World Economic Forum – Does it Mean Anything?

The World Economic Forum 2017 starts in Durban today, boasting a bevy of ‘economic leaders’. This forum is designed to permit world leaders and thinkers to talk about the problems the world’s economies face, to and find ways to solve them, and to talk about crucial inclusive and sustainable progress, particularly for Africa.

In a Moneyweb article today, presenting a radio discussion on the meeting, it was reported that it is expected that notables attending the meeting will be the Prime Minister of Namibia, the president of Senegal, the president of Uganda, and the King of Swaziland as well as his prime minister and possibly the President of Zimbabwe. The meeting will also be attended by the President of South Africa, who will make the opening address.

And therein lies the problem.

The people attending, with the possible exception of the Prime Minister of Namibia, are all leaders of nothing nations, nations brought close to poverty by the policies and actions of their leaders. One could hardly be expected to show respect for the King of Swaziland in his role as an economic leader. He demanded a 25% finder’s fee for a loan of R2,4 billion granted to his country by South Africa, in the form of a bail-out. Readers will remember that the South African Minister of Finance explained to infuriated South Africans that the loan would not cost South Africa anything, as it was borrowed and lent on. That sort of bush accounting goes a long way to explaining why South African bonds now enjoy a junk status! Uganda is enjoying a boom at the moment, probably because the huge sums flowing from the location there of the African Union are largely provided by Europe, a continent which is roundly condemned by most African countries, except when they make their begging bowl presentations. Zimbabwe presently holds the lowest ranking in the world, apart from North Korea (a country highly respected by Namibia as an example of economic and democratic excellence), in the fields of corruption, repression of democracy, lack of transparency in government, honest elections (with the notable exception of South Africa, whose Electoral Commission, in its capacity as an expert observer, declared the most recent election to be free and fair, the only observer believing that), incredibly poor economic policies and practically any other metric related to good governance. And, of course, the geriatric President, Robert Mugabe, will spout his usual diatribe about America and Britain as the examples of everything that is wrong. That will delight Jacob Zuma, the equally crooked President of South Africa, who enjoys the distinction of having brought down the most powerful economy in Africa while building his personal wealth. Zuma dotes on Mugabe, seeing in him the example of what he is striving to be, a dictator of a banana republic.

It is worrisome that a meeting of this nature should be lauded as worthwhile, even valuable to the development of the African and world economies. That shows just how far the world economy, with the exception of the Western nations, which are viewed as having value to Africa only as donors and supporters, has slipped.

In times such as these, the world has need of great men and women as leaders. Few are to be seen, and the nations in a large part of the world seem to be turning to people whose sole interest seems to be personal wealth and aggrandizement, rather than the pursuit of sound economic management. Even the United States has slipped down the ladder of leadership, with the new President Trump being elected on the basis of hatred, arrogance and grand-sounding promises. There are few leaders in the world who can lay claim to the heritage of careful thought, considered action and application of democratic principles that was handed down by their predecessors only a few decades ago.

Why do the people accept this? Can it be that the citizens of the world have lost so much intelligence and perception that they cannot understand what is being done to them by the people they have chosen to lead them? What has happened to the grand experiment of democracy?

It seems that the succession of failed leaders in so many countries has created the view that democracy is not worth fighting for, that empty slogans appealing to uninformed and unthinking populaces have greater value than important principles, that the amassing of personal wealth, at the cost of the world economy and environment is more important than providing the basis of a good life for our children and grandchildren. The continued abdication of their rights of control by the citizens of the world to ‘leaders of no apparent worth will surely result in a growth of a new form of dictatorship by those hungry for wealth and power. Perhaps the citizens of the world will deserve what they will ultimately get.

The World Economic Forum promises to be no more than another talk shop, at which empty slogans will be mouthed for the purpose of gaining newspaper headlines glorifying the participants, to be reported in their home countries in glowing terms by sycophantic reporters, while the business leaders build their circles of conspirators at the elevated levels of government, with the prime objective of each feathering their personal nests, while they lay the foundations for the next world war.

Is this what we, the citizens of the world, want?

Advice for the ANC and their replacement in Government

A broadcast item on the SABC led to an understanding of why South Africa is in the crisis it now is. The item concerned the fact that 35 000 domestic workers lost their jobs in the first quarter of 2017, coincidentally the period in which the Government announced that a National Minimum Wage of R20 per hour will be applied. The reason is simple. The people running the country do not have even a basic understanding of the rules of economics. To clarify: these rules are universal, applying everywhere, regardless of nationality, race or ideology. Although they were identified, codified and clarified by ‘dead White men’, they were never imposed by those White men, or by the ‘colonial regimes’ that are so hated by the unthinking Black African regimes. They are imposed by Nature, and disregard of them is punished by Nature.

In order to avoid the necessity of sending a bunch of ‘leaders’ to university to gain the wisdom and understanding they need to run the country (so probably depriving them of the fat pickings of a government position), here are some basic rules to observe when formulating policies. 

