Neither Red Riding Hood, nor Tito Mboweni believes CR’s statements

Johannes Wessels
@johannesEOSA1

The statements of the government and the ANC are as unrealistic as the famous stories of Baron von Münchausen: both are so far from reality that they belong to the genre of heroic fantasy. However, the differences are also glaring. Von Münchausen’s tales are creative untruths, entertaining its hearers because of the skilful transition from reality to absurdity. The ANC’s untruths are serious policy statements, parading absurdity as real truth.

Whereas Von Münchausen’s tales emanate from a witty brain, the ANC’s tales emerge from an institutionally entrenched delusional disorder.

Baron Cyril von Ramaphosa

The very first paragraphs of the January 8 declaration suggested the following reality:

The January 8th Statement… gives inspiration and encouragement…

“The people of this country have entrusted the ANC with the responsibility to… building a better life for all. Over the course of its history, the ANC has lived up to this responsibility.

“In government, the ANC led the reconstruction of our society from the ashes of apartheid misrule. 

“Prior to the onset of the global financial crisis, our policies contributed to the revival of our economy, the creation of millions of new jobs, the stabilisation of our public finances and the reduction of poverty.

“(T)hese achievements earned the ANC the confidence and trust of the South African people.”

Really? 

JSE’s head of equities voices his despair

  • The ANC has lived up to the responsibility of a better life for all: not even Red Riding Hood will believe that.
  • The government has stabilised public finances! Not even Tito Mboweni believes that (and if he does, Fitch, S&P and Moodeys don’t).
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Loan guarantee scheme overwhelmingly inadequate: cut VAT & CIT to help SMEs

Johannes Wessels
@johannesEOSA1

The centrepiece of the Ramaphosa government’s recovery and economic resuscitation scheme – the loan guarantee fund – is as helpful as giving a desperately hungry infant a dummy, pretending it is food. Not even 5% of formal registered businesses have applied for funding and by end November about 1.8% of these firms have obtained assistance from the scheme.

It is far more affordable to cut Company Income Tax and to raise the VAT threshold to get the economy growing again, than to continue with the current package of the Economic

Why the low interest in the Loan guarantee fund?

On the one hand the enterprise world was pre-lockdown already coping with difficult conditions due to an unfriendly enterprise environment with a president that is on record that he disagreed “with the view that the most effective and efficient way to provide services to our people is through the private sector.”  Many business owners, especially in the case of SMEs, are reluctant to take on more debt in such circumstances, especially when running also the risk that their properties may be confiscated (expropriation without compensation).

On the other hand, the government, being out of pocket and not keen on disbursing billions that it would lose if the beneficiaries cannot service the loans, had asked the banks to apply their own existing loan assessment criteria when evaluating the applications. Were it a Khula or a SEFA process, the money would long ago have disappeared. So, despite utterances of concern about the low and slow disbursement process, the president cannot be surprised or concerned that the banks are circumspect.

In May already, EOSA had spelt out the devastating impact of lockdown measures on the enterprise world , arguing that the systemic damage caused to the spontaneous order of enterprises can best be ameliorated by a systemic response that would enable the spontaneous order to establish its own patterns again.

The government, however, kept its focus on basically two things:

  • Promoting Covid-19 to the highest pedestal of dangers, wilfully ignoring all other existing problems as well as the additional problems the lockdown strategy would create, and
  • Pursuing its social engineering efforts to reshape the South African economy in particular, and society at large, by limiting state relief measures to businesses complying with BEE (effectively throttling white sole proprietor businesses to death), deciding which kind of businesses are essential and which not, and pursuing anti-tobacco and prohibition agendas by bans on cigarette and alcohol sales.
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Ramaphosa’s bold plan (1): Is ‘buying local’ BEE disguised by a face mask?

Johannes Wessels
@johannesEOSA1

If Ramaphosa’s bold plan to restart the economy was a film, the premiere already proved it’s not an ‘out-of-the-box’ blockbuster that will rake in Oscars for economic growth and sustainable job creation. Growth through state-led infrastructure development XXI is a lame sequel fit for an infamous Razzie award.

Like its predecessor – the lengthy National Development Plan – the Economic Reconstruction & Recovery Plan (ERRP) is a sure box office flop.

The ERRP announced by the president after lengthy consultation processes with big business and big labour states “Non-implementation of the ERRP could lead to loss of economic capacity, including collapse of the supply capacity, consumer and business confidence, the labour market and increased vulnerability of the poor. The overall plan aims to mitigate these risks”.

This script suggests its authors live in a make-believe reality: South Africans, whether tax payers or the growing number of unemployed, know consumer and business confidence and employment are not waiting for collapse through the non-implementation of a plan. It has collapsed already and was meticulously crafted by the very same government now purporting to be capable of getting the economy firing on all cylinders again.

