Is South Africa heading for failed nation status?
Last week the rand dropped to a twelve month low against both the dollar and sterling. This is not a train smash compared to where it has traded against both those currencies over the past turbulent decade but it is significant because the decline in value of the rand over the past few weeks is almost certainly politically driven.
I wrote a column for the Sunday Times not long after the ANC came to power expressing the view that the strength (or otherwise) of a country’s currency is, in effect, the share price of that country. These days that argument could easily be knocked down simply by pointing out that the US, with its sixteen trillion dollar debt , should have the weakest currency in the world.
But back in the pre- quantitative easing days of the 1990’s it was a fair comment and it remains a fair comment today for those economies that haven’t resorted to smoke and mirrors economics to survive.
The only reason the dollar is still mighty is that the US keep up the pretence and the Chinese keep buying US bonds. It’s all a huge confidence trick but it’s bound to end in tears. Wouldn’t Greece have loved to have been able to print money and get itself out of the dwang it finds itself in?
So, ignoring countries like the UK and the US and those European countries tied to the near farcical Euro, it’s still true to say that a country’s exchange rate is a pretty good indication of what the rest of the world thinks of it…..particularly when the movements are volatile. That would be particularly true of South Africa.
Over the past few weeks we have demonstrated to the rest of the world that we’re not very good at labour relations in this country. We either give in to violent strikers and award them a whopping 22% pay increase or we sack 12 000 workers as Amplats did last week. That is apparently 20% of their total workforce.
It’s not impossible that all 12 000 will be re-employed y the time you read this and that the mass sacking was a strategic move in an ever complex game of Machiavellian labour relations. But the message it sends out is not good, particularly after the disastrous and globally televised Marikana events.
Not surprisingly labour now has the impression that anything is possible providing the level of accompanying violence is ratcheted up to appropriate levels. For example, the current truckers strike stands far more chance of achieving its aim if a few scab drivers are dragged from their cabs and immolated or chased through the streets and hacked to death with pangas. If a Sky, eTV or BBC film crew can be present then so much the better.
Ludicrous demands for pay hikes way in excess of inflation have become the norm and nobody seems to be getting the message that these are either impossible to meet or, if they are met, will inevitably lead to massive inflation. At this point I expect some bleeding heart lib to tell me to try and live on a trucker’s or rock driller’s wage.
The reason I chose not to become a rock driller was that I didn’t like the pay and I get claustrophobia. I might still consider a trucking job though because I rather like the idea of driving the length and breadth of South Africa in something large enough to flatten a taxi without me even knowing it. You see dear lefties, it isn’t always about money.
It’s not only the antics of what we, without a trace of irony, refer to as “organised labour” though. The other big bear factor for the Rand is the impression the rest of the world is getting that we don’t have a government in South Africa.
We have a chap called Julius Malema who gets more column inches than the rest of the cabinet put together despite being sacked from the ruling party. We have a group of incompetent squabbling adults with commie pretensions who are busy jockeying for position at Mangaung to make sure that their snouts will still be near the swill trough next year.
We have daily reports of corruption on an epic scale by publicly elected officials and we now have the news that the Pres’s house building in Nkandla may end up costing taxpayers more than a QUARTER OF A BILLION Rand.
Add to that the expensive cock ups of e-tolling and SAA and even the most benign supporter of the struggle would have to admit that all is not well in the rainbow nation. We are hurtling towards failed nation status and nobody seems to give a damn. In fact to mention such things is likely to result in accusations that one hasn’t embraced transformation or, worse still, that one is suggesting that those in power aren’t up to the job; and that would be racist.
Talk Radio 702 suggest that all will be well if only we drive with our headlights on but even their Polyanna propaganda falls flat with anyone capable of rational thought.
We are, to put it starkly, knee deep in the hot and smelly and sinking fast. Our traditional trading partners are all practicing austerity so don’t look to them to fill the begging bowl. Asian countries with far cheaper and less militant work forces make stuff far cheaper than we can ever hope to.
Our labour laws are a massive disincentive to setting up a business and our tax regime means that roughly 3.7 million taxpayers will be expected to foot the bill for everything for the next decade. When they have been bled dry then the ruling party will have to resort to plundering pension funds and private bank accounts.
So, if I hate it so much why don’t I leave the country? (someone’s bound to ask). Firstly, I’m sixty and so I have a far shorter timeframe to worry about than someone of 40 with kids. As I mentioned to a fellow sexagenarian the other day, it’s quite comforting to be getting closer to the off ramp.
Second and more important…..if I really want to go I have a very handsomely embossed document called a European passport. Which is more than most of my fellow citizens can claim so for heaven sakes wake up and get it right.