It's been a long, hard battle, but he is finally gone. Jacob Zuma has been our most morally deficient President since die Groot Krokodil, and the most incompetent head of State we've ever had. He is replaced by an intelligent and thoughtful leader in Cyril Ramaphosa, a man who is not tainted by corruption and other selfish and nefarious behaviours. But before we get carried away in our celebrations, let us remember that the end of Jacob Zuma is only respite, a milestone on the path to the actual goal: a free South Africa.
It is really a case of two steps forward, one step back. The end of Jacob Zuma is certainly something worth celebrating. In his almost nine-year tenure, economic growth has halted, unemployment has ballooned and criminals have run rampant. And these, only the results of neglect. We haven't even mentioned the proactive expansion of corruption and state capture. Ramaphosa will certainly put the brakes on the government's downward spiral, but he is unlikely to halt it. And I'll tell you why.
For a start, Ramaphosa supports several socially destructive policies, such as a minimum wage, free higher education and National Health Insurance. But this is not the worst of it.
As Mmusi Maimane said in his speech following Ramaphosa's election, the ANC that elected Ramaphosa, is the same ANC that elected Zuma and kept him in power through all the scandals. Remember that Ramaphosa only just won the ANC presidency and half the top 6 are or were Zuma supporters. The President does not make all decisions for himself. He is subject to the decisions of the top 6 and the NEC, as is clear from his recent cabinet announcement.Whilst many of the bad apples have been plucked away, some of the worst remain. And the most rotten of the lot has been added.
David Mabuza perfectly exemplifies the fact that even though Zuma is gone we are still in heaps of trouble. Mabuza is possibly worse than Zuma. In fact, is definitely worse than Zuma. For all his corruption and inefficiency, we've never heard of our former president killing his opponents. DD Mabuza has done so on several occasions. He is also tainted with corruption, specifically regarding the 2010 World Cup, but whistle-blowers never live to see the witness box. Click here for more on David Mabuza's scandals.
If Zuma were the beginning and end of our governance problems in South Africa the ANC would have got rid of him long ago. The truth is that the whole ANC is a problem. The loyalty to party above country is a problem. The commitment to unity over integrity is a problem. Ramaphosa can only do so much trying to serve God and Mammon. He cannot unite the ANC and simultaneously provide moral leadership. And the wheel will turn again and we will see the evil side of the ANC take over, in a period that could be worse than the Zuma years, unless we do to the whole ANC what has been done to Zuma.
Showing posts with label Pravin Gordhan. Show all posts
Showing posts with label Pravin Gordhan. Show all posts
Monday, 5 March 2018
Tuesday, 27 June 2017
Another One Bites the Dust
We always knew Public Protector Busisiwe Mkwebane was a Gupta appointee despite her rather pathetic efforts to appear nonpartisan, but finally she has flown her colours out in the open. Of course what I am referring to is her findings released last week regarding Absa and the Reserve Bank. The subject of Mkwebane's investigation was an apartheid era bailout of now Absa-owned Bankorp, but her findings ventured many miles from that mandate.
The core finding is that Absa should pay back the R1.125 billion it benefited from the 1985 bailout of Bankorp. I am all for holding accountable those who have unduly benefited from situations like this, but the shareholders who would be punished today are not the same shareholders who benefited during the apartheid era bailout and takeover. Thus it would be unfair to punish the current shareholders and by now, 3 decades later, it is impossible to track down the actual benefactors, rendering Mkwebane's investigation a waste of time, as the likes of Mbeki, Manuel, Gordhan and Madonsela already knew.
It is not, however, just the wasting of time and resources by our state institutions that we are worried about. The major problem is the capture of yet another chapter 9 institution, especially one so symbolically named the Public Protector. Mkwebane had already revealed her Gupta allegiance by having the office's televisions switched to ANN7 and insinuating that the leaked Gupta emails were fake, but now she is chasing after the first bank that closed the Gupta accounts. Also note that this is in light of a questionable relationship with Gupta-associated, Bell-Pottinger-linked Andile Mngxitama and the Black First Land First movement as well as the fact that Gupta-linked figures have condemned, or even talked publicly about the report, especially the other, more controversial part we are yet to discuss.
