Category: Capitalism

Socialist complexity at heart of Eskom’s problems.

WHEN Medupi and Kusile were announced by our government in 2004 and 2007 respectively, the two coal-fired mega-projects were both seen as emblematic of South Africa’s democratic progress —  key to the ruling alliance and its plans for the future.

The ruling labour-left coalition was at the height of its power. With its roots in the victorious anti-apartheid struggle, it had made no secret of its desire for a ‘mixed economic model’, in which a socialist command economy would prevail alongside the capitalist economy, and where the energy sector, would imitate policies from the days of the former Soviet Union. What could possibly go wrong?

According to Pretoria technocrats, a new era of cheap coal would herald in cheap and plentiful electricity with which to ‘build the nation’. Both consumers and workers would benefit. The latter from long-lived and extended public works programmes centred around coal, which in turn would drive salaries and feed households which had experienced some of the worst ravages of apartheid ‘separate development.”(1)

Thus it was that these two projects ballooned into costly engineering exercises, as complexity driven by the technocrats, bureaucrats and party officials, armed with Marxist texts and presidential directives, ruled the day. That Marxists tend to overtheorise economic problems, relying upon ideas such as ‘dialectical materialism’ and the ‘labour theory of value’ to arrive at their conclusions, in effect the triumph of ‘ideology over pragmatism’, has already been remarked upon.

What has not been said in the mainstream media is the manner in which unions such as COSATU, emboldened by socialist think-tanks such as the AIDC whose research is anything but lopsided (2), and with a culture of intolerance for differences in opinion, quixotically feed unemployment, climate change and the national debt. While the rest of the world is moving away from coal, South Africa’s coal ambitions have instead risen and include plans for at least several new coal plants such as Thabametsi, each one able to take our country into poll position as one of the top GHG emitters in the world.

Eskom’s coal-fired power plants persistently and significantly violates the air pollution limits in its licences.

“The main cause of its troubles” say Adjunct Professor Rod Crompton, is Eskom’s decision “to build two of the biggest coal fired generating plants in the world, (Medupi and Kusile). These plants are running way behind schedule, they’re over budget and the bits that are complete don’t work properly. They are probably the single largest disaster in South Africa’s economic history.”

Medupi is literally drowning in ash. The result of socialist bureaucrats implementing design changes via committee without sufficient input from scientists and engineers, whom they invariably ignore. This lack of concern for evidence-based research and scientific methodology in favour of ‘political education’ is not a new one, witness the failed Afro 4000 train debacle .

An editorial published by Engineering Weekly for example, debunks concerns from COSATU and others, surrounding loss of jobs due to renewables, and yet the union continues to demand a state-owned power utility on steroids, with little concern for loss of jobs in the broader economy and the tragic impact upon the livelihoods of those affected by outages and inefficiency.

“There is considerable support in South Africa” says Tobias Bishof-Niemz  for the notion that a transition in the electricity system from coal to renewable energy will trigger a jobs bloodbath at both Eskom and the Mpumalanga coal mines. A detailed analysis of the job numbers, however, suggests quite the opposite. In fact, it points to there being at least 30% more jobs in a fleet comprising solar photovoltaic (PV) and wind farms when compared with an energy-equivalent coal fleet”

Meanwhile the brazen union federation staged a protest march this week, in response to the President’s plan to unbundle Eskom, in effect calling for Eskom and its mounting debt, to be supersized. Unbundling alone may not be enough to offset the crisis. Creating completely separate, independent and regional power utilities able to compete with each other would have a better chance of survival.

NOTE:

(1) See Rudzani Mudogwa’s recently published defense of coal which relies heavily on  statements made by Gwede Mantashe.

(2) An article doing the rounds in the local press  purporting to be by “Dr Sweeney, an AIDC visiting researcher, with the City University of New York’s ‘School of Labor and Urban Studies’,” claims splitting up Eskom ‘will result in privatization’. If one follows the logic of the argument presented, it is the West (including NY City) that is in the grip of rolling blackouts and massive debt run-up by Energy Companies since they were unbundled from the State. No citations, case examples nor evidence is provided by the ‘researcher’.

Medupi alone is a R145bn disaster

Liberalism’s ideologues and their coalfaced discontents 

Mboweni, ANC new economic era?

THE dramatic events this week which saw the removal of finance minister Nene and his replacement by former reserve bank governor Tito Mboweni arrived not a moment too soon.

