Independent economist Cees Bruggemans is a national asset. Unrestrained by the reality of living within the corporate cocoon, his work has flourished since retiring as the long-time chief economist of FNB. Although still subtle, his tell-it-like-it-is Dutch roots come through strongly every now and then. Especially in this brilliant assessment of whether South Africa is following the Zimbabwean lead – and if so, what to do about it. Unemotionally, pragmatically, rationally. One of the brilliant economist’s best contributions. A must-read. – Alec Hogg
by Cees Bruggemans*
Will the SA economy collapse, and when? In 2 or 5 years’ time?
Collapse, the SA economy? Of course it won’t collapse shortly, despite some very precise recent estimates.
It is, frankly, the wrong question.
After all, Zim hasn’t collapsed either, now has it? Not with Mugabe still firmly in the saddle, he and his cadres living well, him traveling overseas regularly, getting the best medical treatment, having a supportive wife, and all the trappings of the good life. He personifies THE Zim economy. Something still carries him ever so handsomely. Whatever it is, it hasn’t come close to collapsing yet, even if they are all working hard at it.
As to the other remaining 14 million odd Zim citizens, residing in and increasingly outside the country, that’s a different story. But if you want their story, or its equivalent here, you have to frame the question differently.
In Zim, the previous establishment, colonial White, first gave way in political terms in the early 1980s, and then nearly completely died out economically in the next 30 years, with only remnants now lingering (only about 1% of the total population), in quiet pockets, some prospering nicely among the ruins of a once flourishing economy, even if often doing things somewhat differently from the way it was done before.
I am told ordinary Black citizens in many regions can’t matter of factly buy food in Zim today. That’s failure on the grand scale, but apparently doesn’t register on a global scale – at least not daily by CNN, BBC, RT, CCTV and such.
When applying a similar yardstick to SA, what have we got?
I would in the first instance describe it as a Restructuring of the SA economy. This has been underway for a long time, by some measures since 1994, by others since 1948, 1902, 1819, 1815 or 1652, and by yet others to a date nearer the birth of Christ, and possibly even further back into distant mists of time, depending on who was thought to be running the show, only to be turfed out by newcomers.
So that is a possible measure to consider in terms of catastrophic change: being “restructured” by people newly getting on top, by whatever process.
Here, our recent times have been rich in experiences. Following the political change to full democracy in 1994, society was made to change (again, for the umpteenth and possibly not the last time). That process is still in full cry: the makeover of the public sector, the prescriptions to the private sector about whom to favour, in shareholding, suppliers, employees, the ownership in the mining sector (mineral rights), similar suggestions about agriculture, and these processes apparently far from finished, as the aim is demographic reflection and marginalization. In historic terms, restitution where possible, and compensation where not, preferably richly, all of it politically guided.
Along the way decisions were and are often made with perhaps unintended consequences, or otherwise the results predictable but the costs acceptable, as in any major conflict where one seeks the means to an end, often whatever the cost.
Thus scarce skills were let go in the public sector, often with great ease. Cadre deployment was favoured in the public sector, in retrospect making often too many unfortunate choices which led to high parting costs, run down plant and poor service delivery. Labour union partners were favoured legislatively with results that often favoured a shrinking few over the many. Private business confidence was frequently negatively impacted to the extent of inviting defensive responses, including reduced local investment and increased business migration.
As a consequence, state spending rose against a less dynamically growing GDP, putting pressure on tax and borrowing resources.
The good news about all this is that this restructuring has not fatally damaged the economy, so far. The economy is still advancing. Except it seems to have slowed down to a trickle, progressively embedding a very disturbing stagnation which seems to be getting worse and this not really being imagination.
The bad news is the daily news. Eskom, mining unions, Transnet, nuclear power schemes that have an unexplained air about them, daunting visa requirements reshaping tourism and possibly the skills gap, not necessarily for the better, medical profession, aid schemes and beneficiaries up in arms, municipalities thrashed, tax and interest rate increases ahead in a stagnating underperforming economy, rising unemployment and discouragement and state welfare payment support, (another) likely sovereign downgrade ahead, steep precious metals drop following rising expectations of imminent Fed rate liftoff (and anticipating Dollar strength), and more such stuff.
All of one morning, sans the crime, atrocious winter weather and sport.
The country appears far from collapse even as its modernity is made to decay in the pursuit of often roughshod restitution and compensation philosophies guiding the political heavy hand, and as aspiration, expectations and entitlements keep being generously fed and increased.
This deep restructuring of SA society and its economy is advanced, but still only in the foothills of what can be achieved, when comparing with a Mugabe. It is this restructuring, its beneficiaries and victims, and their many varied experiences that are perhaps worthy of closer scrutiny.
Who gains, who loses, how much, how quickly. Until the last man standing.
And only then we might consider collapse to have finally entered the picture. But as with Mugabe, there may be a young wife to take over, or an old comrade in the same or even worse mould, with the ultimate collapse still kept at bay as regime change is cadre resisted, and the nation struggles on in all its growing nakedness.
We have a long way to go, with perhaps so far only one or two weekly winter load shedding episodes disturbing our middle class sojourns.
Still, it makes one fidgety, for a sixth sense claims it may not get better. And this is where we see our world collapsing around our ears just as others are building castles in the air as they see their ships coming in, heavily loaded with cargo stuff. Pity both sides don’t talk more to each other, comparing notes. Perhaps the insanity of it all might dawn on enough to opt for a better way forward all round.
Though it didn’t happen in Zim. Why would we be sanier?
* Cees Bruggemans is consultant economist at Bruggemans & Associates. Read more on his website at www.bruggemans.co.za or email hom via [email protected]
