobs have evaporated, along with the substantial foreign exchange earnings they would have brought.  The development of the economy has been reversed over the twenty-one years that the ANC has been in power, taking a country that was the hope of the world to put it in the category of most corrupt, least effective, ratings-degraded, Zimbabwe-style basket case economies.

Another profound reason for the current failings of the South African economy is that the ANC believes that a country can be operated in a political way.  Businesses need firm rules within which to operate, not a constantly changing set of conditions that are unclearly defined and subject to the whim of a dictator-style Minister.  A business cannot be an ANC-style democracy, where every decision is debated ad infinitum and then agreed, probably too late, to accord with the whims of an uneducated majority.  A business needs decisive management which is capable of assessing the objective facts and making decisions, and then putting them into effect.  It cannot take into account the desire to mollify an undefined body of the ‘poorest of the poor’ – that can only be taken into account in the way that the taxes of successful companies and businesspeople pay.  Building houses for the workers and their large families, supporting the education of their children, meeting a ‘corporate social responsibility’ that has nothing to do with the objectives of making a legitimate profit all fall within the responsibilities of the employees and the Government, particularly in a country in which many businesses are hanging onto survival by their fingernails.  The surest way to bring an economy to its knees is to foist all of the Government’s wish-list requirements on the people who are making the economy work.

Another reason for the continuing failure of the South African economy is the substantial amount extracted from the economically productive sector by means of taxes, levies, fees, increased costs of property taxes, electricity and water (in order to subsidise the non-productive sector, including the social grants, the free education at university level for the tens of thousands of matriculants who would otherwise have gone on to the unemployment roll), the massively-expanding Civil Service of overpaid and underperforming persons, and other disguised Government take.  The fact is that the money that the Government extracts from the small productive sector to redistribute to the poor – another way of saying that it bribes the voters to support them at the cost of the taxpayers – would, in normal circumstances, have been applied to development of the business, with a small proportion being peeled off to reward the investors who took the risks and provided the capital, knowledge, contacts and skills, which reward would have provided reassurance to potential investors, local as well as foreign, that South Africa is really open for business.  The more the Government take, the less will be the new investment and the slower the development.  And of course, as the development and investment fades, the economy declines, and the actions of the top politicians become more erratic, more determined by the desire to grab what they can while it, and they, are still there.  The extent to which that is happening can be readily gauged by the intensity of the Government’s desire to ensure that the media toes the Government line, that the investment funds remain in the country, by compulsion if necessary, and that the businesses that remain effective are brought within the control of the regulations that bleed them.

Probably the largest single reason why the South Africa economy is failing is that the Government’s focus is on its voter base, the ‘poorest of the poor’.  In a business, the concentration of top management must be on the business activities that produce the most profit, with attention being given to those that cost the most.  The same applies to an economy.  The Management of the economy cannot afford to place its greatest effort on the sector of the economy that produces practically no taxes, the lifeblood of a Government.  The greatest effort should be applied to maintaining and fostering the growth of the sectors of the economy that presently, and in the future, provide the greatest contribution to the GDP.  That attention, if competent and up to the task, will continue to support the flow of taxes to the Government as well as providing the jobs to the people, whose income will supplement those taxes.  In time, those activities will trickle down to the lower levels, enabling those who now receive an adequate education to enter the fields of the economically active, contributing to the fiscus and dragging their comrades along with them.  This process may be supported by programs designed to accelerate it, by tax concessions and other incentives to enhance it, but it cannot be the central focus of Government thinking and action.  Like it or not, the poor contribute very little to economic improvement, and the best ways to improve their lot is not to subsidise them, but to find ways to motivate them to work their way out of poverty, using their skills, abilities and self-motivation to achieve for themselves what the ANC has failed so completely to do.  The fact that they may well decide to cast their vote in favour of a Party that is pro-business (NOT anti-poor) is a factor that should motivate the Government in power to maximise the success of that process, but never to support it to the detriment of the economic activities that make such self-rescue possible.  The obvious way to do that is to prove an excellent education (rather than finding excuses why the poor education is becoming worse) and relevant technical training, to make the youngsters able to earn a living immediately, rather than making it possible for them to continue their schooling by means of ‘progressing’ to the next grade by the simple expedient of failing twice in a grade, or giving them free university education as a means to postpone their coming onto the labour market for four or six years, while they hold back the education of those who are able and willing to succeed.  Best of all, adopt policies that reward effort and ability, and, wherever possible, drop any notion that someone is ‘entitled’ to something merely by virtue of his or her presence.