Category: Economy

Old King Coal be damned

icebox.jpgWHEN the electric icebox was invented, thousands of ice haulers went out of business.  At the turn of the 20th century, nearly every family, grocer, and barkeeper in South Africa had an icebox. But ironically, South Africa’s dependence on ice created the very technology that would lead to the decline of the ice empire — electric freezers and refrigerators.

During the early 1900s, these appliances became more reliable, and by 1940, millions of units had been sold. With freezers allowing people to make ice at home, there was little need to haul massive quantities across the country.

We can’t stop progress and if we do, we risk losing far more than jobs, our Earth and our human habitat is at risk. Because of altered circumstances, Eskom has decided to shut down five coal power stations — Hendrina‚ Kriel‚ Komati‚ Grootvlei and Camden. The termination of coal truckers contracts has lead to a furore, with Cosatu labelling it a “hostile act”.

We can’t turn back the clock. This is not simply about Independent Power Producers (IPPs), as 250 medical professionals and medical organisations stated in the Durban Declaration, climate change is a medical emergency. According to the Lancet, climate change is the greatest global health threat of the 21stcentury.

Each year has seen an increase in global ambient temperatures caused by the release of Greenhouse Gases (GHG) associated with carbon and fossil fuel such as coal, with the resulting melting of permafrost and the polar icecaps, retreat of glaciers, thermal expansion of the ocean and most indicators are off the charts. Africa will suffer most from increasing temperatures. Workers will be most affected by associated loss in productivity.

We can’t afford to live under domes with an altered climate, neither can we afford to miss out on the renewables revolution. Far from being a scourge of privatisation, it is one of our country’s few success stories, continuing to attract investment, continuing to produce jobs and the roll-out of renewable energy is very impressive. It represents a paradigm shift, we dare not ignore.

A way must therefore be found to accommodate the major shift in energy priorities and the sudden dislocation of an entire industry. Truckers can truck goods in other markets, we must assist them, but we cannot step back from the icebox analogy and the melting point — we really no longer need a coal trucking route, nor a coal industry and its cost in terms of human life.

One can only suggest Eskom needs to be more strategic in its approach and truckers need to given the resources to regain control over their lives. Government must assist in skills retraining and investing in adult education that will help families deal with the crisis. It must not be mislead by the unscientific opinions and haranguing of union bosses.

SEE: Earthlife Africa wins court challenge

Extract Published in Cape Argus, Letters 9 March 2017

See through the hate politics

THE Anti-Politics of Andile Mngxitama, Zanele Lwana, Dumisani Hlophe, and Gillian Schutte have graced a number of publications over the past weeks. From City Press to Independent Online, this group of self-appointed political pundits, have become a stock source of criticism of any opposition trend which does not have the commandeerist seal of approval.

Whether it be advocacy of Mandela’s non-racial legacy, a march in support of economic development, or a campaign against corruption within the ruling party, such opposition concerns are written off as nothing more than “right-wing conservativism”, “pro-JSE market fascism” and “white privilege”.

In Whites Marched to Uphold their privilege  Schutte expresses her belief that the #ZumaMustFall march “indicated the wish to shift political power back into “competent white hands”.

In see through the white nostalgia for apartheid,  Mngxitama and Lwana, assert that the #ZumaMustFall campaign is “just an excuse to flaunt racism and fascism”.

In Madiba legacy a liberal construct is right when he says “Mandela has gone in our minds from militant to saintly reconciler”. It is not the ANC who have reconstructed Mandela from “a militant liberation hero to a reconciler, nation-builder and saintly Mother Teresa character” but rather “unreformed apartheid benefactors.”

All three pieces demonstrate a class project that is avowedly against the non-racial policies of the ruling African National Congress party and leading opposition party, the Democratic Alliance. In order to gain relevance within the ultra-leftist circle surrounding the South African Communist Party, various trade unions and the EFF, (Malema is by all accounts, a Maoist), these pundits blanket-label opposition (and government) in terms that are extraordinarily broad, and often qualified by hate speech and racial profiling.