With the ruling ANC on the ropes after state capture revelations at the Zondo Commission. Nene’s departure signals the demise of Zumanomics and hopefully the re-introduction of the pragmatic, consensus-based policies which gave rise to the boom period under Mandela and Mbeki.

Anyone appreciating the opportunities in the bond market as many analyst did, may find it painful to digest other facts surrounding the South African economy, currently in its longest slump since 1945 .

South Africa has slipped down the ranks of economic freedom to 96 out of 162. a sharp slump from its ranking of 46 in 2000.

Economic stimulus plans announced by President Ramaphosa will come to naught unless there are serious policy reforms.

Reforms which can only happen if the entire economic paradigm and political economy of the country is shifted, from big government for the sake of big government, to household responsibility and individual freedom.

The country recorded a surplus last quarter, a factor of the currency, which also has an effect on consumer prices.

Getting South Africans to work, requires entrepreneurs and individuals ready to create jobs,  thus the politics of the Zondo commission is revealing in what it shows of the opposite trajectory under Zuma. Ergo the clandestine leftism of the former President’s associates, all squaring state capture and the Gupta’s with a ‘dictatorship of the proletariat’ and other Marxist mantras, best understood by dashiki-wearing economics students sipping chai lattes while quoting Fanon and Frere.

The business environment in the country is said to be hostile, a result of ‘ideology getting the better of pragmatism’. A series of blunders involving populist rhetoric on land reform and property rights, and inability to deal with parastatals, in other words, State-owned Bureaucracy, has hobbled Ramaphosa’s government.

Under the last administration, cabinet posts almost doubled, as bureaucracy took its toll on productivity and individual freedom.

Ramaphosa has yet to pronounce on any constructive changes to policy in this regard.

South Africa’s unions must take some of the blame in driving a one-sided narrative, a wedge between the state and business, that has shifted the party from workers rights to political intrigues that saw the Guptas rise to power amidst BRICS neo-colonial ambitions.

 

 

Black opinion: Rationalists versus Irrationalists

TWO rationalist pieces, thoughtfully debunking the legs of Helen Zille’s argument in favour of ‘colonialism not being all that bad’, need to be seen alongside an incredible piece of sensationalist and irrationalist nonsense, authored by self-proclaimed saviour of the ‘black race’ one Andile Mngxitama. The embarrassing piece (compared below) merely demonstrates that when it comes to black opinion, and criticism of colonialism, there are better tools, than a racist free-for-all.

Reported on News24 , without any scientific evidenceMngxitama claims that the recent Cape storms are all the ‘fault of white monopoly capital’. It is a crackpot thesis devoid of any merit — touting an unproven conspiracy theory whose achilles heel is the fact that China is the world’s second biggest emitter of CO2 —  far from being an ‘all-white affair’, climate change is rather the result of a rampant consumer society, one occupied by black and white alike, for which anyone of any colour, utilising its benefits, needs to take responsibility.

CO2emit

South Africa CO2 emissions 1988-2012 showing a peak and plateau strategy

One has merely to remark that it is the ‘black majority’ South African government, which commissioned two of the largest mega-coal projects on the continent this decade, and so far as Nature is concerned, the impacts will be felt by all, regardless of skin colour or pigmentation. What was once true of apartheid South Africa, and its skewed electrification policies, no longer holds. My own research published by the Panos Institute in 1991, alongside that of Mamphela Ramphele, reported the racial bias impacting upon a then output of 246 million tonnes of CO2 pa.

South Africa is currently the 13th largest emitting country based on 2008 fossil-fuel CO2 emissions and the largest emitting country in Africa. Saying: “the ecological disaster awaiting planet earth is a direct creation of white people,” is not just shoddy science, it is assuredly evidence of a racist political agenda. There is no data, to my knowledge, showing that skin colour has any impact on the behaviour of litter-bugs nor that of conspicuous consumption.

The only reason Mgnxitama gets published in the mainstream press is because of his vocal position as leader of the ‘Black First’ front. An organisation with much in common with Donald Trump’s America First movement, and thus deserving of similar criticism to that levelled against France’s Marine le Pen. Though he differs from these two politicos in at least recognising the existence of climate change, is no recommendation.