1. Any job is better than no job. There are exceptions of course, but these are taken care of by acceptable legislation on worker health and safety. The simple fact is that a starving man or woman would much rather work for a small wage than have no wage at all. The cut-off point is reached where the wage offered is so low that the worker sees no economic benefit in undertaking that employment, when he or she will either simply stay at home or take steps to upgrade his or her utility to the employer by doing more work for the same wage or by up-skilling to undertake more valuable work.
2. A work contract is a voluntary arrangement between the worker and the employer. If the worker is not satisfied with the wage he or she is paid, and the employer is unwilling or unable to pay more, the worker is free to terminate the arrangement and seek work elsewhere.
3. The inability of the employer to terminate the voluntary arrangement without extensive and expensive repercussions is a strong incentive to the employer to find a way to have the work done without the need for labour, or, in most cases, with a need for less labour, which is generally more highly qualified. (If you doubt that this rule is valid, look at the mine labour statistics.)
4. The inability of the worker to find better-paying work elsewhere is a direct result of two major factors:
1. There are too many workers for the available jobs, which means that employers have the ability to employ another worker at a cost that he is willing or able to pay. This, in turn, is a direct result of the implications of rule 3. Economic activity is the main determinant of the number of jobs available: too little economic activity results in too few jobs, high competition for the few jobs available and consequently low wages being offered.
2. There are too many workers offering the same or a higher level of qualification than the particular employee. This tends to be the result of a high birthrate, coupled with improved medical care resulting in a population growth higher than the rate of economic growth,
5. In turn, the high cost of labour resulting from interference with the market mechanisms, by governments or by Trade Unions, is a disincentive to a potential employer who would otherwise establish the industry or business that would generate the jobs to employ the present or potential unemployed. To put it simply, an investor does a calculation based on the expected size of the market, which generates the income necessary to cover the costs, and the expected costs, which consist of raw materials and components, labour (quantity (at the required level of qualification) and cost per labour unit, other costs (such as fees, levies, compulsory costs) and other cost inputs (such as electricity, transport) compulsory transfer of profit share (such as BEE share participation, income and other taxes), and then compares the net return to him or her with the expected risks of undertaking that activity. If the calculation produces a less-than-acceptable result, the investor finds an alternative use for the available capital, or simply accepts no return rather than running the risk of a loss. There is no element of racism, political favour or humanitarianism in this calculation. It is the responsibility of the person making the investment (to himself or to the people he represents) to earn an adequate profit on the money invested. Where a profit is not expected, as is the case in the agreement between an individual and a domestic worker, the calculation is even easier. The question is asked: how much can I (or am I willing to) afford paying for the services of a domestic worker? If the wage (including all ancillary costs, such as food, accommodation, transport, UIF contribution, pension contributions, costs of termination (including possible litigation or conciliation)) is too high, the employment arrangement will not be entered into, or, if it already exists, will be terminated. The result will be that the potential takers for such employment will be left with fewer offers of employment, and will either remain employed, accept employment at a lower than desired wage, or find a means to upscale the employment offering by improving skills or reducing hours worked. This calculation is done at many times, but, most often, when the income of the employer is reduced or under threat of reduction, as it now is, with the result that 35 000 domestic workers have lost their jobs in the first quarter of 2017.

The final rule is that no-one has any reason to question the results of government and union activism: any action that increases costs of employment will result in either a shift from less productive forms of employment, either to more productive forms (generally with a reduced number of employed) or a lower level of economic activity. There are no exceptions. The rules apply at all times, although their workings may be disguised (and usually are by employers who do not wish to attract the ire of government, the unions or the public by making an unambiguous announcement) or delayed (it often takes a long time for the realisation that a particular element of activity is no longer profitable, to translate into a replacement or termination of that activity). However, the come-uppences will take place. What will not happen, as history so painfully shows, is that the workers will understand why they have lost their jobs, that governments will accept their part in the blame, or that unions will moderate their demands.

Any government that wishes to increase employment, and so economic activity, and so wage levels, and so tax revenue, must understand rules 1 through 5. It is no great mental challenge to understand that these rules are immutable, and that no amount of legislation or strikes can revoke these rules. The hardest part of Government’s task is to apply them.

Zuma’s speech on Freedom Day

The speech by the State President on Freedom Day 2017 was, as usual, an embarrassment to all thinking people. Apart from the fact that the President, who is, after all, the President of ALL South Africans, used the occasion as an election platform, as he almost always does, it was clear that the speech had been written for him, dredging up all possible statements to show that the ANC has done its job. Unfortunately, apart from the fact that the President was unable to pronounce the word ‘albinism’ and showed clear signs that he did not understand what it meant, in many cases the comments he made were nothing less than an admission of the failings of the ANC Government in meeting the daily needs of the citizens. He gave examples of many Police stations which have inadequate facilities, municipalities that do not perform their functions, and many other examples of failure to govern properly. Heard by an objective listener, Zuma’s speech, in any normal democracy, would be a prelude to the resignation of the President. In this abnormal democracy, Zuma appeared to be proud of his non-achievements.

At the time that Zuma was speaking, numerous marches were taking place, calling for Zuma’s resignation, as ‘he is the man who is solely responsible for bringing South Africa to junk status’. Interviews with several private citizens on television revealed a state of dissatisfaction with the state of the country, with inter-generational rape being common, unemployment high and the performance of local government entities inadequate.

With all of this, Zuma proceeds resolutely on the path of expropriation of land without compensation, a drive to ensure the increase in the representation of Blacks in ownership and management of companies, ignoring the implications on unemployment and economic activity of his hare-brained policies, and concentrating only on the racially-divisive rhetoric for which he is known. He continues to spout the lies on which he bases his policies, and reiterates his unfounded ‘statistics’. There could be no better illustration of this than Zuma’s congratulation of the Chief Justice for his hosting of an international judicial conference. He seemed not to notice that the keynote speech by the Chief Justice could only be interpreted as a stinging indictment of Zuma’s actions.