A progressive meeting aimed at reclaiming economic policies that will avoid South Africa going bankrupt, is thus something more sinister, a conservative “reactionary movement”. An amalgam of youth, students and ageing lefties is thus either a new threat, or an old foe, the”white right-wing” organising only “under the pretext of fighting corruption”. Mandela’s legacy is therefore, a cynical “liberal construct”, a new target in the battle against neo-liberalism by the ultra-left.

It was not so long ago, when communists were on the receiving end of this kind of McCarthyiest witch-hunt, to expose persons and movements with wrong-views, divergent opinions and unlicensed ideology. What is clear, is that there is growing opposition to untrammelled government largesse, an unequal state where 40% of the budget goes towards public service salaries. A country dangerously teetering on the edge of bankruptcy. An economy being strangled by monopolies and parastatals. Since Mr Zuma came to power in 2009, says the Economist, South Africa’s finances have grown ever more precarious. The budget deficit is 3.8% of GDP. Public debt has ballooned from 26% to almost 50%. (see  Try again, the Beloved Country)

Unfortunately, the drift towards fascism in South Africa, isn’t coming from conservatives within the African National Congress, and the democratic opposition, it is coming from ultra-Marxists on the ground, (and within parliament) who see themselves as a vanguard of a revolution still to come.

Whether it is in terms of the Arab Spring, which failed notably in Syria, where the result is 380 000 dead, or in terms of South and Central American failures such as Chavez, Castro and Kirchner, these pundits, notoriously thin on human rights and individual freedom, believe that ideology alone is sufficient to move the country forward.

 

 

Economic disconnect caused by Technology and Welfare disconnect

SOUTH AFRICA’S YOUTH are experiencing an economic disconnect. A generation faced with a world without jobs, a massive debt burden, and an economy that has failed miserably to gear itself up for the third-wave technologies that Asia and the West have embraced decades previously.

While you were out striking, marching or simply shopping, the world evolved, from a bipolar economy, dependent upon China and the USA, to a multipolar universe — an economy without a centre. The rise of the Information Economy — based as it is on information freedom, has been coupled with successive innovations. The Third Industrial Revolution has produced a ‘post-scarcity economy’, where having a ‘China on ones Desktop’, a 3D printer capable of printing anything, is considered de rigeur.

Successive waves of innovation have seen — the virtualisation of the economy, the dematerialisation of assets and the Internet’s proverbial death-of-distance. Pop-up factories, makerspaces, friction-free digital copies and the ‘Internet of Things’ are all buzzwords and terms which the youth are invariably going to meet on their free education journey. In the future, your neighbour will hand you a copy of an open source motorcycle, just so the two of you can go for drive. When you return, you will recycle the vehicle into any number of other open source devices.

We are rapidly approaching an era in which robots self-assemble and produce the goods, which we buy with our wages, which are in turn given to us, via a more efficient means of production and redistribution of wealth. This is an alluring proposition. Holland for instance had moved to end labour in mining. Machines are replacing humans wherever they are found, and the full automation of society is only a matter of time.

Now, Let’s talk about the welfare disconnect

Although the country is one of the few nations on the continent to have implemented a social security programme, this programme is geared towards the elderly, disabled and child-care grants. Thus the youth of today, are born into social security — their parents are recipients of state welfare not because they are citizens, but because they have children.

Once a child is over the age of 18, this grant falls away. The double-whammy of unemployment and poverty kicks in. Some 25.5 percent of the population is unemployed and this figure is worse when the youth and first-time job-seekers are concerned, rising to 63%.

Today’s student unrest is a direct result of the situation where a pupil, having generated income for his or her family, simply by being a child, turns into a liability on becoming a young adult and tertiary student. In most cases, such a person is forced to fend for him or herself.

This is an enormous shock to both the youth and the family.

So far as social security in South Africa is concerned, we are a nation which has the cart before the horse. Instead of paying families to have children, we should be paying people to stop working.

South Africa’s youth can work and play, just about anywhere there is an Internet connection or icafe, but getting connected to the Net is not sufficient to enable jobs and free education. There are other necessities, common to first world economies which we lack as a nation, and without them, being merely connected, is simply not good enough. In fact, a job, as an end in itself, may not necessarily be all that desirable, the same way that owning anything in an economy based upon abundance, is not the alpha and omega.

