GAUTENG
COMMENT, by Pete Bower
MAGAZINE
HOW TO MAKE YOUR PLOT PROFITABLE
Vol 17 No 3
March 2016
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FRONT COVER
Marco Tijssen of Genius Landbou in
Tarlton aboard a 37kW Kioti NX5010,
the largest tractor in this South Korean
manufacturer’s line-up in SA.
The national discourse
A
dolph Hitler's spin-doctor, Joseph Goebbels, is reported to have
said, in relation to some aspect of World War 2, the Holocaust
or Nazism, “tell a story often enough and make it fantastic
enough, and eventually it'll be believed.”
Looking at the national discourse in present-day South Africa one can't help but
wonder whether we are not being assailed by similar Goebellian tales and other selffulfilling prophesies.
Are we talking ourselves into a depression? As Parliament resumes its business, if you
can call it that, we may well wonder.
Certainly, the economy is tanking. All the usual economic indicators show this, the
situation not having been helped by Jacob Zuma's inexplicable pre-Christmas game of
musical chairs in the finance ministry.
That little episode knocked a R500 billion hole in the South African economy, simultaneously resulting in the value of our currency cementing its 40% decline against
international currencies in one year. Small wonder foreign investors are putting their
money elsewhere.
Unemployment is at an unprecedented level. This is not surprising, really, because
South African labour laws are onerous and wages are higher than those in other
producing countries, and productivity is lower, which means that we have become an
importing, rather than manufacturing, nation.
On the subject of manufacturing there's another interesting observation. In years past,
when the value of the Rand dropped against other currencies some economists would
loudly say “Rather than being bad news it benefits South African exporters by making
their products more competitive.” You don't hear that any more, or at least not from
serious economists, because they know that we manufacture and export so little.
And the argument is spurious anyway because if a low exchange rate makes exports
cheaper it also makes imports more expensive, notably the imported machinery and
components one needs to manufacture stuff to consume locally, let alone export.
The drought has the country in a steely grip, although some rain in late December and
January has brought a little relief in parts of the country, resulting in a few farmers still
being able to plant maize, and in turn resulting in estimates of the amount of maize
needing to be imported having dropped from seven million tons to four million.
International events aren't helping, of course: commodity prices remaining low are also
having an effect on our mining sector.
So notice how easily the national discourse has become about the likelihood of a credit
agency downgrade to junk status and the effect this will have on South Africa-Inc's
ability to borrow money.
To older economic observers this is all quite new. It's only in the past decade or so that
the focus of international economics has been on the ratings published by research
companies such as Moody's and Standard & Poor. And what does it mean to you and
me? Simply put, it means the treasury and banks will have to pay more interest on the
money they borrow internationally which down the line means that our money won't
buy us as much in the future than it does today. We will all be a little poorer. And those
who are already poor will be poorer still.)
Notice, also, the national conversation around corruption. Not a day goes by without
another report of somebody in high office benefiting irregularly from some deal or
larceny. Less frequent, however, a