Zuma is a consummate politician, speaking the words that the electorate wants to hear, directing their sentiments towards the emotional and ignoring reason and truth. If South Africa ever wants to become a rational democracy, the legacy of Zuma will have to be erased from the public conscience. Together with his predecessor, this criminal (yes, criminal: he breached the Constitution in a grave manner, and he breached his sacred Oath of Office, both of which are criminal offences which would put an average citizen behind bars) President has achieved something that Nelson Mandela feared would happen as an extreme failure of democracy.

Cry the beloved country. South Africa deserves better.

 

The chickens come home to roost

It is a truism. You can fool some of the people all the time, and some of them some of the time, but you can’t fool all of them all of the time. Jacob Zuma is learning some hard lessons, and several of his loyal henchmen and –women are learning that you can’t trust a lying manipulator.

Zuma has lied consistently, to the ANC, to Parliament and to the public. He lied when he asserted with a straight face that he did not realize that the Government was spending R245 million on his private home. How he could ever hope to get away with a bald-faced lie of that magnitude is almost beyond belief, but he obviously did. When he was found out, he convinced his Minister of Police to lie for him, to aver, in an outright breach of his Oath of Office and of his duties under the Constitution, that all of that money had been spent on ‘security upgrades’. Another lie, but this time the incredibly stupid Minister was found out by the Constitutional Court, as was his lying boss. The fact that the lying President was in control of the ANC stooges in Parliament, men and women sworn to uphold the Constitution and to hold him to account, enabled both of these liars to worm out of any responsibility for their lack of honesty and integrity, and the Minister of Police was disciplined, in mock accordance and a slap in the face for the Constitutional Court Judges and the public of South Africa, by a meek letter saying in effect “You’ve been a bad boy. Don’t do it again unless I tell you to.” Both of them walked away free, but the ANC received a hearty serving of egg – or something worse – on its face. But they still held to their hero worship of the worst President the country has ever had, National Party included.

The next act of dishonesty came when the Minister of Energy simply rubber-stamped a deal under which the country’s fuel reserves were sold at a price substantially below the market price, and, again, in breach of a Constitutional duty to refer the proposed sale to Parliament for approval. Zuma failed even to reprimand the Minister, or to refer the question to the Police (a bunch of incompetents firmly under his thumb), to the Hawks (ditto) or to the Public Protector (a woman of unquestionable integrity) who would have taken the Minister to the cleaners. He ignored totally the supposed Performance Agreement which, he said, had been signed with all the Minister. In total accordance with the style that one has come to accept from this man, he has never made public the terms of those supposed agreements, never mind his evaluation of the performance of the Ministers.

Zuma followed through in signing an agreement with the Russians committing South Africa to spend R1,2 trillion on totally unnecessary nuclear reactors, no doubt including, in a side agreement, a demand for payment of a ‘finder’s fee’ of 10% to the ANC and another unspecified amount to himself via an unspecified intermediary. When the public came to hear of this lunacy, the lying President denied that there was an agreement, and that the (nonexistent) agreement was no more than an intention to explore possibilities for future co-operation, under which the Russians would train several South Africans in the operation of the nuclear power stations that they hoped, fervently, one imagines, the South African Government would buy from them in a fair and transparent open-market, arms-length deal. Yeah, of course. The Russians are known as generous people, with a strong desire to help a Third World country struggling under the depredations and incompetence of a President who can’t remember the details of his much-vaunted Nine Point Plan. Of course, the Russian embassy spoiled the whole plan by publishing the non-existent agreement on its website. Unfortunately, they failed to publish that part of the agreement that said that it didn’t exist or, in case it was found to exist, that it was not binding. Or something. The resulting furore, Zuma hoped, would be sidelined by fervent lies told by the Minister of Public Enterprises and by various Eskom officials. That didn’t work. By now, the public, represented by the Opposition Parties and numerous civil society bodies, took the matter to Court, which, inconveniently, today declared that the whole process embarked on by Eskom was illegal and to be annulled That process, to foist on the unwitting (Zuma hoped) public was managed (if one can say that anything that Eskom does is managed, in the conventional meaning of the word) first under the supervision of weeping, shebeen-visiting liar Molefe and then under the good step-father liar who did not realize that his step-daughter, who lived in his house, was the Director of a company that had been handed a billion Rand contract by Eskom, under his authority. Yeah, sure.

In the meanwhile, Zuma was the subject of a finding by the honourable Public Protector that reasonable grounds existed to require that the President was an illicit recipient of favours handed to him by the Guptas, who, in turn, had been handed many favours by Zuma and his lying cohorts. Of course, Zuma denied and denied, and applied to Court for a review of the Finding, a puzzling request in view of the fact that the Finding was that a Commission of Enquiry must be established, under the leadership of a Judge appointed by the Chief Justice, again a man of unquestionable courage and integrity, for the explicit purpose of determining whether any guilt existed on the part of Zuma, Molefe or any other minions. The Public protector must have considered the possibility that Zuma would try to appoint a stooge to head the Commission of Enquiry, as he did in the cases of the Marikana Commission of Enquiry and of the Arms Deal Commission of Enquiry. One wonders why she should have suspected that. Perhaps someone might have mentioned to her that the man holding the highest office in the land was not beyond reproach in the matters of honesty and integrity. Of course Zuma lied about his reason for requesting the review, claiming that he was not given the opportunity to state his side of the case, but, unfortunately, the (now) former Public Protector happened to recall that she had interviewed this liar for four hours, and so she released a recording of the interview, which consisted not of Zuma attempting to state his case, but of him ducking the questions, ably supported by his lawyer. Of course, in the twisted state of this man’s mind, forgetting a four-hour interview with a competent (one of the few in Government) person is entirely possible. In the same way as flying pigs are possible.

