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I’m still rather confused about the impact of the new poultry tariffs. One of the guests we interviewed on CNBC Africa’s Power Lunch told us that the recently imposed duties will double chicken prices at fast food stores. If that’s true, why no consumer outcry? Yfm’s CEO Kanthan Pillay has taken a different approach. He goes back to basics. And reaches conclusions many of us have forgotten about. Communistic dogma has deep roots. Its major (misguided) thesis being that human beings can manage things better than the marketplace. That solutions can be engineered and State interference can be constructive. Because, well, those making the decisions “know”. Kanthan’s piece has refrains of the column I wrote recently about the “Know F-Alls”. Have another look at that one after you’ve read this. – AH
By Kanthan Pillay*
The whole idea of communism, given shape by Karl Marx and Friedrich Engels in the 19th century, was the theory that all property is owned by the community as a whole and that each person would contribute and receive according to his or her ability and needs.
It was promptly taken up by the Bolsheviks in the Russian revolution of 1917 and spread to China, Cuba, Vietnam, North Korea and others. The dream of communism was that as capitalism is pushed aside, the state would no longer be necessary and we would be one big happy family.
In practice, the opposite happened. In the communist world, the state expanded to control every aspect of the life of every citizen. Freedom of speech was the first casualty, followed by freedom of movement, followed by the introduction of secret police and weeding out of dissidents.
Eventually, in the 1990s, communism collapsed entirely – those societies grew tired of being poor, undemocratic, and oppressed. Today, Cuba and North Korea are anachronistic remnants of that line of thought. The former closed economies of Brazil, Russia, India, and China have been shaking off decades of state control with the result that their people have seen dramatic increases in personal wealth and disposable income as well as reductions in poverty. Those countries invited us to join them in this brave new world under the banner of Brics.
But we live in a weird and wonderful country. We have a nominally capitalist economy that was the economic powerhouse of the continent but is facing declining economic growth. So our elected government puts a communist in charge of trade and industry.
So in June, the South African Poultry Association (Sapa) asked the International Trade Administration Commission to increase import duties on frozen chicken.
Sapa asked for increases of up to 82%, saying that if this did not happen, up to 20 000 jobs would be lost locally.
At the same time, just about everyone else opposed the increases, saying that it would hurt competition and lead to higher prices.
Chicken meat is the largest source of protein for most of the 50 million people in this country because it is the least expensive source of protein. For those of us who cannot afford to buy deboned free range Halaal chicken breasts from Woolies, the most affordable way to buy chicken is in the form of frozen bulk packs – imported inexpensive frozen bulk packs.
It was those bulk packs that Sapa wanted to penalise – carcasses, whole birds, boneless cuts, and offal. (I don’t recall ever seeing chicken feet on sale at Woolies, to put this in perspective.)
Communists are supposedly concerned with the well-being of the poorest of the poor. One would have thought that anything that would make protein more expensive for those who can least afford it would be tossed out the window with the contempt it deserves.
This week, our communist minister of trade and industry, Rob Davies, responded to the call by slapping duties on chicken imports – most of them from Brazil.
(Yes, Brazil is nominally our close friend and partner in Brics.)
It’s one of those smack my head moments when I’m reminded why the road to hell is paved with good intentions and why “communist” should become a swear-word in our democracy.
State intervention in the economy is almost always a bad idea because it essentially takes money from those who are producing it and gives it to those who are not. The best way economies can flourish is when the playing fields are level – no subsidies and no tariffs.
For example, last month Minister Davies went running cap in hand to the imperial seat of capitalism, Washington DC, to beg the Obama administration for an extension of the US Africa Growth and Opportunity Act (Agoa) beyond 30 September 2015.
Agoa was introduced in 2000 to allow a number of African countries, including South Africa, duty-free and quota-free access to the US market. Agoa was meant to expire at the end of the Bush administration in 2008 but was renewed by the Obama administration.
What that means is that almost all our goods enter the world’s largest economy duty free.
In short, what I am trying to get across is that we as a nation have taken a very strong viewpoint that our goods should continue to be allowed to enter the US without penalty. This allows us to compete fairly with US businesses.
There are many reasons why our chicken industry is under pressure and nearly all of these are the result of state intervention. Rising electricity prices is one (as a result of the state monopoly on electricity production through Eskom). Rising labour costs is another (as a result of state intervention in the cost of labour through job-destroying minimum wage laws).
The solution is for the state to get out, not get more involved. With a communist in charge, that’s not going to happen.
So a baby chick asked his mom: “Am I a people?” “No, you are a chicken.” “Do chickens come from people?” “No, chickens come from eggs.” “Are eggs born?” “No, eggs are laid.” “Are people laid?” “Some are; others are chicken.”
* Kanthan Pillay attended primary school in SA, high school in Bangalore and studied Political Science and Psychology at Princeton University. A newspaper and television editor and director, he has bene the CEO of Yfm for the past six years. Kanthan has a 20-year old daughter, Aura Devagie, who was born in Sardinia and a 6-year old daughter Mia Angella, who was born in Johannesburg. Kanthan and Aura and Mia share a house in Johannesburg with hundreds of books, three dogs, a feral cat, and a snake. Click here to read more of his writing.
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