Mangosuthu Buthelezi’s Online Letter
Dear friends and fellow South Africans,
"A renewed global recession is just around the corner." Somehow when this statement is made in the United Nations’ World Economic Situation and Prospects 2012 report, it attracts more notice than when it is said by a member of the opposition in our country’s Parliament.
I have been sounding this warning for the past two years, because I have the capacity of reading the economy through the processes of history, rather than purely through economic analysis. I may not be an economist, but I am a student of history and I have seen enough of this world to understand the cyclic nature of transition.
We are, at present, in the middle of a major historical transformation of the economies of the world, both at the productive and financial level.
Manufacturing capacity has been destroyed in the West and consolidated in the East. Both financial centres and products are following the same trend.
This is a painful process which will continue to create instability and, from this instability, recessionary cycles, until the process has been completed and a new world economic order has been established on the basis of which the world’s recovery can finally commence.
In this context, the real question – which I have put to the ANC for ten years, with no answer – is what products and services South Africa will bring to the international market in order to make a living, over and above the usual pool of commodities which thus far has constituted the bulk of South Africa’s wealth in international terms.
In the past ten years the Government has focused primarily on job creation, which is good. However, it has generated jobs mainly through redistribution, which is not good.
Government itself has employed people, and forced private entities to comply with a number of social obligations and responsibilities, all of which has increased the number of people employed. However, this operation has not increased how much we produce and the overall amount of money the country as a whole makes to earn a living.
Last year the Minister of Finance, aware of this problem, tried to bridge the gap by launching the idea that government employment should be tied to the building of infrastructure. However, there are no concrete plans for this to happen.
Infrastructure genuinely tailored to improving our industrial bases and productive capacity and providing other forms of externality would generally help the country to make more money to earn a living. But this will require building advanced infrastructures for the 21st century, both hard infrastructure as well as soft infrastructure like free nationwide broadband Internet coverage. I see none of this in the making.
What we have seen a lot of is social programmes and programmes aimed at extending the welfare state. All these programmes are good. But it must be accepted that they come at a cost and are not aimed at making us more money or enabling us to develop internationally viable products or services.
In the past 2 years, the welfare state has been extended to companies, enabling many segments of our industry to survive, even though they could not have survived without subsidies from government and other forms of regulatory or trade protection set out to defend them from international competition.
Government has even increased its own cost of delivering services by restricting itself to consuming only certain products because they are South African made, even though there are cheaper international substitutes. This has been done in the hope that it will stimulate a new industry capable of exporting without subsidies. But, in this respect, there is nothing more than a speculative hope while the costs we are paying are huge.
The costs are not only fiscal, in the form of money the government pays out to industries or individuals. There are also social costs which are directly exacted from South Africans as if they were a private tax. Because of Government’s tolerance of collusion in the banking industry, the insurance industry and the cell phone industry, South Africans are paying far too much for the products provided by these three industries, as compared to the rest of the world. This enables these industries to make good profits, while the country is losing money as a whole.
Allowing foreign companies to provide directly to our consumers better and cheaper services in respect of banking, insurance and mobile communications would help all South Africans, individuals and businesses alike, to become more competitive and have more income at their disposal, whether for consumer spending or investments.
The fact is that the ANC has jumped into the shoes of the National Party and pursued the same industrial policy, just changing the beneficiaries from the old Afrikaner economic circles to the new circle of black diamonds.
The rest of the population remains like cows to be milked until dry, whether they belong to the middle class or are poor people in rural areas struggling to pay for airtime, or wondering why so much of their money went into bank charges which in most other countries in the world do not even exist.
It will be difficult to seriously address economic problems in our country for as long as this mindset remains and, possibly, for as long as we do not have a profound change in the political leadership of South Africa.
Yours in the service of the nation,
Prince Mangosuthu Buthelezi MP