Can SA escape the boiling pot in time?

Posted 18 February 2016 Written by Leon Louw
Category Politics

President Zuma is not having an easy time of it. His State of the Nation address was an attempt to appease the left while pretending to promote investment. If there is one ray of sunshine in this mess, it is that Zuma will actually subject proposed new laws to economic impact assessments, to see whether or not they will do harm or good, writes Leon Louw in Business Day.

The frog in the pot myth might not be true of frogs, but it is of SA. If you put a frog in a pot of hot water, it jumps out. If you put it in cool water and heat it slowly, so the myth goes, it boils to death because it doesn’t notice the change until it’s too late.

President Jacob Zuma’s state of the nation address, or Sona, last week was criticised for its failure to recognise the heat, for being "business as usual" and for lacking a sense of urgency.

Had we been plunged overnight from the heady heights of the 1990s into our current catastrophic circumstances, Zuma might have declared a state of economic emergency. He might have announced a review of the world’s most disastrous labour policy, radical red tape reduction, the liquidation or privatisation of apartheid-era state-owned enterprises, investor-friendly tax rates and recognition of the fact the "ruling alliance" should have ended when, after 1994, it was no longer legitimised by a common opposition to apartheid.

Instead of muzzled business leaders, the contributions of former finance minister Trevor Manuel might have been welcomed. Instead of policies that will boil us to death — minimum wages, National Health Insurance, regulation of "market conduct" — Zuma would have shelved these pending conditions.

The Presidency’s "Sona-in-numbers" reveals the muddled thinking that characterises trying to reconcile the socialist desire to out-left the left and the capitalist desire to promote investment. The "numbers" are largely about the extent to which the government will redistribute wealth rather than allow its creation. The government will, for instance, collect taxes to fund tourism bureaucrats, and spend leftovers getting residents to travel from A to B. That is meant to be better than people spending money on something else, wherever that happens to be.

More of the citizens’ wealth will be plunged into the bottomless Eskom pit. The perpetuation of the apartheid behemoth makes us the equivalent of half a budget poorer annually. The state of the nation address acknowledged "energy constraints ... are an impediment to economic growth" and repeated the promise of mysterious "strategies" to solve the problem. It ignored the 1998 white paper, which, if implemented, would have ensured adequate cheap electricity in a modern, liberalised and partly privatised electricity market. There might be light at the end of the long, dark load-shedding tunnel. Two days after the address, Zuma issued a report that, according to Carol Paton (Zuma releases report that calls for partial privatisation), "recommends a shake-up of state-owned enterprises, including the partial listing of some (and) the privatisation of others".

As usual, though, successes claimed referred to what the government had done, namely diversion of resources from productive to less productive purposes, and ignored what South Africans have done for themselves, such as the spectacular rise of 5-million black South Africans into the "black middle class".

The address had customary clichés about the need for market-friendly, pro-growth policies, without revealing an appreciation of what they are. Instead, it had the mandatory mantra about our woes being caused largely by the "global financial crisis". Notwithstanding repetition by officialdom, the so-called crisis has zero relevance to the policies they propose in its name, such as "market conduct" regulation.

By far the most serious omission was a long-awaited undertaking to implement the Presidency’s promise of socioeconomic impact assessments as a precondition for existing and proposed laws and policies. If we are lucky Zuma and his government will convert veiled talk of economic liberalisation and privatisation into purposeful action before the water in our pot becomes any hotter.

Louw is executive director of the Free Market Foundation

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