With this avalanche of misfortune still breaking about him, Zuma then fired the respected Minister of Finance and his respected Deputy, claiming that the firing was done on the basis of a remarkably unintelligent intelligence report (who would ever think that the State Security Agency could produce anything even remotely intelligent?) that these honourable men were working to harm the financial interests of the country (after they had clearly been pulling out all stops in an attempt to hoodwink the investing public into believing that South Africa was on a growth path, despite 23 years of economic decline). When he found that this did not wash, the lying President switched his story, to claim an irrevocable breakdown in the relationship between them and him. Of course there was a breakdown. Zuma was pushing as hard as he could to collect the finder’s fee and commission for the nuclear reactor deal, not to mention keep his stooge, Dudu Myeni, in her (for him) very lucrative job that has cost the South African public R18 billion so far, with another R5 billion still to strike this year, and all the while these two men were preaching a doctrine of financial discipline and fiscal prudence. Those two reasons alone would have been enough for Zuma to see red (not the SA Communist Party colour red, which, in any event, is synonymous with financial losses), but the Minister of Finance was unwilling to sign off on a renewal of an illegal contract, promoted by his Minister of Social Affairs Dlamini (surprisingly, the sister of the woman Zuma is promoting to succeed him as President, presumably to ensure that he is protected against the 783 criminal charges of fraud, corruption and money laundering, inconveniently reinstated by the Court, although still held up by his stooge, the Director of Public Prosecutions – curse those honest Courts!), to renew the contract found by the Court to have been issued illegally, after heavy promotion by the said Minster, followed by a campaign by her against the efforts of her own Department to comply with the Court Order to replace the illegally-appointed contractor. One wonders what the poor, lying, President could have done to get the Minister and Deputy Ministers of Finance on his side, when the Deputy Minister had not only refused to accept a R600 million payoff by his partners, the Gupta Brothers, but had also had the temerity to go public with the fact that the Guptas had made him the offer to become Minister of Finance. How much more could Zuma have afforded to offer, when R600 million was not enough to buy even one of the two?

Zuma followed up this campaign of lies and deceit by responding to the demonstration marches by hundreds of thousands of concerned citizens (predominantly Black citizens) by declaring that the demonstrations were racist. Of course they were, just as his description of the cause of the economic problems brought about by 23 years of unremitting economic incompetence by the ANC were actually the fault of Jan van Riebeeck, or White Monopoly Capital, or the need of the average urbanized Black for a piece of land that those unwilling Whites (who pay most of the taxes that have so carefully been diverted to the benefit of Zuma and his stooges) unreasonably refuse to hand over without being paid for it. Or something.

Now, to add to all his problems, the booted Minister Peters, responsible for the (highly questionable) sale of the country’s strategic fuel reserves at an amazingly bargain basement price and on terms that would not deceive even a grade 5 child, has requested her constituents to forgive her for the things she did wrong. Perhaps she is following the example of the President, who believed that restitution for his fraud in respect of R245 million spent on Nkandla was adequately made by apologizing to the public for the confusion they had suffered about his honest intention to repay the money (an intention which he strenuously denied in Parliament on several occasions, in case he forgets). Perhaps Peters did not get the memo explaining that fraud and corruption on a large scale usually winds up in a long prison sentence (unless pardoned by Zuma for reasons of ill-health), regardless of requests for mercy. To make matters worse, the members of the ANC top six have categorically denied that they apologized to Zuma or the ANC for statements they made calling into question their (unquestionable) support for this fine, lying President, in total contradiction of a clear and unambiguous statement made to the public by Zuma that they had apologized. The worms have begun turning, perhaps realizing for the first time that Zuma is not to be trusted, that to take the bullet for him, no matter how big the payoff offered by him to forfeit any semblance of honesty and integrity, will result in being thrown under the bus. Perhaps they have started to understand that Zuma is there for one person only, himself, and that no amount of fine talk can change the character of the man.

What next?

There are still many matters in which Zuma can be held to public scrutiny and be found wanting. The end is only a matter of time away, but this lying President, thick-skinned as he is, will not relent. He will carry on lying, because the only alternatives to lying are to declare a State of Emergency and take dictatorial power, almost certainly on the basis of a lie regarding the evil intentions of Jan van Riebeeck to destroy the strong economy that Zuma has labored so long and hard to bring about, or accept the inevitable and prepare for a long time behind bars. Realistic observers are fully aware that the end of this sorry story will be messy. The only question in their minds is how many more people Zuma will be willing to sacrifice to his ambition. Will it be only a few dozen, or will it extend to 52 million, before the ANC starts to understand that it was Nelson Mandela who set the example they should be following, not Jacob Zuma?

