Clem Sunter

The perfect storm: why waste it?

2015-10-29 10:01

All the red flags are aligned for a perfect storm. We can let the storm envelop South Africa; or we can use it constructively for thinking outside our individual boxes to rescue ourselves from its worst effects.

Let us first examine the flags. On the global front, China is increasingly being affected by the grey flag of ageing and its economy is slowing down. Europe is almost flat and so is Japan for the same reason. America is fighting to survive the headwinds even though it is a younger and more resilient nation. But a boom is unlikely unless a new technology comes along to ignite one. On the commodity front, life has never been tougher because there is no country to replace China as a source of demand. At current oil prices, Saudi Arabia is projected to run out of cash in five years time.

Meanwhile, the green flag of climate change is waving more vigorously than anybody anticipated. 2015 is set to be the hottest year in modern human history. California is running out of water and if the drought does not relent, the state will lose 120 million trees in the next four years as well as most of its wild fish species. Water evaporation rates in the centre of Australia are remorselessly sending the nation’s most precious resource into the atmosphere before it can be used by its earthbound inhabitants. A report quoted on CNN predicts that temperatures in Dubai and surrounding areas will rise to around 60 degrees centigrade long before this century is over. Basically the region will become uninhabitable.

Here in South Africa, we are in the middle of a savage drought in parts of the country which is threatening our crop production. As for mining, it is barely keeping its head above water with profits that are a shadow of what they were in the last century. While agriculture can recover in the short term because it is weather-dependent, the prospects for a turnaround in the mining industry are slim in the remainder of this decade.

The grey flag will continue to flutter and act as a brake on global economic growth. However, China has relaxed its one-child policy to allow for two children per couple. That will take time to be felt in the economy.

The red flag around Mr Putin has just become a whole lot more cloudy and uncertain with Russia’s participation in the war in Syria. The chances of a random event precipitating a conflict between NATO forces and Russia have risen in the crowded airspace over Syria. Or maybe the trigger will be the call by members of the Republican Party for a no-fly zone over that country which is sure to cause a showdown between America and Russia. Talks between all the participants are due to be held shortly, but the differences are huge.

The religious flag has created a war of beliefs that almost every day constitutes the first item of news on most international news networks. We have to accept that we are back to the era of the crusades and this flag has more momentum than the rest of the flags combined.  Even in this modern age of toleration for almost anything, religious zealotry can be more divisive than any other factor. Combine that with the porous border flag of millions of displaced migrants searching for a better life in Europe and you have a formula for a disaster that the European Union appears powerless to avert as the winter sets in.

The silently rising flag of unacceptable levels of national, corporate and individual debt as a result of zero interest rates has injected further uncertainty into the near-term economic future of the world. The crash of 2008 is long forgotten as greed reasserts itself as the primary driving force of the human race. “More of everything” is the cry in the material world even as the sixth extinction is vastly reducing the species in the natural universe. Elephants and rhinos could shortly join the list of extinct species.

I have left until last the flag that is changing the game of politics and economics the most: the anti-establishment flag. Everywhere in the world ordinary people are fed up with the political establishment whether it resides in Washington, Whitehall or Canberra. Spin doctors have finally had their day as public esteem for national leaders has descended to an all-time low. Lots of new players, like Nicola Sturgeon and Jeremy Corbyn in the UK together with Justin Trudeau in Canada, have come from nowhere to leadership positions of their parties and countries.

The reason has been well articulated by Thomas Piketty, the French economist, who has also become a superstar overnight. We are back to the same level of inequality that existed in 1910 as the super-rich add more and more to their immense wealth while the middle and working classes struggle to survive. The corporate Gini coefficient measuring the ratio of CEO salaries to average worker pay has hit an all-time high. Only two nations have genuinely entered the premier league of nations with a per capita income above 35 000 dollars in the last hundred years: South Korea and Singapore. Otherwise, the gap still yawns despite the uplifting of millions from absolute poverty. Institutions like the United Nations, World Bank and IMF reflect the lack of progress with little, if no, transformation to reflect demographic realities.

In South Africa, the flag began to enter public perception in March this year with the demand for the removal of the Rhodes statue from the University of Cape Town campus. It has now extended to the unacceptable level of university fees for many students. Battles have been won but there are many more to be fought. At the same time, the Economic Freedom Fighters have presented their demands to the bastions of the capitalist establishment and answers will be eagerly awaited. Money has to be found for all these causes just as our economy is slowing down and the government is drawing down its reserves. The “South African Spring” could not have happened at a worse time.

Yet the plain fact is that the “Born Frees” which now represent over half our population are not free at all.

They may be entitled to vote but that is about it. Economic freedom, or the opportunity to build a satisfactory life for oneself as well as ones family, is a distant dream. It now requires some revolutionary new ideas that are not just hidden away on the internet in some lengthy document. Those ideas need to be itemised into a readable plan as inspiring as the Freedom Charter and converted into action, starting now.

The only way to achieve this is for the leaders in all fields in South Africa- and we have plenty of talented men and women capable of doing this- to emerge from their silos and start constructing the second miracle together. Some precious stones only sparkle when polished by completely different stones. Synergy is the key. The first miracle amazed the world in the early 1990s. The second one beckons. Otherwise we will all drown.

- Send your comments to Clem.


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