That Mngxitima’s writing is increasingly on the fringes of rationality and scientific argument, can be seen by the emergence of writers whose opinions are eminently more sensible and suited to the important issues of the day. Thus we turn to Tembeka Ngcukaitobi writing in the Conmag, for our guidance on Helen Zille, who correctly observes, that “neither England nor Holland can claim the same robust system of judicial supremacy that we do” and “the notion of an independent, fair and just legal system ‘which is not influenced by politics whatsoever’ first emerged in the writings, not of a lawyer, but a journalist: John Tengo Jabavu, the editor of the Xhosa newspaper, Imvo Zabantsundu, in the late 1890s.”

“Jabavu’s writings in a marginal Xhosa newspaper were unsurprisingly ignored by the colonial government of the day. But they found fertile ground in the organisation which he did not found, but whose foundations he clearly influenced – the South African Native National Congress.” Ngcukaitobi’s writing on legal history thus traces the emergence of the ruling party and our own constitution, before tackling the second of Zille’s claims “which draws a link between colonialism and the development of our transport infrastructure [which] is equally distortive of history.”

“It was an official policy of the colonial government,” he says, “to use prison labour for infrastructure. Large numbers of Xhosas imprisoned after the last frontier war in 1878 were taken to Cape Town and, on arrival, turned into unpaid labourers, in the development of the rail infrastructure.” This transportation and technology theme is given better treatment if not short thrift in a parallel piece published by a blogger known simply as VaPunungwe, who asks: “what model car was Cecil John Rhodes driving?” 

The same question may well be asked of Jan van Riebeeck — what cellphone brand was he using? Technology is thus to be seen within its own context, not as some imported novelty, but rather as an historical construct, within a milieu as it were. It would thus behove persons such as Mngxitama to rather stick to writing on what one knows for certain, instead of punting racist theories and speculative rhetoric as easily debunked as that of Helen Zille’s.

 

 

Land ownership, is it so desirable?

PRIOR to 1994 “black persons” did not possess the vote. The majority were relegated to so-called independent homelands, most did not own land as such, and if they did, were largely dispossessed in one way or another by a labour system, which imposed a hut tax, drafted labourers onto the mines, and created a migrant population, which eroded both tribe and family, in the process shifting profit from the land, into the hands of the rand-lords and barons.

Some 87% of the land was thus owned by white persons and only 13% by black persons. There was no child-care grant to speak of, no disability grant, pensions were skewed in favour of the white folk.

Today we all possess the vote, the social wage comprising child care grant, pensions, disability and veterans grant is growing, more black people own houses and vehicles than ever before and there is unprecedented level of economic activity compared to similar periods under sanctions.

All this may one day change. Whether it is Julius Malema demanding land, or the land debate unleashed by the tipping incident, and online invective by Qwabe et al, then you may be forgiven for thinking we are still living under apartheid, and that when one arrives at white women versus the land and the dispossessed, it all comes down to real estate.

The facts behind this tragic reality are rather different.

For starters, the post-apartheid state currently owns 14% of the land in the country , only 79.2% is in private hands.

Between 57-84% of homes owned and fully paid off in the country (depending on tenure) measured over the past year, are black owned, mostly the result of mass state housing being available for purchase at low prices.*  This is not to say that the relative value of black-owned property versus white-owned property is something to be sneezed at, the value here is still undoubtedly skewed in favour of the white minority.

Likewise equity, when it comes to shares, 30% of the stock on the JSE is either in black hands, or in companies controlled by BEEE, with the rest either “white-owned” or under foreign control. An uneven and unequal state of affairs that certainly deserves correcting. Despite the enormous gap and Gini coefficient marking South Africa as one of the most unequal societies in the world, the Living Standards Measure (LSM) 10 has gone from 5% black in 2004 to 29% black in 2014.

In the face of extraordinary adversity, there has been unprecedented transformation, (arguably an incomplete, unfinished transformation), —  our country’s growth has however been a mixed blessing. Our population has grown from 20 million in 1960 to 52.98 million in 2013, which means we have more than doubled our population in 50 years. For every one job that would have been sufficient to provide an income and a house in 1960, three jobs must be created today.

To make matters worse, we have gone from a long boom powered by a resource market, to a resource meltdown, starting in 2009, at the same time that we are now heading into the fourth industrial revolution and a world without jobs, where increasing mechanisation and automation translates into unskilled labour becoming forever redundant.

Instead of the bipolar world which BRICS was meant to create or supplant, (the arrangement is essentially a Post-Bretton Woods solution for the 1950s), we have belatedly, and without much planning involved, entered the digital age, kicking and screaming.