Some thoughts to bring about a return of sanity in South Africa

 

 

 

It is clear to any thinking observer that Jacob Zuma has not only captured major parts of the State, but he has also captured the leaders of the ANC. Too many of the top people have hitched their wagons to the star of this corrupt man to expect them to make rational decisions in the interests of the country and its people. Their only interest lies in maintaining their power, and that depends on the ANC remaining the dominant Party in Parliament.

However, the top people in the ANC are not the majority of voters, and the key to unseating Zuma and his evil cohorts is to bring the real truth to the knowledge of the voters, something that Zuma and his gang have worked assiduously to prevent happening. They have captured the SABC, on which the majority of the rural population rely for news and views, and they have captured the popular Press. These media feed a carefully-planned diet of adulterated news to the public, avoiding any reporting of criticism of Zuma and his gang, while maintaining the fiction that sends them to cast their vote for the ANC, time after time, regardless of how the country is sinking into the well of national destitution. The average voter is not stupid, but has not been educated to understand precisely what the ANC is doing to his or her country. That is true even of the ANC backbenchers in Parliament. An hour spent listening to the inane comments spouted by these comments must convince even the most hardened socialist that they have zero understanding of the probable effects of the ANC policies and actions, as well as inactions, on the country and its voters. The point has been made that these backbenchers continue to support Zuma because failure to do so will place them on the unemployed list, and one of them have skills, training or professional qualifications to fall back on when that happens. Their only hope for receiving a continuation of their present good income is the maintenance of Jacob Zuma in power, regardless of what that will do to the country, regardless of the overwhelming evidence of what it has already done to the country.

What is needed is an intensification of the efforts to bring down the criminals running the country and the ANC. This may take two routes.

The first route is for the DA, as the Party likely to succeed the ANC, to announce that it will undertake a Truth and Reconciliation process, in which people who can show that they actively worked against corruption will be granted immunity for their participation in it. If a businessman or a civil servant provides evidence to a responsible body, such as the Police, the Public Protector or a political Party which took action on that information, showing evidence of a corrupt act, that person will be immune from prosecution under the incoming Government. That simple announcement will free those potential whistleblowers of the fears that cause them to work for a continuation of the current corrupt regime, and permit them to bring to the attention of the public the acts to which they have been party. The announcement, coupled with a statement of a firm intention to prosecute any act of corruption with the intention of ensuring long jail sentences for those who do not confess now, will go a long way towards loosening the ties of fear that bind those who might otherwise want to see South Africa prosper.

The second route is to find ways to ensure that the vast majority of potential voters know and understand what is actually happening to their country, so that they will be equipped with facts and understanding when they go to the polling stations. That could be achieved by distributing free or at very low cost radios that are fix-tuned to a radio station that provides accurate and complete information. This should be done with an intention not to provide information that is attuned only to the cause of the DA. The objective is to develop an intelligent and rounded voter base, people who understand that there are always plusses and minuses in any situation, and that careful thought must be applied to every claim made by a political Party. We do not need to reinforce the ‘yes-man’ situation that the ANC has cultivated. We need intelligent, informed voters, who can guide the Parties in their actions in Parliament. The cost of such a radio will be very low, but the benefit for the country will be massive.

Currently, South Africa is firmly on the way to becoming a replica of Zimbabwe, Zambia and all the other African basket-case countries, dominated by a group of self-seeking plunderers, with an ever-decreasing ability on the part of the public to stop the decline. Innovative and urgent action is needed to reverse the trend, and inspiring speeches in Parliament do not fill the need. The average person no longer trusts a politician to do what he says he will. He needs reasons to believe again.

 

 

 

 

Some advice for Ramaphosa

Cyril Ramaphosa, an undeclared contender for the position of President of the ANC and so, ultimately of South Africa (if the ANC can hold onto its voter base in the face of its abjectly poor management of the economy) made the first really strong (almost) statement of his political career last night, declaring to an assembly of presumably dyed-in-the-wool Black ANC supporters that the policy of radical economic transformation is ‘non-negotiable’.

This was not the brightest thing to do at this critical time in the country’s economic history. The new Minister of Finance is in New York, attempting to convince the world’s investors, already very leery of the economic policies of the ANC, which have placed the country on a continued economic slide towards the present junk status, will not change, that it will continue on its path of ‘fiscal conservatism’. The fact that this path, together with several other elements of the ANC policy, are the cause of the current junk status, appears to have escaped his attention, and the inflammatory electioneering speech of Ramaphosa will certainly go a long way to convincing the investing public that the ANC will continue to be blind to the failings of its policies.

Junk did not happen overnight. It was the result of a long series of bad decisions, one building on the other, since the ANC came to power on the back of a voter base which is either economically illiterate or blindly trusting in the qualities and moral integrity of one man. The country has been sliding down this increasingly-steep slippery slope for the last twenty-three years, and a continuation of the political lunacy is guaranteed to bring about a continuation of the economic train smash, until, finally, the Government will be forced to accede to the harsh demands of the IMF when it begs for rescue. There are only two ways to avoid this fate: either a less-corrupt leader will take control of the ANC and change the country’s economic direction, or another Party will do the same. The only question is whether the change will come before the IMF takes control, or after.

