Category: Economics

Our 14 point action plan

1) Fire No 1 and pay back the money

2) Cut back on five hour lunch sessions, R1bn wagyu steaks for No 2

3) Dump the Gupta Raj and the British East India Company kickbacks.

4) Reduce size of cabinet to pre-Zuma levels

5) Break up SOEs into smaller units, sell SAA.

6) Dump Eskom and introduce an Energy Commons

7) Introduce a Social Wage for all (including Basic Income Grant)

8) Household responsibility to provide home economics

9) Income equalisation for periodic work

10) Rent Stabilisation for those renting

11) Compulsory Civics classes for young scholars and new immigrants

12) Adopt David Robert Lewis’ Electronic Freedom Charter

13) Celebrate the Earth Rights we got into the Constitution

14) Hire competent staff at finance ministry

Competing visions for a new South Africa

TWO parties, each with contradictory and competing visions for South Africa’s future, hold centre stage. In the one corner, the African National Congress with its legacy of struggle against apartheid and nation building, that has increasingly come under the spotlight with revelations of corruption and state capture, and the failing economic policies and antics of its president Jacob Zuma

In the other corner, the Democratic Alliance, an opposition political formation with market friendly policies, but hampered by a troubling legacy, fraught because of its historic support from white capital versus the emergence of black capital under the ruling party, and yet presenting a different vision of reconciliation, inclusion, and equal opportunity.

So far as DA leader Mmusi Maimane is concerned, the struggle is about keeping the reconciliation project alive while creating an open and inclusive society in line with a constitutional vision that is the antithesis of the creeping totalitarianism and authoritarianism of the current administration.

Over the past months, the ANC has diverted itself from the proud nation-building of past administrations, towards an increasingly tribal vision of a society not unlike the Bantustans of the apartheid-era. A country defined by race, where domination of one group by another is the order of the day, and where expropriation of land without compensation is matched by the growth of state and tribal authorities.

And yet within the ANC itself, there exist competing visions to what has been broadly condemned by the investment community as “Zumanomics”, an unworkable recipe for economic disaster.  Thus a lively debate on so-called ‘radical economic transformation’ has ensued at the party’s organising conference.

So far as ANC NEC member and Minister of Police, Nathi Mthethwa is concerned, “South Africans should focus less on the colour of monopoly capital and rather focus on contesting monopoly capital in all its forms”

“We shouldn’t be aspiring to change white monopoly capital to black monopoly capital. The uncompetitive nature of monopoly capital makes us raise an issue of contestation, whether it will be black or white,” Mthethwa told reporters during a media briefing this week.

It was party spokesperson Zizi Kodwa who thus also articulated a view that is in direct contrast to the DA faction under Helen Zille and seemingly the ANC under Zuma. According to Kodwa, “the new South Africa creates a clean break from our ugly past giving birth to a new nation with new prescripts. South Africa is not an improved version of the past or a case of taking our better past forward, South Africa is a new nation.”

Can the DA match its own rhetoric and the propaganda of the ruling party, with a victory at the polls? The alliance has seen major victories during the past general election in several of South Africa’s metro’s including Johannesburg, and Nelson Mandela Bay. As the ANC moves to reduce its opposition to the left, it invariably risks losing the middle ground, where the most votes in the next election are bound to reside.

Thus as the party erodes the opposition EFF base, whose red shirts are now ironically being deployed in support of the DA — the ANC policy conference and its adoption of far-left language, risks reducing the party’s central mandate as articulated by the NDP and will come as a blow to those arguing for moderation.

All good news so far as the DA is concerned.

Recycle & Repair Shops, redefining sustainability

The Recycle Swap Shop operates from the premises of Hou Moed Centre, within the marginalised township of Zwelihle in the seaside town of Hermanus. Zwelihle’s children often struggle to get their hands on essential items that are often taken for granted by many; like toiletries and stationery, let alone more costly items such as shoes and school uniforms.

In 2003, the situation facing children and their families in the “squatter camp” visited was simply, desperate. The RSS concept was the answer.

Sweden is stepping up its recycling game. A Swedish municipality recently opened up what could be the world’s very first shopping mall dedicated to recycled, reused, and repaired goods.

The new mall, ReTuna Recycling Galleria, is in the city of Eskilstuna, Sweden. And it’s a one-stop-shop for sustainable products. The mall boasts over a dozen different stores focusing on everything from reused household goods to refurbished electronics—as well a restaurant, educational center, conference center, and an exhibition.

