Thanks to the lockdown you are much poorer and deeper in debt (also the wasteful debts government incurred)

Johannes Wessels (@johannesEOSA1)

South Africa’s economic growth rate has dropped through the floor: the lockdown economy has shrunk in 2020 Q2 by 51% (Q-on-Q annualised). Whilst the third quarter ending 30 September will register substantial growth, it will not bring the country back to where it was prior to lockdown. As cause (lockdown) and consequence (massive unemployment, poverty and the destruction of existing wealth and the means to generate wealth, i.e. businesses) of this economic meltdown mature, the future bill for yesterday’s stupidity will grow exponentially.

And those that will have to foot the bill will be much poorer with SA fast approaching the door to leave the club of upper middle-income countries to join the ranks of the lower middle-income countries.

The government has been blaming Covid 19 (this time apartheid and colonialism cannot carry the can), talking about “unprecedented economic consequences of the pandemic”. Pres. Ramaphosa refers to the economic effects of the global coronavirus pandemic”.  

And Dlamini-Zuma remains on record (National Council of Provinces, 23 June) that the government was “absolutely convinced the Covid pandemic – and not the lock-down measures was causing the economic damage.

That is a lie and StatsSA is correct with their description attributing the decline to “the impact of the Covid 19 lockdown restrictions”.

Why you should believe StatsSA and not the government:

EOSA has compiled the following evidence pertaining to lockdown strategies, applying the stringency index of the Blavatnik School of Governance (Oxford University) as well as the Google Mobility Index.

Leader of the pack of losers

Plotting countries position on the stringency index together with Q-on-Q GDP change (2020 Q2) reveals a significant correlation.  GDP contraction in countries with stringency measures below 50 on the Blavatnik Stringency Index (i.e. Sweden, Taiwan, Japan & Uruguay) has been limited to below -15%.  However, countries where lockdown regulations plot the countries above 50 on the stringency index suffered GDP declines larger than -10% seems the norm, reaching -36.7% (US), -33.5% (Peru), -23.7% (Spain) and -22.6% (UK). 

To date SA is the leader of the losers’ pack with annualised Q-on-Q GDP change of -51%.

Excluding South Africa, a clear outlier, improves the correlation to r = 0,7031.

Following Mike Schüssler’s advice, I looked at the correlation between the stringency index and the Google Mobility Index that measures visitor numbers to specific locations like bus and train stations, parks, grocery stores, etc.  It compares the change in mobility to the baseline data before Covid.

Without SA, the correlation between the GDP 2020 Q2 change (annualised) and the  Google mobility data is significant.  The less mobile a country’population, the bigger the GDP damage.  A correlation of r = 0,7478 is recorded (based on 37 countries).  Adding SA bring the correlation down to r = 0,5872.

In both correlations SA is an outlier to the negative side.

The irony is that much of this economic meltdown could have been avoided if the government did not:

  • turn a deaf ear to the voices criticising its model and approach (think PANDA, prof. Glenda Gray);
  • cling to its centrist approach with the same set of regulations for a country as wide and diverse as South Africa with a curfew and a ban on exercise even in provinces that had for a long time not even 50 proven cases of Covid 19;
  • ignore the pleas to at least allow e-commerce without restrictions;
  • impose abolitionist policies on society rather than concentrating on doing its basic tasks right; and
  • use the lockdown regulations to reshape the country’s economy in accordance with their class ideology.

Not only did the government prevent and retard economic activities thereby fuelling unemployment and wealth destruction, it even wasted the resources on ill-conceived expenditures like the Eastern Cape’s scooter ambulances and field hospitals whilst forbidding the existing public and private hospitals to continue with operations and treatments the government considered as “non-essential”.

Field hospitals wasted expenditure

The Auditor General’s first report on the Covid 19 stated that R4.8 billion was made available for field hospitals, either to upgrade 13 existing hospitals or to build/use temporary structures to increase hospital beds.  By 30 June only 18 of the 66 projects were completed and the AG found improper procurement procedures mentioning also a need “to monitor the demand for additional beds”. Also on the quarantine sites that were identified the AG concluded that “the demand for such facilities has been relatively low”.

With public and private hospitals operating far below capacity (with so-called non-essential treatments suspended), the expenditure on the quarantine sites and field hospitals effectively amount to wasteful expenditure.

To date the government however has failed to acknowledge it has made a fundamental miscalculation and a wrong call.  Not only have they massively damaged the economy and livelihoods of citizens by the lockdown, they did that for a threat closer to a molehill than a mountain, trampling on the rights of its citizens.

Red Riding Hood would not believe the Vandals

Whilst there is outrage over a hair product advertisement and the bombing and looting and vandalising of Clicks stores, taxpayers and other citizens of South Africa have reason to be outraged about the vandalism caused by those in power

Not even Red Riding Hood would still be so gullible to believe the government that lockdown measures and face masks are essential to combat a virus that, as is evident in Sweden, is not as deadly as the flu has been in many years over the past 30 years.

It is time for lockdown to end right now and time for citizens to stop being muzzled by unfounded fears. 

One thought on “Thanks to the lockdown you are much poorer and deeper in debt (also the wasteful debts government incurred)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s