What Ramaphosa fails to recognize is that the country simply does not have sufficient well-experienced and qualified Black managers to rescue the country. Of all people, Ramaphosa should know that a skilled manager is not born: he or she is the result of a good educational foundation, with the addition of years of on-the-job training and a wide exposure to the advice of people who have seen it all before. South Africa could have been approaching that stage now, if only the ANC had not decided that a certificate that the bearer has been educated is less important than the content of that education. The educational system has demonstrated convincingly that it is not capable of producing the managers of the future that the country needs, and no number of examples of exceptional Black graduates will change that. There are exceptional Blacks, as there are exceptional Whites, Indians, Coloureds and Chinese, but that is not proof that the system produced them – they are exceptions. The country cannot grow on exceptions. It needs an educational system that consistently produces school and university graduates who are amongst the best in the world. South Africans are capable of that, as is shown by the Model C schools that Nkosazana Dlamini Zuma so disparages, but the general system does not harness that talent. That was proven convincingly this week, when the Law Society warned the University of the Witwatersrand that it will lose approval for its Ll B school unless it tightens its law educational standards. That comes only a few years after the Law Society reported that a significant proportion of new law graduates were incapable of using language efficiently. It is a frightening state of affairs when a formerly prestigious law school, which, over the decades, has consistently represented the pinnacle of university education in South Africa, and the graduates of which have, until the past two decades, been held in high regard by most of the world’s academia as well as big business, has to be warned that its education is sub-standard. Unfortunately, in the international Management Consultancy of which the author is part, a recent degree from a South African university is treated as an indicator of below-par capabilities. Once again, the ANC has shown its belief that tens of thousands of certificate bearers is of greater value to the country than a smaller number of graduates of excellent quality.

The quality of management of the State Owned Entities, such as Eskom, SAA, Sanral, Denel, SASSA and SABC, as well as of most ANC-controlled State Departments is an unmistakable testimony to the extremely poor standard of the Black management available in the country. The South African Police Services seems incapable of producing a Commissioner who is able to hold the top job for more than a year! Apart from the rampant corruption (another manifestation of poor management), it is clear that the policy of pushing an ANC cadre into the top job years before he has the skills, the integrity and the personal qualities to perform adequately is a virtual guarantee of failure, and no amount of Hlaudi-speak will be enough to convince the world that the financial woes of the organization are a figment of the Opposition’s fevered imagination. SABC requires another R3 billion, although the former CEO, now out of the job for only a few months claims it had a cash surplus of R800 million, and SAA requires another R4 billion only a month after the last R5 billion was injected to save it from bankruptcy – who has ever heard of a State-owned airline failing to publish its annual accounts for fifteen months after the statutorily-required date, in order to save it from insolvency! The incompetence and corruption (another manifestation of managerial incompetence) of Eskom has resulted in a massive slide in the industrial and mining output of the country, causing it to miss out on two world booms. The reliable, affordable supply of electricity is universally recognized as a promoter of economic activity, and Eskom has been singularly negative in its role in that regard, while the ANC and its leaders have benefitted enormously from the endemic corruption on the corporation.

The management talent is available in South Africa, amongst the thousands of sidelined White managers who would love to be in a position to help their Black counterparts, and tens of thousands of South Africans abroad would be delighted to return to add their skills and efforts to the drive. Believe it or not, Mr. Ramaphosa, Whites want the country to succeed as much as Blacks do! They all understand that the future of the country lies in the hands of all its citizens, and the amount of goodwill on the ground, amongst all races, is considerably greater than the ANC wants to believe. The average citizen wants the Rainbow Nation of Nelson Mandela to succeed, and he or she will do whatever it takes to make that happen, if only the Government will step aside and allow them to do that.

The real problem of the ANC and its hangers-on is that they believe that the size of the economic pie is fixed, and that the only way that the Blacks can get more is to ensure that the Whites get less. That may be true in the world of the ANC, as is demonstrated by the fact that the economic pie has been shrinking consistently since they have been in power. Numerous non-ANC initiatives to grow it have failed because the ANC policies have ensured that the preconditions for growth – good education, good experienced management, good control of corruption – have been removed, rather than being expanded. An attempt in the 1990s to bring about 350 000 sustainable jobs failed because the Premier of KwaZulu Natal demanded from the German sponsor of the project a bribe of 15% of the cost of the project, promising that payment would ensure the co-operation of the Premier and the MEC for Economic Development! The economic pie is, in fact, not fixed, as is demonstrated by the fact that several economies, around the world as well as around Africa, have been growing at a pace greater than 5% p.a., even in times of world economic slowdown (with the South African GDP growth rate now projected at under 1% in 2017/8, and likely to be less). Even a smaller share of a bigger pie will translate into a better standard of living for tens of millions of South Africans, Black and White, with a brighter future for the Blacks making their way up the educational and experience ladder. Black Empowerment will happen inevitably in a growing economy, but cannot in a declining economy. No amount of entrepreneurial training in school will substitute for the quality education that is required to allow the schoolchildren to become citizens of the world.

Mr. Ramaphosa, as an intelligent politician, it is necessary for you to recognize the facts of the situation. A continuation of the mantra of Radical Economic Transformation cannot achieve anything of value for your Black voter base. A continuation of putting down the Whites who managed the growth of South Africa from a small colony at the end of Africa to a country that was important to the world, in the face of abjectly poor political management over many decades, will only deprive the country of a significant base of skills, knowledge and entrepreneurial capability, to the cost of all.

Mr. Ramaphosa, you are the Deputy President of all South Africans, Black, White, Coloured, Indian, Chinese, not only of the ANC portion of the country. The continuation of the present Zuma-ANC lunacy will serve only to drive away an increasing number of the people who supported the delivery of a democracy in this country on the basis of the moral character of a great man, Nelson Mandela, as well as the capital that is so essential to economic growth.