Joining France’s countless pastry shops and bakeries is a new kind of shop, which collects unwanted goods, repairing them if necessary, selling or upcycling them if possible, and, if all else fails, properly recycling them. And their numbers are growing.

Ressourceries, which could be translated as “resource shops,” operate something like Goodwill or the Salvation Army, accepting donations of used goods and reselling them at discounted prices. But the ressourceries take it to the next level by just about anything that’s brought through the door.

New York City’s Pop Up Repair Shop was a one-month experiment “aimed at breaking the cycle of use-and-discard goods.” It was the first step of a larger exploration of the issue, led by Sandra Goldmark, a set and costume designer and theater professor at Barnard College. Sandra and her husband Michael Banta, a theater production manager at Barnard, launched the shop using funds from an IndieGoGo campaign, which raised over $9,000.

“The most well-known example of items that are relatively simple to repair are clothes. Putting a patch on some jeans or a jumpers elbow, darning socks, these are some of the simplest repairs that most of us have experienced, if not done ourselves” says Recycling Expert UK

Once seen as a niche part of the fashion industry, being eco-conscious has rapidly become one of the hottest ‘topics’ of our time. From luxury fashion houses to fast-fashion retailers, and everything in between – more and more fashion companies are responding to mounting consumer interest and ‘going green.

There are literally hundreds of online projects involved in recycling and repair in one way or another.

The Bicycle Recycle Project at Seven Hills School in Nevada City, California, provides students hands-on learning of basic bicycle mechanical skills, reinforces the value of recycling, and provides the satisfaction of helping others.

Other recycle projects include an Electronics Exchange where consumer electronics may be repaired and swapped.

Meanwhile, the BBC bemoans the flipside: Why is it so hard to repair anything?

 

 

The new labour struggle: less work, same pay, and basic income for all

SINCE the 19th century May 1 has been International Worker’s Day, chosen by organised labour to celebrate the contribution of workers around the world. But it’s frequently forgotten that the day actually celebrates a particular achievement of the labour movement: being able to do less work. Not better paid or decent work, but shorter working hours.

May 1 initially commemorated the 1886 Haymarket affair, where Chicago workers were striking for a radical and dangerous proposal: the eight-hour work day. This idea was so incendiary that the protests turned violent; both police and protesters died in the conflict.

Today more and more people around the world are facing precarity, casualisation, inequality and unemployment. It’s time to pursue a new agenda for a new global labour movement – or rather, to update the old agenda of the 19th century: less working time and more money for all, in the form of shorter work days and a universal basic income.

What happened to the struggle?

An eight-hour work day and weekends off were far from the norm for most full-time workers before the early 20th century. They usually worked 12 to 16 hours a day, six days a week. It took a protracted, often violent organised labour struggle in the face of strenuous opposition to change that.

Forty-hour work weeks were finally legislated around the world less than a century ago. This seemed like just the beginning. The economist John Maynard Keynes predicted in 1930 that thanks to technology, within a century we’d all stop worrying about subsistence. We’d work 15 hours a week, just enough to keep us from getting bored.

In some ways he was right. Technological advancement has exceeded his wildest dreams; productivity and output per worker has soared. But this has proven to be our problem rather than a source of liberation.

As productivity grew and each worker could produce ever more output, we consumed more and more stuff so that full time, 40-hour-a-week employment could stay stable. Now we’ve reached our limits, with climate change, pollution, deforestation and extinction spiralling out of control. We can’t afford to keep consuming ever more.

We’ve also moved into a different phase of automation, a “fourth industrial revolution” where artificial intelligence and machine learning can do the work of accountants, lawyers and other professionals.

The logical solution would be to enjoy such automation by working less (while the amount of stuff produced remains the same with machines’ help). Instead, those of us lucky enough to be formally employed still work nominally 40-hour weeks (in reality too often working far more) while ever more people can’t find any steady employment.

The fruits of soaring productivity growth and the wealth generated by automation are not being redistributed via rising salaries or shorter working hours. Instead they are captured by a tiny global elite. The richest 1% now has more wealth than the rest of the world put together. Yet there isn’t a mass organised struggle explicitly calling for a redistribution of wealth and work.

It’s time to revive a very old labour ideal. Industrial Workers of the World/www.iww.org

Instead, in places as varied as South Africa, the US and Europe increasingly frustrated, alienated populations faced with the rise of precarious work and wage stagnation point their finger at foreigners and immigrants. Their calls are not for redistribution, but for isolation and xenophobic exclusion.