Before we get to the climax of this story we need to ask why the public protector is chasing a controversial, almost irrecoverable R1 billion and ignoring the R700 billion stolen by the ANC in the last 20 years. To be short, this simply reeks of favouring special interests.
Finally, we get to the crux of the matter. The public protector has no right to recommend changes to the constitution. Simple as that. Mkwebane completely overstepped the mark when she recommended parliament amend the constitution to change the mandate of the Reserve Bank. First, this is nowhere close to what she was asked to investigate, and second, she would not have the mandate to make the those recommendations even if she was asked. Yet we have these ridiculous findings playing right into the vague, unintepretable radical economic transformation rhetoric, designed purely to draw attention away from state capture.
So in the end, what we have, amongst other things, is another ploy to draw attention away from the Guptas and state capture. But it has, in fact, drawn a whole lot of attention to the capture of yet another state institution, the office of the public protector.
The core finding is that Absa should pay back the R1.125 billion it benefited from the 1985 bailout of Bankorp. I am all for holding accountable those who have unduly benefited from situations like this, but the shareholders who would be punished today are not the same shareholders who benefited during the apartheid era bailout and takeover. Thus it would be unfair to punish the current shareholders and by now, 3 decades later, it is impossible to track down the actual benefactors, rendering Mkwebane's investigation a waste of time, as the likes of Mbeki, Manuel, Gordhan and Madonsela already knew.
It is not, however, just the wasting of time and resources by our state institutions that we are worried about. The major problem is the capture of yet another chapter 9 institution, especially one so symbolically named the Public Protector. Mkwebane had already revealed her Gupta allegiance by having the office's televisions switched to ANN7 and insinuating that the leaked Gupta emails were fake, but now she is chasing after the first bank that closed the Gupta accounts. Also note that this is in light of a questionable relationship with Gupta-associated, Bell-Pottinger-linked Andile Mngxitama and the Black First Land First movement as well as the fact that Gupta-linked figures have condemned, or even talked publicly about the report, especially the other, more controversial part we are yet to discuss.
Before we get to the climax of this story we need to ask why the public protector is chasing a controversial, almost irrecoverable R1 billion and ignoring the R700 billion stolen by the ANC in the last 20 years. To be short, this simply reeks of favouring special interests.
Finally, we get to the crux of the matter. The public protector has no right to recommend changes to the constitution. Simple as that. Mkwebane completely overstepped the mark when she recommended parliament amend the constitution to change the mandate of the Reserve Bank. First, this is nowhere close to what she was asked to investigate, and second, she would not have the mandate to make the those recommendations even if she was asked. Yet we have these ridiculous findings playing right into the vague, unintepretable radical economic transformation rhetoric, designed purely to draw attention away from state capture.
So in the end, what we have, amongst other things, is another ploy to draw attention away from the Guptas and state capture. But it has, in fact, drawn a whole lot of attention to the capture of yet another state institution, the office of the public protector.
Saturday, 25 February 2017
Assessing the Budget Speech
So I was pretty close with my predictions on the budget, though they weren't too hard to call for anyone. One thing that did surprise was the new tax bracket: 45% for those earning more than 1.5 million. We'll get back to that one though.
In the immediate aftermath of the budget speech there was nothing but praise for Gordhan for masterfully negotiating the political tightrope he had found before him. But I think there has been enough analysis on that. I want to focus on what the budget actually means for South Africa.
Perhaps the most notable point is how much emphasis Gordhan puts on reducing the deficit, but while doing almost nothing about it. There was no sign of spending cuts, not even the same admonition to end wastefulness that was given last year. Instead there were increases in social grants (which, as it stands, may not even make their intended destinations) and billions more thrown at education. Now I can sense the immediate protests of "But we need more money for these things!" I'm afraid though that if we keep raising the debt to finance welfare, we will get to the point where it will be impossible to pay for these things at all. Especially in an economy that is growing at hardly above 0%. As much as we want to be charitable, we need to be sustainable to survive. And a budget deficit, especially in our economic climate, is not sustainable.