Fixing the disconnect

Exactly how is the country to going pay for free education, and range of services? How are we all going to live in a world without jobs? These are the questions foremost on people’s minds, as the country sobers up to the events of the past weeks, which saw the unprecedented storming of parliament and storming of the Union Buildings.

South Africa as luck would have it, already has a ‘sovereign wealth fund’ with a massive R1.5 trillion rand invested, and certainly the youth need to be tackling finance minister Nhlanhla Nene and education minister, Blade Nzimande on why they are suffering in the face of so much wealth.

Instead of a Public Investment Corporation (PIC), benefiting one privileged generation who just happened to be in power during the 90s, let’s make the public investment more inclusive of all citizens, and all generations, and recommit the fund to its Public goals, since the ruling party appears to have lost the distinction between what is public and what is private, funding Nkandla, and government pensions for party insiders.

PIC should rather be redirected to funding a social wage for all citizens, one which includes free education, health insurance and a basic income grant. Instead of a party wage, we could have a social wage reducing the worst affects of poverty and mitigating the coercion inherent to the job market, even one that is Internet-enabled, while providing free education.

Moving South Africa from a coercive labour market to a voluntary labour market, could easily be achieved by removing the compulsion, violence and necessity to seek employment.

A job should not be a requirement in order to survive or be a South African citizen.

Labour should never be compulsory, or forced under the barrel of a gun. As Marikana has proven, people are willing to die for their freedom, and this message is now being taken up by students, who rightfully are demanding free education. The same generation will soon be demanding social security, a social wage for life.

Only the most productive labour and most capable persons would enter the wage economy. One has merely to look at social democracies in Europe to see what a social wage economy looks like:

The State disburses funds, seeing an immediate benefit to the fiscus, via the value added taxation system, which recoups the money spent, in a virtuous cycle.

Citizens with a social wage, are able to purchase the necessities of life and thus avoid the worst pitfalls of extreme poverty.

There are compelling reasons for embracing wealth redistribution in this way.

Alaska for example, pays its citizens to purchase services that would normally be gained from the state, from the private sector. In this way, the state avoids creating enormous bureaucracies which are costly and unsustainable by their very nature, and avoids the cost escalations that come from tenderpreneurs, and mega projects, whose only aim, is to keep people employed, in a world in which labour not leisure is the goal.

Societies with some form of social wage, whether social security or social welfare, produce more scientists, artists, musicians and thinkers. They are better equipped to innovate and create. They experience stability and longevity, both in terms of health extension and the extension of the period in which these societies exist, and remember.

[This is a condensed version of the previous five part series on the economy: Fix the Economy Stupid and Provide Free Education]

Rent Stabilisation needed in South Africa

THE boom in property prices in South Africa has meant that for many families, owning property is out of the question. Renting results in vulnerability and a number of factors below need to be considered. The move by listed property groups into residential property has further pushed up rental prices. Rents have increased on average by 10% pa, with yields at 6% compared to the inflation rate 3.90%

Rent stabilisation offers an alternative to social housing projects. In the London borough of Camden, demands for rent stabilization are producing results, and it perhaps time that similar policies were considered in South Africa.

Like Cape Town, at least a third of Camden residents live in privately rented homes, with more and more families being forced to move into a sector once considered mainly for young professionals and students.

This means that tenants have no long-term security which affects issues such as preventing children settling in their local schools and families becoming part of their community.

The average house price in Camden is £700,000 (R125 million) and is way out of reach of all but the wealthiest families. The average rent for a two bedroom property is £440 (R7883) per week and these rents and house prices are simply unaffordable for the majority of local people in a borough where average income is around £33,000 (R591 246)”

According to a report produced by the Camden City Council, “The main economic reason for introducing regulation is that the market in question is operating badly – i.e., there is market failure arising from market power; lack of information and asymmetry in that information; external costs or benefits from the provision of the good; dynamic problems in ensuring adequate investment; and/or issues around risk and uncertainty. The housing market is susceptible to many of these problems, particularly because of the contractual relationship between landlord and tenant and because it is difficult to adjust supply rapidly in the face of changing demand.”

