‘I won’t be your fool no more’. And so it goes in the lyrics of the famous song written by Little Richard in 1956 and sung by many others, including Buddy Holly. Now RW Johnson reflects on our present discontents. He points out the best comment came from Julius Malema who described the situation as one of “pathological crisis”. Malema said that “No one in the world will trust a political leadership that changes cabinet and finance ministers like underwear”. And that the first replacement, David Van Rooyen, had “questionable political credentials”. In the words of RW Johnson ‘Van Rooyen may have been mayor of the great city of Merafong but most diplomats and journalists would have some trouble locating that town on a map. Moreover he is not even a member of the ANC’s national executive committee’.
Read RW Johnson’s complete article Where to now? which appeared in Politicsweb yesterday and is based on an article that first appeared in Rapport newspaper. He is the author of How Long Will South Africa Survive?
Ironically, this places Gordhan – who was a weak finance minister in 2009-2014 – in a position of great strength. Even if he stands up to Dudu Myeni, Motsoaledi and the nuclear lobby, he can hardly be sacked now. But it is almost certainly wrong to imagine that he will play the role of the Iron Chancellor, the Horatio who holds the bridge. It is all a bit too late. This week’s antics almost certainly imply a recession in 2016 and that will make a further credit downgrade extremely hard to avoid.
When I published How Long Will South Africa Survive? in May this year I suggested that South Africa was heading fast towards a major economic crisis as its bonds got down-rated to junk status. Thus far events have followed this script almost to the letter. But shortly after the book’s publication I got a waspish email from a gentleman who worked in the Treasury who said I had things completely wrong.
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Perhaps the best metaphor is that of an advancing crowd. Those in front face soldiers with guns, are scared to death and dig their heels in, trying as hard as possible not to be pushed forward. But behind them there is a large and happy mob, full of demands. It cannot see the danger in front and so it continues to push forward.
Together, such merrily ignorant folk exert quite unstoppable pressure so that the people in front are relentlessly pressed forward, despite all their efforts to stand fast. Nhlanhla Nene was the most important man in that front row. After a brief game of musical chairs, Gordhan stands in his place. But the crowd still presses on.
While Gordhan may be stronger than before in relation to the President, he is considerably weaker in relation to the markets. It is not just that we now stand just one notch above junk status. The main point is that Zuma’s antics in this last week have given a deeply disconcerting glimpse of how poorly governed we are. After sacking Nene Zuma blundered through an address to a business audience full of paranoid imaginings and fundamentalist assertions.
In the midst of this meandering performance he revealed that he did not accept that value was dictated by the laws of supply and demand; instead he was an adherent of the labour theory of value which even Marxist economists stopped defending by the 1960s. In truth, Zuma is a semi-educated street corner activist and it showed. Zuma’s hasty denial that he had had another love-child with Dudu Myeni merely drew attention to the fact that he had put the country’s economy at risk in order to placate one of his girl friends – probably not even realising that he was doing so.
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Currently, it is easy to find activists of all stripes who advocate an all-out attack on inequality without any consideration for the fact that redistributive policies quite normally throttle growth. Others happily advocate a high minimum wage with no concern for the higher unemployment this would cause. And at a time when there is increasing talk of a tax revolt there are still some gentle souls advocating far higher rates of tax to fund NHI, free education and other such Scandinavian delights: a particular favourite since the flying visit of Thomas Picketty is a wealth tax.
No one seems to notice that when President Mitterrand attempted to introduce such a tax in Picketty’s native France it quickly became a laughing stock, raised only a miniscule amount and had soon to be scrapped. This is all just froth and the time cannot now be long delayed when the considerably harsher contours of our real situation are made plain to all.