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Mpiyakhe Dhlamini
 
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The boat is sinking!!

28 July 2014, 15:23

When one is on a boat, in the middle of the ocean, the primary concern should be staying dry and safe; that can only be achieved if everyone in the boat works towards that singular goal in the first instance and only once the integrity of the boat is assured can one start to worry about such things as catching fish or outracing other boats.

The captain is tolerated and obeyed as long as he does not lead the boat and crew to destruction, no single person is more important than the vessel and without it everyone is doomed.

Well, a country just so happens to fit the into the analogy of a boat like a hand into a glove, specifically it’s economy:without a productive economy, no one can stay afloat. Surely everyone on the boat must do everything they can to patch any leak that may spring up, at worse a person would do nothing but it would simply be gross criminal idiocy to put a saw to the boat in order to start a fire with the wooden planks  even if one were on the verge of hypothermia, more so if the boat has just recently been springing a great many leaks.

Without a boat, everyone is dead, this is also true of an economy:imagine a scenario where south african products were produced so uncompetitively  that no one bought them, government would have to print more money to try and maintain its consumption because of the inflation caused by importers buying foreign goods with a devalued rand, causing more inflation to the point where it is more profitable not to utilise available capital.

That would quite simply be economic armageddon, many would lose their lives because food and healthcare services could no longer be produced cost-effectively. It would take the country decades to recover but even then the after-effects would still be with us because of things like interest payments on loans with unfavourable terms because they were negotiated out of desperation.

It can happen:just consider germany after WWI, zimbabwe more recently and the USA after their civil war in the 19th century. Currently, south africa is overly reliant on mineral exports for forex (this overdependance is one of our boatleaks so to speak), meaning that if something catastrophic were to happen to the mining sector, then we would not have enough dollars to import the things we need (machinery for farms and factories, oil and petroleum) which would mean we would have to exchange whatever rands we had at whatever  rate the market would give us causing the apocalypse I mentioned earlier.

So shutting down production of the biggest forex earner among all minerals for 5 months is crazy-stupid right? Following that up with a shutdown of one of the few local industries generating direct demand for our minerals  for a month is just plain suicidal.

So what has the captain been doing? Surely everything is being done to patch up the leaks? Unfortunately this has not been the case, instead of applying emergency measures to boost production (halt all compulsory mining work stoppages temporarily, pass an emergency bill in parliament for 6 months barring all employees from striking while a permanent solution is found, pass the independent system and market access bill, cut taxes, freeze public servant salaries (it is an unproductive sector so it actually causes inflation), suspend the child care grant and freeze increases on all the other welfare programmes, suspend BEE and AA requirements in Eskom’s build program.

Instead of this; politicians are talking about introducing a national minimum wage, taking away farms from productive people (regardless of how they got them, they are still productive) and giving them to people who have not yet proven their ability, tightening AA and BEE, introducing more taxes (e-tolls are a tax), printing more money (by borrowing more from the reserve bank), making it more risky for investors to put their money into sa (threatening to take 20% of all new mines and barring foreigners from owning land).

I’m not saying that some of these government interventions maybe neccessary, but applying them now would be a disaster because our boat is about to sink, and for some of us it’s the only one we have.

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