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Nationalisation is the Tokoloshe

13 June 2012, 08:32

A couple of problems with your article Thuletho. Though let me start by agreeing that the argument against nationalism should not begin and end with an attack on its uneducated proponents.

However let me take you on with regards to some of your statements: “Big business is about BIG profits. Governments are there to promote human interest”. Both of these statements are over-simplified. Big business these days is about a lot more than BIG profits, otherwise why would large corporate spend millions on CSR and Sustainability reports, neither of which impact the bottom line. While making large profits is central to capitalism, it is not the end unto itself you make out, Capitalism is about adding value, the creation of value results in profits. Most large corporations are coming to the understanding that pursuing profit for the shareholders, at the detriment of value for a greater group of stakeholders, is not a sustainable and lasting strategy. Governments are there to promote human interest indeed, in an ideal world; however the concept of which human interest is being pursued is questionable. This is true in most democracies unfortunately.

Your suggestion that the nationalising of the financial sectors, amongst others in Europe and America was “a measure which governments utilise in an attempt to re-distribute wealth” is also incorrect.  Companies were “nationalised” to obviate further collapse and a run on other companies, tax payer money was used to bail out companies who were paying massive bonuses and conducting unethical business practices. I don’t believe it’s a fair comparison.

“Non-rich South Africa only stands to benefit – better health services, education, infrastructure and possibly lower taxes” . I do wish you’d tell us more about how the ANC government will be able to deliver better education, with or without nationalisation. If you are suggesting that profits from mining activities will enable the government to spend more money on education then I’d I hope the ticket you bought to La-La Land was of the return-variety. We have consistently spent more and more (as an absolute and as a measure of GDP) on education without any tangible dividends. More money will not improve the situation, it hasn’t till this point. However if you are for nationalisation, then in fact we will have a lot less budget to work with as the cost of acquiring those organisations would be massive. Perhaps this would be a good thing; perhaps cutting our education budget to 10% of its current levels would force a rethink. Also your lower taxes statement, please do elucidate us as to how this will be achieved? You are suggesting we nationalise the mines, buy the shares and then run them alone or in partnership. Well this requires capital, a lot of it even at the 50% you are suggesting, so boom, there goes the infrastructure budget, as well as taxes, the corporations are going to want massive tax breaks for them to work in partnership or under the auscpices of government.

The growth you speak of by Japan, EU, US you speak of was undertaken in a very different environment, an environment of growth, entrepreneurship, and productivity gains. We are in a worldwide cycle of low growth, and we have show as a nation we are unable to stimulate growth that is not consumption dominated and lead by worldwide macroeconomic activity. We are not supportive of entrepreneurship and productivity gains these countries achieved are impossible with our restrictive (and possibly tightening) labour law and unskilled and uneducated workforce.

Your article too fails to note case studies on successful nationalisation, of the kind the ANCYL have suggested, in fact because I believe there are few or none. Zambian copper mining comes to mind, its chief resource  sector floundered and nearly completely crashed following nationalisation in the 70’s. It has flourished after privatisation. Foreign mine owners have pumped in more than $4 billion in expansions in the last seven years, compared to almost none by the government since nationalisation. Output has soared to 569,887 tonnes in 2008 from record lows of only 200,000 tonnes in the early 2000s. You suggest that the government has the capital and the skills to do better here, when the same government is unable to place cadres of sufficient skills and expertise in Telkom, a bottleneck to development and technological entrepreneurship in South Africa. A government that is unable or unwilling to provide decent education for the masses.

I’m afraid that while some of your points were indeed interesting, you were truly unable (to my mind) to provide a compelling argument for nationalisation. Your suggesting that FDI is not the be-all and end all is correct, we cannot rely on FDI to help us grow, especially speculative FDI that is looking for better returns. However we cannot create an environment where investment and autonomy of those who wish to bring capital and create opportunities here are seen to be limited. A simple scanning of the planned fixed investment by the mining companies, and indeed other companies during this affair is instructive. While investment doesn’t naturally mean jobs, a lack of investment without a doubt signals no new jobs, and if anything cutting of jobs.

I personally believe that when government starts to meet its grow targets, can implement IPAP, can provide basic and advanced (internet) services to its people and raise educations to meet the best on the continent (let alone the best in the world) then we can debate such things.

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