South Africa has traditionally been a slow adopter of technology, we only turned on our tv screens twenty years after the West, and likewise, our broadband cable networks. The digital age, information filled and inevitable as it is, has been another mixed blessing, it has brought us all modernity, and in turn, unprecedented choices in online media, as well as the proverbial death of distance, in which there is no economic centre at all.

In the new digital world, in theory, all parts of the globe are able to compete with each other, equally. The result has been the dematerialisation of value, the rise of bitcoin, online shopping and netflix, pop-up factories, China-on-the-Desktop, the Internet of Things, all trends for which South Africans on the lower LSMs seem inadequately equipped, and for which unions, as well as employers, have failed to prepare workers.

It does not take a rocket scientist to see the massive disruptions which are occurring in nearly every economy on the globe, and more is yet to come. SA is not alone here. Uber is disrupting the taxi industry, Amazon is disrupting commerce, P2P is disrupting copyright, Bitcoin, as already mentioned, is disrupting banking.

Unless we seize these opportunities, and figure rapidly where our next economy is going to be placed, and yes, Operation Phakisa, the Oceans Economy is one such initiative, there is a danger that we will always be on the wrong side of the digital divide, and the tale-end of the economic food chain.

There is an urgent and drastic need for better internet access for the poor, food security in the form of food garden allotments, community tool-shops which replace DIY with Do-It-with-Others (DIWO), and for a raft of safety and social security measures, these I have already mentioned to some degree on Medialternatives before, they comprise an unconditional basic income grant, income equalisation, rent stabilisation and a free education grant.

Unconditional basic income grant – this is a payment once a month into your bank account, to all citizens of voting age, essentially outlawing poverty and preventing the worst excesses of the marketplace, such as the coercion of labour.

Income equalisation – in jobs that are seasonal, a central fund evens out the high and low periods, guaranteeing safety when there is no work, and creating savings when there is not.

Rent stabilisation – a form of rent control, sets maximum rates for annual rent increases and, as with rent control entitles tenants to receive required services from their landlords and to have their leases renewed.

Free education grant – a tertiary level grant to learners enabling access to higher education.

Unfortunately, ultra-leftists within the ranks of the ruling party and opposition groups as well as neo-conservatives, shun such proposals as too utopian, idealistic, or mere neoliberal tinkering. What they, the rag-tag left and conservative lobby, desire and want most of all, is to kill the private market economy which funds social security, by transplanting failed centralist and statist command economy proposals from the old Soviet Union and Cuba, a state of affairs which paradoxically also benefits the conservatives who are, at the end of the day, merely oligarchs.

Instead of social security we end up with business on welfare, endless bailouts, and junk status. It is South Africa’s dirigiste economy (the directed market), not the market economy which has failed. And it is the conservatives who have failed us most of all. One has only to look at SAA.

*Source: South Africa Survey 2016, SA Institute of Race Relations.

Bitcoins for Africa

What barrier is preventing Bitcoin adoption in one of the largest and most beautiful continents in the world? Someone has decided to find out.

Localbitcoin has partnered with Borja and his friend Elvis, who are both avid adventurers, as they ride their motorcycle through every country in Africa and set up a Bitcoin exchange in under represented African countries.

“We are two friends who love motorbikes.”, said Borja just before taking a ferry to Tangier, Morocco.

Starting in Morocco and ending in South Africa, with several stops in between. Feel free to tweet your support and assistance to @LocalBitcoins with the #BitcoinAfrica tag.

http://bitcoinmagazine.com/7444/localbitcoins-motorcycle-trek-through-africa/

Smile FM, Cape Town’s latest radio station

Today Smile 90.4fm  – Cape Town’s new FM radio station –  started broadcasting.

Backed by SA’s pre-eminent film producer Anant Singh, Smile 90.4fm won the first FM licence to be awarded by the regulator, Icasa, for Cape Town in 14 years.

Smile 90.4fm – which held its official launch in Cape Town last week –  will be unique in that it will be completely bilingual – going out in 50% Afrikaans and English and with a mix of music and talk. Half of the music will be local.

It has a 10-year licence according to MD Tony Mallam

Mallam, who has worked for the SABC and was a shareholder in and financial director of Kfm – said: “My first licence with Kfm was for six years and when we got the paper work for this one, it was for 10 years. We checked with Icasa and they felt it was a mission to renew every six years.”

In its application, the station’s funding target was R36-million.

FROM: Journalism.co.za