Now you have the opportunity to stand up, to speak truth to your political boss and to your nation, and prove to them that you have what it takes to be the next President.

Why are businesspeople smuggling funds out of the country?

There has been much ado about the evil businessmen smuggling funds out of South Africa, as well as out of other developing countries, thereby depriving those countries of the capital needed to develop their industries, and so causing the poor to remain poor. This has been the reason for the United Nations to appoint Thabo Mbeki as Commissioner of a learned group to determine the extent of the smuggling, and make recommendations on what to do about it. That appointment was remarkable, given the ex-President’s background, but it does illustrate the priority given to the situation by at least some pressure groups in the world body. Apart from much noise and publicity, and the expenditure of large sums of money, however, not much seems to have resulted from the work of the Commission. Recently, a righteously indignant article was penned on the subject in the Cape Times under the title ‘Accomplices to financial murder’ by Wesley Seale, a lecturer at Rhodes University’s Department of Politics & International Studies, in which the author asserts, with some evidence, that some R58 billion left the country in illicit funds flows, and states that ‘The capital is unrecorded and cannot be used or accessed as public funds or private investment capital, meaning that the population does not benefit from its potential impact of infrastructure investment and inevitably pay more, whether through taxes or at the till.’

At first glance it appears true that the country is being deprived of a significant amount of capital, which, presumably, could be well used to improve the conditions for all in the country, probably most notably for the poor. However, in most of the developing countries of the world, which are the ones to complain most vocally about the problem, the amount of capital lost to them in this way is a small fraction of the sums lost to Government-sponsored corruption and fraud, to sheer incompetence in the implementation of measures designed to ‘boost the economy’ which are, in reality, no more than ways to feather the nests of those promoting them, and to the costs of implementing abjectly poor economic policies, which are the real reasons those countries are home to so many poor. The complaints are, in reality, only another way of blaming ‘White Monopoly Capital’ for the problems caused by the Governments in those countries, a way at pointing fingers at others to distract attention from their own failings.

This does not mean to say that the flight of capital, illegal or otherwise is not real, nor that the funds so exported could not have been used by those taking them for the ultimate benefit of the mass of people in the country. Those statements are true, although one may question how the amount was determined. In fact, it is almost certainly significantly greater than the R54,48 billion claimed. However, the correct way to approach this problem is not to demand more legislation or more tightly-imposed legislation. As is always the case in matters such as this, the people drafting the legislation and then enforcing it probably do not number more than a few thousand, and they are poorly funded and poorly experienced to boot, while those doing the exporting of funds number in their millions, and have access to tens of billions of Rands to plan and execute their moves. In addition, those advising the legislators and enforcers do so with a clear eye to their own benefit, which is almost never aligned with those aims seemingly espoused by the writer. A fight against the illicit export of capital is ultimately doomed to at least partial failure. If the flight of capital from the country is to be combatted, it is necessary to understand why it occurs.

There are probably two main reasons why funds are exported illicitly.

The first reason is that the funds were gained illicitly in the first place, and so are exported, or not repatriated, to avoid having evidence of the illicit activities within the reach of the law enforcement agencies, if those bodies could ever be induced to carry out their lawful duties against the perpetrators. If you were planning to steal R254 000 000 from the State, it would require a remarkably low level of intelligence to leave the evidence in plain sight, at Nkandla, for instance, or an absolute assurance that the Minister of Police would be subject to inducement to lie to Parliament about the evidence. If you were planning to take a huge bribe, about $20 000 000, from a munitions supplier as an inducement to grant a contract of supply amounting, ultimately, to $5,4 billion, you would be much more inclined to direct that the funds be paid into your personal bank account in Geneva, where they would, hopefully, remain hidden from the investigative authorities in your own country as well as that of the supplier, discounting as unlikely the possibility that a slightly inebriated representative of the bribing company would brag to drinking companions about his role in making the deposit, or that, as a result of that bragging, the Police in the foreign country would investigate and find a written note of the negotiations for that and other similar bribes.

There is persuasive evidence that at least one of the many crooked Presidents of developing countries has been deeply involved in nefarious activities of this nature, and any determined investigation of their involvement in business activities such as those illustrated will certainly raise many questions that need to be answered, by, unfortunately, those who are also compromised in this way. It is remarkable how few sitting Presidents and Ministers of State have been imprisoned for conduct of this nature, but, given the rumors, it is almost certain that their actions represent a multiple of the amount of R54 billion spirited away illicitly. There are methods of countering this reason for illicit flow of funds already in place: They must simply be applied vigourously and with determination, by people who are not dependent for their jobs on the goodwill of those in power who may benefit from the perversion of those methods.

