Guest Column

We need to nationalise

2017-05-21 06:07
The people shall share Thousands of Economic Freedom Fighters march through the streets of the Johannesburg CBD in October 2015, demanding the nationalisation of mines. Picture: Trevor Kuene

The people shall share Thousands of Economic Freedom Fighters march through the streets of the Johannesburg CBD in October 2015, demanding the nationalisation of mines. Picture: Trevor Kuene

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Vuyani Ngalwana

Those who dare to endorse nationalisation are labelled as ‘stupid’.

Gustave Le Bon and Edward Bernays are two of the names that spring to mind regarding the power to influence group psychology by manipulating the content of the information that the public consumes – a phenomenon known as propaganda.

Stripped of all frills, it comes down to three psychological tactics that have endured since the turn of the 20th century:

1. Creating carefully calculated associations with the subconscious fears and desires of individuals.

2. Influencing opinion leaders and perceived authority figures in order to reach those who follow them.

3. Initiating the contagion of behaviours and ideas through social conformity.

The object is social conformity by sheer deception. Perhaps the best illustration of this phenomenon in recent times is the fabled War on Terror, a lie perpetrated by the US as a ruse to plunder natural resources in the Middle East and elsewhere.

In South Africa, nationalisation has, by sheer manipulation of facts, become the bogeyman of economic transformation. South Africans – black, white, educated and uneducated – are now conditioned to believe that nationalisation is the most stupid idea. This is done through relentless bombardment in the media, carefully selected television interviews, social media and carefully edited “news” material about Zimbabwe and Venezuela.

Of course, no one likes to be perceived as stupid, least of all people with degrees. So they conform, and probably grumble in private. One who dares buck that trend publicly is snuffed out with references to Venezuela and Zimbabwe, and labelled stupid for good measure.

Professors of economics are not spared either. Witness the vitriol that followed Professor Christopher Malikane for daring to speak out in favour of nationalisation. The depravity of the assault even borders on racism, as when the professor’s academic standing was called into question, prompting his peers to spring to his defence.

The attack on nationalisation hinges on factual deception of which Le Bon and Bernays would have been proud. But here are the true facts.

Mineral and petroleum resources in South Africa were nationalised 15 years ago and the economy did not collapse. Mining companies require prospecting and mining licences from the government, and it has the power to suspend and cancel them. One of the objects of the legislation by which government nationalised mineral and petroleum resources was “to promote equitable access ... to all the people of SA” to these resources. The reason ordinary South Africans are largely not benefiting from them is not the failure of nationalisation; it is the failure of this government to give effect to the objects of the legislation.

So, when people demand “nationalisation of the mines”, I wonder if they have any idea that we already have the right of equitable access. And it is not in the rapacious interest of mining companies to talk too loudly about that, or for this captured government to inform ordinary South Africans; lest we make our rightful demands.

Banks are an obvious strategic target for nationalisation because the single most egregious impediment to most black South Africans’ entry into the supply-side of the economy is the banks’ prejudicial tight-fistedness.

(Yes, the Industrial Development Corporation and other government funding entities are not faring much better either. But that is a story for another piece.)

The South African Reserve Bank should, like the Bank of England, facilitate employment and competition in the market, not target inflation largely in the interests of its private shareholders.

The Bank of England was nationalised in 1946. The reason advanced was its “importance to the economy”. It has two primary objectives: to maintain price stability, and to protect and enhance the stability of the financial system. But it also has another objective: to facilitate growth, employment and competition.

Contrastingly, the legislative objectives of the Reserve Bank are limited to “monetary stability” and “balanced economic growth”. It does so by influencing total monetary demand through the exercise of control over money supply and the availability of credit.

Inflation targeting is the resultant obsession. Economic growth, employment and competition be damned. The inevitable result is that the emergence of many smaller businesses on the supply side of the economy – especially in banking and financial services – is suffocated under the mound of the inflation targeting policy.