South Africa is a prime example of this contradiction. It’s the most unequal major country in the world, with staggering wealth and unemployment rates. It has experienced years of deindustrialisation and jobless growth.

South Africa is experiencing the sorts of contradictions that follow in automation’s wake. Factory and even service jobs are being automated, and CEOs earn 541 times the average income. Meanwhile, people desperate for a wage resort to what anthropologist David Graeber terms “bullshit jobs” like pumping other people’s petrol or watching their parked cars.

South Africa’s inequality isn’t just a matter of income or wealth. It’s also a matter of working hours – some people have too many, some none at all.

From labour to leisure

An obvious solution would be to cut back on the standard work week so that demand for labour goes up.

Education institutions would have to scramble to fill some of the demand for skilled workers. But the pressure might be a good thing. It would push the school system to produce well-equipped graduates, and provide new solutions to problems such as the university fee crisis, spurring greater urgency for the state or private sector to underwrite higher education programmes.

This would also decrease inequality. The only way to keep wages the same while hiring more people is for wealth to get spread out: for the highest earners and others who capture the fruits of corporate profits (i.e., shareholders) to get less so workers get more.

Shortening working hours has also been linked with a host of other social goods like better health outcomes, less impact on the environment, higher gender equity, and increased happiness and productivity.

Labour must also be decommodified more broadly. Then even those unable to sell their labour in a rapidly automating world would reap some of automation’s fruits.

The simplest proposal to achieve this is the universal basic income guarantee: the idea that everyone gets enough cash every month to cover essential living costs, no matter what. It’s a redistributory measure. If you earn enough to not need it, you give it back to the communal pot when paying your taxes.

If that aspect is taken into account, the proposal is surprisingly affordable. It could also end poverty, stem inequality, enable work that isn’t valued by capitalist markets (such as care work or the arts), and empower workers to bargain for better conditions without the fear of starvation or homelessness.

What we need are shorter working hours and a universal basic income. In other words, a leisure movement – not a labour movement.

Radical, and attainable

Such a call is both radical and attainable. It’s attainable because it simply spreads out the gains from productivity growth. It’s radical because we live with the cultural ramifications of centuries of labour scarcity, when everyone had to work as much as possible to produce enough goods to go around. That’s not the case anymore, yet the old mentality remains: hard workers are morally superior, and laziness is unquestioningly a character flaw, a moral failing.

This is a default assumption not only among the middle and upper classes, but as my own and others’ recent research in South Africa and Namibia shows, among the unemployed poor as well.

This proposal is also radical because it challenges the unopposed accumulation of wealth amongst a small elite. It will certainly be opposed by the very wealthy. But then, so were calls for a 40-hour work week.

Via: The Conversation

BRICS dilemma, folly or curse?

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Master of Junk

IT WAS never meant to be anything more than a political union, similar in status to the non-aligned states. Economically, only two of the five BRICS nations, China and India are doing well, the rest are all currently in junk status. Russia was junked in 2015, followed by Brazil in 2016 and South Africa in 2017. In many respect it is Russia which has tilted BRICS in favour of junk, and has lead the pack in this regard, with the result, there is now a Good BRICS and a Bad BRICS story.

Goodness BRICS

Let’s take a look at what is good here. So far as the China is concerned, the need to create markets for its overproduction of goods has meant that it is forced to continue investing in overseas markets, and the result is largely of benefit to us.

South Africa, an outlier so far as size is concerned, has seen several deals involving, variously, the creation of an entire city in Modderfontein, the relocation of a Hisense television factory to our shores, and the latest investment of 11Bn Rand towards a new car factory in PE. So in addition to our ample resources and export market, there is now significant beneficiation of goods within the country, in an evolving relationship, all producing goods which in turn end up in the West.

India, another global leader, has taken a slightly different tack. The past decade has seen successive major investments by Asian-based entrepreneurs in the South African economy. Beginning with Lakshmi Mittal, who bought former state-owned ISCOR shortly after democracy, to create ArcelorMittal. More recently the Indian billionaire Anil Agarwal bought a substantial stake in Anglo American, a traditional dual-listed South African business, which has relocated its headquarters to London. The pattern is thus one of picking up bargains, arguably to the benefit of stakeholders. Though trade between the two countries is booming, this is often however at the cost of local clothing and textile workers.

Badness BRICS

Where trade with the two Asian economic giants of BRICS has tended to benefit South Africa. The reverse is true when it comes to Russia. Instead of buying out state-owned enterprises (SOEs) as in Mittel, relieving taxpayers of an unnecessary drain on the treasury, or simply just investing money, the Russian strategy has been instead to hijack the remaining SOEs whilst foisting projects upon us of dubious merit. In effect it is Russia which has engaged in what can only be called a form of state capture, and nuclear colonialism.