The second reason why funds are lost to the country is much more profound. The funds are mostly derived from business activities that, in their essence, are mostly honest and, in most cases, result in the legitimate generation of economic activity and jobs. The money is, in all conscience, the property of the person or company that conducted that activity and would not otherwise be subject to censure. If it were not exported, it would be subject to taxation in that country, and thereafter to the rules and laws of BBEEE, to levies and limitations, to an obligation to service the wishes of all ‘stakeholders’, most of whom are rewarded for whatever contribution they may have made in the earning of that wealth by land taxes, by high wages gained by means of union blackmail and by the payment of an unreasonably high level of taxes and levies, and, ultimately, to further taxation when the residue is distributed to the shareholders of its legitimate owners. And therein lies the real source of the problem. The modern State, as represented by the Governments of developing countries have an absolute conviction that they are the owners of the wealth of the countries, disregarding the people who generate that wealth as inconvenient necessities in the generation of the wealth. The entrepreneurs who invest capital, time, ingenuity and risk do not share this socialist-Marxist view, and feel that they are entitled to retain a greater proportion of the profit they create, often in spite of the actions of the Government, and a greater proportion of control over how those profits should be applied. By virtue of the fact that they are in a small minority, at best, in the voting process to decide who will form the Government that will decide the rules, they do not believe that they can possibly get a fair deal from the State, and so take steps to protect what they can of the total of the wealth that they create.

The limits of what these entrepreneurs are prepared to tolerate are stretched a little by the amounts that they are able to move to a place where they can have better control of the fruits of their creation, and so those entrepreneurs are willing to retain their investment in the country. Where the opportunities do not exist to stretch those limits to an acceptable extent, the entrepreneurs and investors will take the obvious step of departing altogether from that State, a step which, although small each time, will ultimately have a disastrous effect on the State. Without the capital they invest, the skills they are able to muster and the activities they create, the countries they leave will increasingly take on the hue that is Zimbabwe. That is the simple set of facts that need to be understood by any analyst willing to forego the socialist-Marxist line of belief, and understand that capitalism is significantly more good than bad. Capitalism does have bad facets, but it also has significant good ones too, and the art of good government is to enhance the good and minimize the bad by means that do not throw the good baby out with the bad bathwater. Unfortunately, those elected by the (relatively) poor majority feel that they have been given a mandate to exploit the productive minority which makes up the bulk of real economic activity in order to appease the vocal majority while, incidentally, skimming off enough to make their own efforts sufficiently rewarding to remain in the ‘demanding’ positions required to rule the country. As in the case of Robin Hood, they steal from the rich to give to the poor, mainly because the poor have nothing to steal.

All nice theory, you might say, but is it true? The short answer is that cases abound to demonstrate that the theory is correct. Switzerland and Hong Kong have been strong economies for years, in which the owners of capital felt safe, protected from the depredations of the semi-dictatorships that abound in Africa. No entrepreneur in those countries would wish to take the risk of large-scale illicit export of capital, simply because they feel that the amount taken from them by those countries is in an acceptable proportion to the value of what those countries provide to them. The same applies to a somewhat lesser extent in Germany, Britain and the United States (in the immediate past), in the Nordic countries and in Singapore. It does not apply in most African developing countries, not at all in Zimbabwe and, to a rapidly increasing extent, not in South Africa. Zimbabwe has passed the point of earning the trust of entrepreneurs, with the result that there is practically no significant entrepreneurial activity there, and what little there is would abscond in an instant if a possibility to do so existed. In South Africa, the level of investment by foreignors has dropped alarmingly, albeit predictably, and there are continuous complaints by Government that the local companies are ‘sitting on piles of cash’, which could work wonders in increasing employment if it were to be invested in the economy. And all the while, those companies are taking active steps to move their activities outside of South Africa while not increasing, or even actively running down their exposure in the country. The simple fact is that the investors do not trust the South African Government to give them a fair deal. They know that they will be subjected to increasing levels and forms of taxation, both direct and indirect (by Eskom increasing its tariffs, for example, and by an increase in the already unjust BBEEE regulations, which seek to punish White Monopoly Capital for its productiveness, rather than harnessing the brains behind that capital, which is only partly White, in the interests of increasing the economic activity for the entire population), and that the Government will continue blithely along the route that has been proven over the duration of ANC rule to be bringing the country to destitution. The recent Ratings Agencies downgrades of South African securities was not the result of an illicit export of capital: it was a direct result of policies that sideline the productive areas of the economy while promoting those activities that are destructive of capital and wealth, such as the continuing subsidy of the terminally-incapable rule by ANC cadres of State-owned entities, supporting the economically-ineffective SAA, PRASA, Sanral, and all their sister companies, and demanding ever more from the wealth creators while pursuing insane policies such as enhanced BBEEE.

It is essential to understand that those who might be persuaded to undertake an illicit transfer of funds are more intelligent as a group than those trying to stop them, that they are, by their very nature, disposed to analyse all possible avenues to increase their net profit, to undertake acceptable risks to do so, and to apply their resources in the best possible way. They will always find a way to avoid the nets that Governments set for them, until the effort is no longer worth the reward, when they will move entirely away from the country, taking their skills, their capital, their business genius and their drive with them.

The cure for the flight of illicit funds from the country? Simple. Understand that the creators of wealth are the owners of that wealth. Give the owners of those funds a reason to keep them in the country, to invest them in the productive activities that created them in the first case. Abandon every policy that aims to move wealth from the producers of wealth to the consumers of wealth, allowing them the opportunity to build the wealth of the nation as a whole. Give tax advantages to every entity, human or corporate, that generates economic advantage, and that converts the onus of supporting the indigent to one that creates income-earning opportunities for those people. Turn the economy around from one that takes from the rich to give to the poor (with a small indulgence to the masters of this process) to one that harnesses the energies and ingenuity of all in driving the economy to the heights of which it is capable.

And most of all, relegate to the garbage heap of history those socialist-Marxist views that make capitalists evil and the poor noble.