By Alec Hogg
A decade and a half back, American journalist Tom Friedman wrote his game-changing Lexus and the Olive Tree. This magnificent treatise on how globalisation was transforming the world opened a new window on how things really work. Ever since, I’ve been less distracted by the daily noise, more comfortable that logic eventually prevails. Because it has to.
Friedman dubbed the term “the Golden Straitjacket” to describe the new reality where the discipline of capital flows ensures those who want the money are forced to follow economically sensible policies. When they stray, as populist politicians are wont to, the straitjacket tightens along with the purse strings. As developing countries are by definition capital hungry, politicians tend not to stray for long – unless they are autocracies run solely for the benefit of the ruling elite.
Those who know the rules have been watching the Zuma Administration push the Golden Straitjacket’s boundaries. And seen a predictable response from ratings agencies which have dropped SA’s credit rating to a single notch above “junk”. The next ratings update are only a few months away. Even though SA’s politicians will chafe against the straitjacket, logic tells us they will eventually do the right thing. Starting, dare we hope, with Eskom?
Yesterday’s top five stories
As Rhodes statue falls, white backlash rises
Global Investing: Three reasons crude oil isn’t soon going back to $100
American woman claims world’s oldest, supercentenarian crown
The Rhodes ruckus: Statues, Names, Inconsistencies and Life’s Uncertaintie
Fired Medupi workers wreak havoc on SA power supply
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