The little that was done to address the deficit involved raising taxes. unfortunately this is a self-defeating method for such an aim. Having a balanced budget is simple. Income must equal expenses. So if expenses exceed income we can either reduce expenses, which Gordhan hasn't done, or we can increase income, which for the government is tax income. But this is where Gordhan went wrong: increasing the tax rate is not the same as increasing tax income. In fact, the very opposite is true. Often decreasing the tax rate leads to an increase in tax income in the long run. Why? Decreasing the tax rate attracts investment, investment brings economic growth and economic growth results in there being more money to tax.
This is where the new tax bracket comes in. Instant logic argues that 4% is not that big a difference, especially for people earning more than one and a half million a year. If someone can pay 41% surely they can pay 45%. Looking more deeply one may consider that for a lot of people that 4% could be the straw that breaks the camels back. There is only so many times you can take just a little bit more before all the little bits add up to a whole lot. And 41% is already a lot. So that 4% could well drive many people out of South Africa, to countries where they both earn more and keep more of what they earn. And you may say, "Oh, it's only 100 000 people that are affected, and only a fraction of them will leave anyway." But remember, these 100 000 are the people who contribute most to our economy. They are doctors, lawyers, engineers, and especially businessmen and entrepreneurs, the people who have the potential to grow the economy and create jobs. We have already been experiencing a mass exodus of these people and can't afford to lose any more. Marginalising the wealthy has a negative affect on all of society.
Unfortunately a budget that is good for our economy and for the people of South Africa is impossible in this political climate. So taking that into consideration, I too shall have to render my praise to Minister Gordhan for the budget he presented in such trying circumstances.
In the immediate aftermath of the budget speech there was nothing but praise for Gordhan for masterfully negotiating the political tightrope he had found before him. But I think there has been enough analysis on that. I want to focus on what the budget actually means for South Africa.
Perhaps the most notable point is how much emphasis Gordhan puts on reducing the deficit, but while doing almost nothing about it. There was no sign of spending cuts, not even the same admonition to end wastefulness that was given last year. Instead there were increases in social grants (which, as it stands, may not even make their intended destinations) and billions more thrown at education. Now I can sense the immediate protests of "But we need more money for these things!" I'm afraid though that if we keep raising the debt to finance welfare, we will get to the point where it will be impossible to pay for these things at all. Especially in an economy that is growing at hardly above 0%. As much as we want to be charitable, we need to be sustainable to survive. And a budget deficit, especially in our economic climate, is not sustainable.
The little that was done to address the deficit involved raising taxes. unfortunately this is a self-defeating method for such an aim. Having a balanced budget is simple. Income must equal expenses. So if expenses exceed income we can either reduce expenses, which Gordhan hasn't done, or we can increase income, which for the government is tax income. But this is where Gordhan went wrong: increasing the tax rate is not the same as increasing tax income. In fact, the very opposite is true. Often decreasing the tax rate leads to an increase in tax income in the long run. Why? Decreasing the tax rate attracts investment, investment brings economic growth and economic growth results in there being more money to tax.
This is where the new tax bracket comes in. Instant logic argues that 4% is not that big a difference, especially for people earning more than one and a half million a year. If someone can pay 41% surely they can pay 45%. Looking more deeply one may consider that for a lot of people that 4% could be the straw that breaks the camels back. There is only so many times you can take just a little bit more before all the little bits add up to a whole lot. And 41% is already a lot. So that 4% could well drive many people out of South Africa, to countries where they both earn more and keep more of what they earn. And you may say, "Oh, it's only 100 000 people that are affected, and only a fraction of them will leave anyway." But remember, these 100 000 are the people who contribute most to our economy. They are doctors, lawyers, engineers, and especially businessmen and entrepreneurs, the people who have the potential to grow the economy and create jobs. We have already been experiencing a mass exodus of these people and can't afford to lose any more. Marginalising the wealthy has a negative affect on all of society.
