Market economy

Anti-business, Black economic empowerment (BEE), Black-owned businesses, Central planning, Corruption, Crime against business, Developmental state, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Inequality, Job creation and unemployment, Lockdown, Market economy, Preferential procurement, Small and medium enterprises (SMEs), Small, medium and micro-sized enterprises (SMMEs), State Owned Enterprises (SOEs)

CR’s mask fell off: lives are less important than empowerment

Johannes Wessels
@johannesEOSA1

There is an increasingly high risk that South Africa will not by 2025 have recovered to its pre-lockdown levels of GDP. In a research report – Vaccines and re-opening: Covid-19 risks to the 2021 recovery – HSBC, one of the largest banks in the world, indicates that South Africa will not recover as quickly as most of the emerging markets.

HSBC places South Africa in a cluster of countries that will not by end 2022 regain their pre-Covid GDP levels. This list also includes France, Italy, Spain, the UK, Mexico and Argentina. According to HSBC’s estimates the rest of the Eurozone will have recovered by end 2022, with Germany reaching that target by the first quarter of 2022.

SA on the bus to Argentina

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Buying local, Central planning, Developmental state, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Economic Reconstruction and Recovery Plan, Export-led growth, Job creation and unemployment, Large enterprises, Market economy, Medium Term Budget Policy Statement, Northern Cape, Tourism & hospitality services

Ramaphosa’s bold plan (2): weak on detail, strong on flights of fancy

Johannes Wessels
@johannesEOSA1

Two recent key government speeches gave rise to two important questions:

Is the inability of the government to effectively implement its policies & plans (?) worse than its inability to table concrete action plans, underpinned by clear strategies, designs, milestones, budgets and target dates?
Why can even Thabo Mbeki see the president is naked whilst organised big business still praises the beauty of his imaginary clothes?

The president’s tabling of the Economic Reconstruction and Recovery Plan (ERRP) was lame and lacked detail, whilst the Minister of Finance’s Medium Term Budget Policy Statement (MTBPS) left one with a feeling there is not much grasp within the collective government on how to prevent SA from slipping rapidly, if not tumbling, down the slope.

Instead of rekindling confidence and inspiration, vague and mixed messages fuelled doubt and a disbelief that the government can prevent SA from boarding the proverbial bus to Argentina (debt default). I put the following three arguments to illustrate this assessment:

Will the government stand solidly behind Mboweni’s strategy of freezing public sector wages for three years when they cannot deal with the much easier route to stop financing the effectively bankrupt SAA? Recall also how Pravin Gordhan in 2018 (knowing well that Eskom was not only overstaffed, but the personnel besides overpaid) overruled the Eskom Board and management when they had decided on a zero salary increase as part of addressing the Eskom viability issue.
Can one rely (trust would be too much to ask) on the government’s undertaking to reign in public expenditure? This, when they had failed multiple times to table a comprehensive plan on how to deal with Eskom’s debt and the growing debt burdens of other State-owned Enterprises (SOEs).
How is the “growth through infrastructure roll-out” approach different from numerous previous attempts – since the days of Thabo Mbeki – to strengthen the country’s economic fibre by infrastructure investments announcements, with the emphasis on announcements?

Flipchart notes or a detailed plan?

The Enterprise Observatory of SA reckons four fundamental problems underpin the ERRP and the MTBPS:

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Anti-business, Black economic empowerment (BEE), Black-owned businesses, Buying local, Central planning, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Entrepreneurial space, Job creation and unemployment, Lockdown, Market economy, Marxist-Leninist ideology, Opportunity tax, Preferential procurement, Township enterprises

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 1 9 was the excuse to gain more arbitrary power and programs to recover from the lockdown devastation are aimed at cementing these arbitrary powers.

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Anti-business, Economic freedom, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, Enterprise profitability, Job creation and unemployment, Lockdown, Market economy

The Scamdemic: Lock-down the bricks to raise the bed for the Covid-Tokoloshe

Johannes Wessels (@johannesEOSA1)

Like an infant caught red-handed when breaking a precious antique Grecian vase, the Ramaphosa government tries to escape accountability for the economic havoc caused by its lock-down strategy. It vehemently denies that that strategy has caused, and is continuing to cause, immense economic damage, joblessness, bankruptcy and hunger, blaming the naughty Covid-pandemon for toppling the “vase” (i.e. the economy) without government having a hand in the tragedy.

In child-like fashion it is spinning endless stories of how it miraculously prevented a larger tragedy by ensuring the vase did not fall on the Persian carpet.

Just in case that defence may not work, it also seeks safety in numbers, arguing every other country is in the same boat, having implemented lock-downs and suffering similar economic shrinkage. To make sure it will escape accountability, it also hides behind “scientific advice” that only they can see.

In the July 23 version of “my fellow South Africans”, the president said “(t)he coronavirus pandemic continues to cause our economy great damage, threatening the viability of many businesses, leading to job losses and badly affecting the income of those that can least afford it.”

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

This is not smoke and mirrors, it’s either a blatant lie, or an overwhelming manifestation of a lack of basic economic insight, or both. Here is the evidence.

If Covid harms the economy, pensioners must be the most productive group

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Buying local, ECONOMIC POLICY AND STRATEGY, Market economy

England’s Norman Kings had a better grasp than the ANC of the importance of export for economic growth

Had the Norman kings of England in the 11th and 12th centuries a better grasp of economics than that displayed this week by Rob Davies, Minister of Trade and Industry?

In briefing Members of Parliament about Government strategy to support local industry now that Government is facing a fiscal cliff, Davies said it was unlikely to receive extra cash to support industrialisation (As the Budget bites the focus shifts to buying local… ) Government would therefore be “more vigorous” in getting value for money out by procurement of local inputs, rather than imported ones.

The strategy Davies proposed was (you guessed it!) more state control and prescriptions: Rather than pursuing growth through the tradeable sector, stimulation is sought through consumer spending with Government as the main consumer…

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