The proposed Rosatom nuclear deal along with its many intrigues under Malusi Gigaba is very bad for South Africa, both economically and politically. Apart from the fact that the deal will result in an unnecessary 1Trn Rand expenditure from the treasury on nuclear technology already past its sell-by-date, — bringing to a halt and seriously compromising a highly successively renewable energy programme — it will not only relieve the country of taxpayers money, but will also remove scarce foreign exchange.

If implemented the Rosatum deal would commit South Africa to paying forward for its electricity in Dollars for the next 60 years — a currency that Russia desperately needs in order to balance its own books. In effect no money is being invested by Russia as such. Instead, the country would borrow money on the open market against its forward production, in order to buy moribund technology from Russia in a similar deal already concluded with Saudi Arabia. The ‘sukuk deal’ financed Medupi and Kusile in this way, and albeit local technology which benefitted, the resulting finance model is no doubt to the ultimate detriment of the economy and climate. See how Saudi money dried up.

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From NDP to Junk status without a Plan (or even a paddle) in three easy steps

ANYBODY remember the National Development Plan (NDP)? The economic initiative was the hallmark of successive ANC administrations. As late as January 2017 the plan was being touted as a vision for 2030, “the product of hundreds of interactions with South Africans, input from tens of thousands of people, extensive research and robust debate throughout the country”. When Pravin Gordhan was hastily recalled from London, whilst on an economic roadshow, it was the NDP, with its broad vision that he was selling to investors.

The markets were reassured by the long-term stability promised by Pretoria bureaucrats, and, after the Nene fiasco, (a foretaste of what was to come) not only was the economy in recovery, but the currency was even experiencing a bull-run, making the Rand one of the world-beating currencies of 2017, at least this was until President Jacob Zuma fired his finance Minister again, and then half-his cabinet while embarking on a course which took South Africa directly into the headwinds of currency volatility and the ire of ratings agencies. Within a short space of a week, the gains and momentum of the past 12 months were wiped out, as local banks lost heavily, and borrowing money on international markets suddenly became a lot, lot harder.

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What happened? Can one put this down to the simple cult of personality surrounding the President? The Guptas and the intrigues of Nkandla and Pretoria, or BRICS?  Here is one alternative version of events, and no doubt there will be others:

Frustrated by electoral inroads being made to the left and right of the party, the centrist ANC realised that something drastic needed to be done. Instead of meeting the official opposition the Democratic Alliance (DA) whose market-friendly policies and promise of renewal had resulted in astonishing gains at the polls, in both the City of Johannesburg and metros of Tshwane and Nelson Mandela Bay, NEC party insiders decided to quietly drop the NDP focus in favour of a new mantra —  that of ‘Radical Economic Transformation’ (RET)

In effect, the ANC were now adopting the policies of the far-left Economic Freedom Front (EFF), promising massive changes in ownership, whilst debating expropriation of property without compensation,  (an all too familiar bait and switch strategy) and thus a sure sign that groups such as Black Land First (BLF) were also beginning to dictate the ruling party agenda. Exactly what RET represents, is anyone’s guess. In all likelihood, it is mere code for a hodge-podge of incoherent leftist policies. If the ANC is to survive at the polls come 2019, it will have to enter into coalitions, and the dilemma remains that the DA and EFF are on opposite sides of the political fence so to speak.

The resulting drift to the far-left by the ANC under Zuma (even if by some accounts, simply empty promises) has had severe consequences. The fallout couldn’t get any worse than if Hugo Chavez had to suddenly arrive back from the dead, flogging the statist focus of big government and the anti-private property rhetoric which nearly destroyed Venezuela. So while ratings agencies were hammering the bond market, and the parastatals were still on life-support, we saw the travesty of Malusi Gigaba and the trillion-Rand nuclear debacle (read: expensive mega-projects) getting everyone in a tizz.

Unless Pretoria figures out a way to print money without encouraging further Rand depreciation, the big bucks flagship projects and renewable energy procurement touted before the downgrade are all but DOA. The only questions remains: Can the NDP be saved (or scaled back?), or will it take a defeat at the polls to realise, that when it comes to economic policy, nothing in South Africa is cast in stone? That the ANC is unlikely to be in power come 2019, with a workable NDP or not, is slowly dawning. Some 100 000 people from across the spectrum, marched on Friday while calling for the President to resign.