Unfortunately a budget that is good for our economy and for the people of South Africa is impossible in this political climate. So taking that into consideration, I too shall have to render my praise to Minister Gordhan for the budget he presented in such trying circumstances.
Tuesday, 21 February 2017
Preparing for the Budget Speech
It's a good thing that Pravin Gordhan is not one who is easily rattled. At least he doesn't show it if he is. Very few people in any job could be in a more stressful situation than our finance minister is in now. Multiple branches of the ANC are calling for his head, a rumoured potential replacement has been nominated for parliament, and he is preparing for the most important public event on his calendar, the budget speech, which needs to balance powerful conflicting interests.
With the ANC under pressure and policy tide turning toward populism as a release valve on the one hand, and an ailing economy in desperate need of some freedom therapy on the other, Gordhan has his work cut out. He is walking a tight rope. What we want him to say is this: "We are privatising the SOEs, phasing out state welfare and cutting taxes." This would catch the ears of the business world and spark a new era of economic growth. The rand would literally jump in value, but he would certainly lose his job. The ANC Youth League, Women's League and the MKTV would be joined by a host of more conservative ANC structures and members in calling for his head and Zuma would garner more than enough support to bring down the axe. But it's nice to fantacise about a budget that would actually help the economy.
To win back his detractors would require exactly the opposite of what we need. Increase taxes on the wealthy, more welfare and tons of investment in black business. However Gordhan is both intelligent and moral, at least when standing next to many of his ANC comrades, so there is no chance this will happen either. Besides, I doubt he could care less about what Collen Maine and company have to say. No exponents of this line of thinking have ever shown any understanding of economics, or even the ability to predict the consequences of ones actions. Unfortunately these people can say whatever they like, since they are not in a position to make the decisions and so will never be held accountable. No wonder Gordhan ignores them.
What is likely to happen is this: subtle tax increases attempting to raise tax income without driving away investment and subtle spending cuts in an attempt to reduce costs without sending the populists into a state of outrage. This is why he left big issues like income tax and SOEs alone last year and will probably do so again this year while focusing on things like sugar and sin taxes and cutting down on wasteful expenditure.
So I have pretty low expectations for this budget speech. I don't see anything radical happening, for better or worse. Gordhan, for the sake of keeping his job, without ruining the economy, will probably just deliver more of the same. But I hope I'm wrong.
With the ANC under pressure and policy tide turning toward populism as a release valve on the one hand, and an ailing economy in desperate need of some freedom therapy on the other, Gordhan has his work cut out. He is walking a tight rope. What we want him to say is this: "We are privatising the SOEs, phasing out state welfare and cutting taxes." This would catch the ears of the business world and spark a new era of economic growth. The rand would literally jump in value, but he would certainly lose his job. The ANC Youth League, Women's League and the MKTV would be joined by a host of more conservative ANC structures and members in calling for his head and Zuma would garner more than enough support to bring down the axe. But it's nice to fantacise about a budget that would actually help the economy.
To win back his detractors would require exactly the opposite of what we need. Increase taxes on the wealthy, more welfare and tons of investment in black business. However Gordhan is both intelligent and moral, at least when standing next to many of his ANC comrades, so there is no chance this will happen either. Besides, I doubt he could care less about what Collen Maine and company have to say. No exponents of this line of thinking have ever shown any understanding of economics, or even the ability to predict the consequences of ones actions. Unfortunately these people can say whatever they like, since they are not in a position to make the decisions and so will never be held accountable. No wonder Gordhan ignores them.
What is likely to happen is this: subtle tax increases attempting to raise tax income without driving away investment and subtle spending cuts in an attempt to reduce costs without sending the populists into a state of outrage. This is why he left big issues like income tax and SOEs alone last year and will probably do so again this year while focusing on things like sugar and sin taxes and cutting down on wasteful expenditure.
So I have pretty low expectations for this budget speech. I don't see anything radical happening, for better or worse. Gordhan, for the sake of keeping his job, without ruining the economy, will probably just deliver more of the same. But I hope I'm wrong.
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