What South Africa could learn from Greece…but probably won’t.
Another brilliant article from David Bullard. In case you were wondering why South Africa seems to be less violent this week, our little gem,
Foolius Julius Malema, popped over to see his new buddy Hugo Chavez in Venezuela. Now that’s what I call a marriage made in heaven. Anyway, back to reality….
It’s been a quietish week in SA but that’s probably because Kiddie Amin has popped across to Venezuela to see for himself the economic miracles that Hugo Chavez has performed. No doubt Kiddie will come back with lots of great ideas for nationalizing the mining industry, freezing the bank accounts of the “privileged” and distributing wealth to the poor (after he has taken a substantial brokerage from himself of course). It could all be a bit depressing were it not for the fact that bad economic news seems to be genuinely spooking some members of the ANC. I even think I heard the President say that we must stop blaming apartheid now and do something for ourselves. Trevor Manuel was down at Mitchells Plain urging children to get an education and not a criminal record. Maybe the tide is turning at last.
Last week the Fraser Institute announced that it had relegated South Africa to 61st position from its previous 49th place in the world mining league. To quote from Dr James Greener’s weekly Tidemarks newsletter to his clients, “This dreadful news should not surprise anyone following the JSE mining sector. Only a small minority of the pure mining companies consistently declare a profit and some are amongst the Exchange’s largest loss-makers. They also have to devote copious resources to keeping abreast of the never ending stream of advice, instruction and obstruction emanating from clueless bureaucrats. Minerals Resources Minister Shabangu, who through no fault of her own, has no education or experience in this activity, has kindly pointed out that mining companies ought to be using modern exploration technology to enable them to discover “world-class” deposits. Does she perhaps imagine that mining houses still deploy grizzled old prospectors on mules to swirl grit around a pan?”
That says it all really. We have a Minerals Resources minister who clearly holds her position because of loyalty to a political party rather than because of any specialised knowledge or academic prowess. How can we possibly climb back up the mining league table with people like that in charge? Interestingly, the majority of China’s senior political figures have engineering degrees and it shows doesn’t it? If you’re going to drive an economy you have to have a thorough understanding of what you are driving. Most of our politicians and union leaders don’t even have a rudimentary understanding of economics which is why we are becoming less and less important in the world. Other than the stuff we have under the ground we have less and less to offer. Our most talented citizens move away as soon as they can. If they are white they know they cannot possibly be allowed to excel and if they are black they know they will always be regarded as AA beneficiaries. No surprise then that so many self respecting talented black South Africans are also planning to get the hell out and show that their talents have nothing whatsoever to do with being fast tracked.
Which brings me to Greece. How does it feel to be a citizen of that once great civilisation today? Pretty awful judging by the TV coverage. In a nutshell, Greece is bankrupt and now needs to go cap in hand to the European community and the International Monetary Fund for what the Financial Times called a R300 bln “lifeline”. If they don’t get that then they can’t continue to function as a country. The conditions for the lifeline will be higher taxes and a drastic reduction in government spending. What got Greece into this mess in the first place? They were spending more than they earned as a country and in order to create employment and keep the people happy the Greek government invented new jobs in an already bloated civil service. Civil servants don’t produce anything except forms so if your civil service greatly outnumbers your economically productive citizens then you are on the road to ruin. Add a dash of government corruption over the years and you’ll begin to understand how Greece got itself into this mess. How it can ever get out (unless Ouzo becomes the world’s favourite drink) is more difficult to fathom. The country’s shipping superiority is long gone and tourists may not want to visit a country where the basic utilities may or may not be available. Greece risks becoming part of the white third world. Whether hard working Germans will be happy to bail out profligate Greeks is another consideration. It’s not impossible that Greece will be chucked out of the European Union. After all, who wants to look after a wayward younger brother who won’t work and is always asking for money?
Notice any similarities with South Africa? Apart from our slide down the mining league, we are also hostile to investment and put all sorts of employment quota obstacles in the way of people who want to do business here. Our taxpayer base is dwindling and supports an increasingly large number of people who will never pay tax in their lives. Political corruption is rife at national and municipal level and we also have a bloated and ineffectual civil service. We could easily go the same way as Greece but while Greece will always be remembered as the seat of democracy we will be remembered as the country that had everything going for it in 1994 and lost it all in 20 years.