“Regulation may also be introduced for reasons of equity and distribution. In particular because housing is both costly and a necessity of life, regulation may be introduced to make housing more secure and affordable. In these circumstances there will often be a tension between helping tenants and protecting returns to landlords, and an emphasis on the former can result in lower investment and increasing pressure on rents. In this environment it is often necessary to introduce other subsidies or forms of provision such as social housing where market returns are not required.”

SEE: Co-ownership democracy 

SEE: Share ownership, a way up the property ladder?

SEE: Energy commons a way out of Eskom debt trap? 

SEE: Income equalisation a solution for South Africa? 

Homegrown global economic players keeping SA afloat

TWENTY years ago, South Africa had finally stepped out of economic and political isolation. The elections had been won by a democratically-elected government, and parliament was busy drafting a document which would become the nation’s constitution and Bill of Rights. Then, with the exception of a few multinational resource companies such as Anglo American, very few listed companies on the Johannesburg Stock Exchange were global.

One of the crowning achievements of the Mbeki administration perhaps, was to create the conditions necessary for local South African companies to diversify and expand overseas, resulting in a dividend windfall for investors and creating international giants of which we can certainly be proud.

Here are few of the public companies:

SASOL

SAB Miller

Woolworths Holdings LTD

Pick ‘n Pay

MTN

Mediclinic

Aspen

Standard Bank

Investec

These are just some of the listed companies repatriating profits back to South Africa. They help to stabilise an otherwise underperforming market. At the current exchange rate, the net asset value of these shares rises whenever the currency devalues, representing a windfall for those invested in the stock in Rands. After pronouncements about the economy by Minister Nene, will the inward-looking Zuma administration take time out to congratulate South Africa’s global players in what would otherwise be an isolated economic system, economically dependent upon the sub-region for trade.

READ: DA’s finance spokesperson Ashor Sarupen asks: Is Neoliberalism a Straw Horse?

READ: Americans taste South African snacks

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Income equalisation, a solution for South Africa?

INCOME equalisation is a scheme which allows workers and professionals who are eligible taxpayers to even out fluctuations in income by spreading their gross income from year to year.

In Western Australia a voluntary income equalisation fund targeted at farmers, fishers and foresters helps to balance periods affected by seasonal agricultural work.

In similar categories of work, an equalisation fund makes sense, since the benefits of averaging out yearly income outweigh the short term gains to be made from seasonal contracts.

Part of the problem of agriculture and fisheries workers dependency on farmers and the fishing industry, who in turn only rely on workers and labour part of the year, is the insecurity inherent to the industry.

The money contributed to the equalisation fund is reinvested and earns interest which is then paid out to the recipient in the form of a dividend.

In South Africa, workers affected by seasonal changes could use the fund to guarantee income in the off-season.

In other categories of work, income equalisation could even out differences in salaries, since not all companies pay the same wage for the same amount of labour.

Examples of activities that would qualify for income equalisation include:

  • beekeeping
  • animal husbandry
  • dairy farming
  • grain and seed growing
  • market gardening
  • fruit growing
  • poultry farming
  • share-milking
  • vegetable growing
  • vineyards

Income equalisation should be seen as an efficient means of guaranteeing stability in the labour market, and like unemployment insurance, there are many benefits to be had from collective bargaining in a voluntary labour economy.

SEE: Towards a Social Wage

South Africa’s Energy Commons

ENERGY systems linked by information technology could deliver a revolution in energy provision as the PC does for electricity what Windows and Macintosh did for operating systems. Remember the days when the only computers to be found were large mainframes in universities? The personal computer helped consumers escape from the clutches of centralised computing and large corporates like IBM.

Netmetering could revolutionise electricity provision in South Africa. We have reached the point of grid parity, “in which the cost of producing electricity and the cost of purchasing it from Eskom are the same’, points out David Lipshitz of Mypowerstation, one of the many online metering projects which have sprung up on the back of the revolution in connectivity, It is therefore only a matter of time before alternative energy grids powered by the Internet become a reality.

New emerging technologies which allow consumers to produce and share energy are already surpassing the state’s ability to deliver affordable electricity, as centralised power grids become a thing of the past and abundant free electricity becomes a very real possibility. It all comes down to how one defines the energy grid and how the new netmetering projects are going to be structured — whether as energy cooperatives or as micro-enterprises — the result determines whether a new energy commons connected by the Internet becomes a reality.