There is a hidden sub-text as well: Covid 19 was the excuse to gain more arbitrary power and programs to recover from the lockdown devastation are aimed at cementing these arbitrary powers.

Continue reading “Ramaphosa’s bold plan (1): Is ‘buying local’ BEE disguised by a face mask?”

Is it right to pay tax when clean and safe hands are missing at the till?

Johannes Wessels (@johannesEOSA1)

SARS commissioner Edward Kieswetter’s biggest headache is not the gaping R300 billion crater in tax income this financial year or the growing Everest of assessed losses for companies that will impact negatively on CIT for years to come. His biggest problem is how to convince taxpayers to sustain a government that under the pretext of “a better life for all” has served up a toxic mix of corruption, wastage, mismanagement and anti-growth policies.

In addition, the very same government has doggedly pursued a lockdown strategy not underpinned by much logic that could yield any outcome other than a severe economic disaster with long term humanitarian effects. These effects include shortened lifespans, poverty related deaths, and deaths from medical conditions the government deemed non-essential. The toll of this inept strategy will in all likelihood dwarf the real Covid 19 death toll.

Lockdown has mowed down millions of jobs and several hundred thousand businesses. Those that survived have been severely crippled: they have a radically reduced income, have run up losses or have achieved less than half their previous taxable income.

One recalls the words of Saint Augustine, bishop of Hippo Regius in North Africa, whose theology and philosophy influenced ancient as well as modern thought: “Without justice, what are kingdoms but great bands of robbers?

Tax compliance in a lockdown context

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Skills more important for the economy than splitting fine or frizzy hair: it’s education, not race, that counts

Johannes Wessels (@johannesEOSA1)

A tumult about a shampoo advertisement diverted attention from the biggest economic decline under the ANC government to date. A quarterly GDP figure that confirmed the country is plunging into poverty got less attention than a Clicks advertisement. The deteriorating economy will entrench the country in the bottom half of the Economic Complexity Index (ECI), making it less and less attractive as a destiny for both skills and capital.

Splitting “frizzy and dull” hairs from “fine and flat”, however, is apparently for South Africans far more important than worrying about an additional three million unemployed or thousands of businesses pushed into the abyss of loss and debt. Reading Figure 1 (ECI data) reminds of the typical good-news, bad-news joke: the bad news is that SA has slipped from the top third of countries to the middle third. The good news is that this ranking is far better than where the country is heading for. The ECI, developed by Ricardo Hausmann of Harvard and Cesar Hidalgo of MIT, measures the productive capabilities of large economic systems, whether cities, regions, or countries and is based on the knowledge accumulated in a population that gives expression to the diversity and complexity of economic activities. 

Almost simultaneously with the DA’s embrace of non-racialism as a pillar of their redress strategy that will not use race as a yardstick to address inequality, the 2020 Q2 GDP demolition figure was released. The throttling of the economy by the government’s lockdown strategy made far less ripples than what TREsemmé claims to smoothen out in frizzy hair.

The commentariat treated the DA like TREsemme

It was not only the Twitterati that underplayed the economic news: the same sentiments dominated in serious opinion pieces and radio and TV talk shows. And the commentariat effectively placed the DA in the same box as TREsemmé:

  • Carol Paton, editor at large of Business Live, reckons race will matter forever and lamented the DA’s policy removal of race-based redress “since that will affirm suspicions that the DA is a party whose real agenda is to defend white privilege by denying that such privilege exists at all”. 
  • Stephen Grootes, radio presenter and Maverick columnist, echoed that “firm evidence and the lived experience of South Africans” indicate whites are rich and blacks are poor.

A Coalition of the Offended encompassing inter alia Julius Malema, the Daily Maverick, Justice Malala and Twitters’ @BiancavanWyk16 emerged: all deeply shocked and emotionally wounded, found Clicks’ sacking of an executive and suspension of selling TREsemmé insufficient.

Some called for “attacks” on Clicks stores and the malls that provide rental space for Clicks. Others demanded a sort of #BlackHairMatters kneeling, some were just happy to find something to be unhappy about and some considered the actions of others in the coalition either overboard or underwhelming.

Whilst one can understand that the EFF, the ANC and a plethora of beneficiaries or wannabe-beneficiaries of BEE, are obsessed with affirmative action, expropriation without compensation and preferential procurement mechanisms enabling hiked prices, it remains amazing that leading commentators such as Paton and Grootes ignore the hard evidence that race is not the best proxy for measuring inequality and that the application of race fails to target those really at the bottom of the pit. 

Way back, Census 2011 already provided evidence that education is a far more reliable marker.

Race as a marker for household income inequality weighed and found wanting

Continue reading “Skills more important for the economy than splitting fine or frizzy hair: it’s education, not race, that counts”

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”.

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