The Reserve Bank, like the Bank of England, should be nationalised because of its “importance to the economy”. Its legislative objectives should be amended to include facilitating employment and competition in the market, like the Bank of England does. Until that is done, and visionary, competent people are appointed to achieve it, the meaningful and sustainable transformation of this economy will remain something that government likes to say, but has absolutely no intention of ever achieving.

Commercial banks are also strategically important to the economy if used to facilitate growth, employment and competition. What we have currently is an oligopoly of banks driven by individual greed of shareholders and executives. This is precisely the sort of incentive that resulted in the 2008 financial crisis.

The “social conformity” angle we have been fed is that South Africa was, relatively, spared the pain of the 2008 crisis because of our banks’ monetary stability policies. The truth is that banks and other big businesses were sitting on bundles of cash they were not investing in the economy, citing “political uncertainty”.

Here are other truths:

- In 2008, Iceland nationalised four large commercial banks: Kaupthing, Landsbankinn, Glitnir and Icebank. In 2009, Straumur Investment Bank and the savings bank were also nationalised. The sky did not fall.

- In 1948 the Australian government tried to nationalise commercial banks but that was successfully resisted in the high court on constitutional grounds. But try they did. The sky did not fall at the news of the attempt.

- In France, three major banks, Banque Nationale de Paris, Société Générale and Crédit Lyonnais, were nationalised after World War 2, and remained nationalised for half a century. Again, the sky did not fall.

- The 2008 US Troubled Asset Relief Program, by which Hank Paulson pumped staggering amounts of taxpayers’ dollars into the banking system, is widely regarded by economists as nationalisation. Denialists insist that this was a “relief” programme, “recapitalisation” or a “bailout” – naturally. The idea of the paragon of capitalism nationalising assets is unthinkable. But it did. And life goes on.

There are more examples: Norway’s post office, Switzerland federal railways and Électricité de France are state-owned; as are hundreds of local savings banks in Germany. The sky has not fallen.

Now the Labour Party in England is talking about nationalising UK rail, energy and mail industries in its leaked manifesto leading up to the snap general election called by Prime Minister Theresa May for June 8 2017. This is being greeted with hysteria by the laissez-faire media there, completely oblivious of the fact that these industries are successfully state-owned in much of continental Europe.

Zimbabwe and Venezuela are often cited as examples of the decrepit effects of nationalisation. Yet many listed South African companies remain invested in Zimbabwe.

Venezuela thrived under Simón Bolívar’s nationalism. What failed under President Hugo Chávez was not nationalisation; but rather the manner of its implementation, exacerbated by the US and its allies that conspired to ensure its failure, because they saw it as a threat to “The New World Order” – a euphemism for the rampant plunder of Venezuelan oil resources.

Implementation that has disastrous effects in these circumstances can never be indicative of the inefficacy of the policy itself. The experience in continental Europe proves this beyond doubt.

The bottom line is this: Nationalisation is not the problem. Like every policy proposition, it is its implementation that will be the measure of its success. The fact that this government’s deployees at state-owned enterprises are disastrous in their running of some of those entities is not the appropriate measure of nationalisation’s success. Think of South Africa beyond the ANC.

Nationalisation in this country is bastardised by people who view it through an ideological prism as a sort of “rooi gevaar”, rather than focusing on its efficacy in promoting and facilitating economic growth that is inclusive of all hard-working South Africans, adequate employment and competition.

Finally, a headline in the UK’s The Independent newspaper sums it up: “Jeremy Corbyn’s nationalisation policies are grounded in cold, hard economic sense. Europe proves it.” I submit that nationalisation in South Africa is grounded in cold, hard economic sense. The facilitation of sustainable economic growth, employment and competition depends on it. Zimbabwe and Venezuela are an Aunt Sally argument.

Ngalwana SC is based at the Duma Nokwe Group of Advocates

TALK TO US

Do you think that nationalisation is a good idea for South Africa, and why?

SMS us on 35697 using the keyword NATIONALISATION. Please include your name and province. SMSes cost R1.50

Read more on:    politics
X

SHARE:

Inside News24

 
/News
Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.