Free electricity systems and the smart grids of the future could be just around the corner. But first, lets rewind to how we got here.

Problem is the manner in which South Africa has structured its energy system as a cash cow for municipalities which purchase bulk electricity from Eskom, the national energy provider. The City of Cape Town for example, earns billions from the resale of electricity to consumers. Municipalities, according to the National Energy Regulator may be receiving up to 60% of their revenue in this way. There is thus no real incentive to support the new decentralised energy systems which could end up, not only saving consumers money, but also providing cheap, low-cost and near-to-gratis energy for everyone.

Historically, small power stations owned and operated by municipalities were gradually replaced by the centralised power grid. In South Africa, the grid is operated by an apartheid-era parastatel, Eskom which took on a new metastasized form after 1994. Following rolling black-outs, Eskom embarked on an aggressive expansion exercise with successive increases of about 25% a year and most recently announced plans for a 16% rise. Eskom Chief Executive Brian Dames explains the reason for the costs: “we need to continue to invest in the electricity infrastructure which can support higher rates of economic growth and development and extend access to electricity to all South Africans.” In other words, needless infrastructure projects which merely benefit tenderpreneurs.

The solution to the double bind of increasing capital and infrastructure costs and the resulting increase in tariffs appears to be in shifting energy away from being just a commodity (to be bought or sold) into a public good. In other words, a broad social commons. Paul Hartzog of the Forward Foundation sees the Energy Commons as one of the five commons (along with food and culture) which emerges as energy production ‘shifts from massive technological production infrastructures to smaller scale distributed energy production networks’.

The return to the idea of small scale energy provision, whether by Independent Energy Providers (IPP), or via small home installations, has been long coming, and is in part fueled by Eskom’s spiraling energy costs.

Relocating energy provision within a social commons, as advocated by academic John Byrne in a deregulated environment would open the way for the networked energy systems and smart grids also envisioned by the futurist Jeremy Rifkin, in which energy is supplied to consumers by thousands of small producers, much like Internet content is supplied by a network managed by service providers. The obstacles are thus not technological, but rather political.

There is no technical reason why small scale suburban and urban energy collectives cannot organise around energy provision, entering into collective bargaining agreements with their respective municipalities in a framework in which the grid acts as a battery, storing energy when there is a surplus, and providing energy when it is needed. It all depends upon the enabling environment, access to the cables which connect homes to each other and the resulting energy traffic.

The entire feed-in tariff debate which has been going on for almost a decade, hinges upon the idea of consumers being able to feed surplus energy back into the grid, and finding some means of metering the result. Climate Smart’s Hilton Trollip, confirms there is no technical reason why your electricity metre cannot run backwards. Online energy companies such as Mypowerstation have already begun to offer netmetering services in anticipation of deregulation, while the feasibility of net-metering and other technologies which could allow consumer-producers to buy and sell electricity, thereby freeing ordinary citizens from the dictates of centralization, is quite advanced.

Yet it could take decades for Eskom to unbundle its infrastructure, granting consumers access to the “local loop” so far as the traditional grid is concerned. If only the South African government would review its monopolistic grip on the local energy market, the market could be freed to deliver what consumers really need, instead of being dictated to by interest rates, the cost of lending, in an environment in which the only winners are the banks, the broad energy commons could provide the same valued added services we find in other deregulated systems such as mobile phones.

* NOTE: Eskom has asked the National Energy Regulator of SA for an increase of 16%/year for the next five years, starting in April 2013. That comes on top of average annual increases of 25% for two consecutive years, plus a 16% r ise in the year to March 2013. Eskom now charges 61c/kWh, before municipalities add their own charges.
** Wind is the now the cheapest form of electricity generation, with an average price of 89c a kilowatt hour compared to 97c/kWh for Eskom’s new coal-fired power stations.
*** The 2012  bidding round for alternative energy projects should add an additional 3,200 megawatts of power to the national grid by 2020. The government is targeting 1,470 megawatts from onshore wind projects, 400 megawatts from concentrated solar power and 1,075 megawatts from solar photovoltaic projects, Biomass and biogas projects should each generate 47.5 megawatts, small hydropower projects 60 megawatts and other small projects 100 megawatts