Alec Hogg: SA modelled on declining power bloc

Economic laws care nothing for sentiment. They also reject emotional arguments and certainly have no truck with social engineering. In the rational world of economic reality, the winner is always that system which promotes the most efficient distribution of goods and services, thus enabling the most efficient allocation of resources.

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We're seeing these dynamics playing out in competition between the world's three power blocs – USA, China and the Eurozone. with Europe's socialist inclinations serving to nobble its runner, this is rapidly becoming a two horse race. Sadly, it is to this economic donkey that SA has long looked for inspiration.

Fresh data this week shows the gap between the three blocs keeps widening. The Eurozone contracted by 6.8% in Covid-19-hit 2020. That's virtually double the 3.5% decline in the US while China did best, actually growing 2.3%. The IMF expects the Eurozone to lose more ground in 2021 with its GDP falling another 3.3% while both the US and China are forecast to expand.

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