Prince Mashele

Devaluing the South African graduate

2011-01-17 13:00

Devaluing the South African graduate

When the First World War finally came to an end in 1918, Germany was left virtually bankrupt and yet facing two daunting responsibilities: (1) paying war reparations to the victorious Allies, set at about $12bn after long and rancorous negotiations; and (2) making provision for the sustenance of millions of its impoverished and war-fatigued people. Let us call this "the German Conundrum".

Not surprisingly, many post-war governments fell on the German Conundrum; some governments in that country did not last a week. Miraculously, one man outlasted the expectations of both inside and outside observers: Rudolf von Havenstein.

As president of the Reichsbank - the central bank responsible, inter alia, for monetary management - Von Havenstein decided that the German Conundrum could be solved simply by printing more paper money. And he did. In his magisterial book, Lords of Finance, Liaquat Ahamed captures the dramatic consequences of Von Havenstein’s folly:

By August 1923, a [US] dollar was worth 620 000 [German] marks and by early November 1923, 630 billion. Basic necessities were now priced in the billions - a kilo of butter cost 250 billion; a kilo of bacon 180 billion; a simple ride on a Berlin street car, which had cost 1 mark before the war, was now set at 15 billion. … The country was awash with currency notes, carried around in bags, in wheelbarrows, in laundry baskets and hampers, even in baby carriages. (2010: 121)

What is the basic money principle that escaped Von Havenstein’s plainly stupid mind? He did not know that national bankruptcy cannot be made up for merely by printing more paper money; there must at all times be a connection between the state of the economy and the money in circulation. If the only thing that works is the printing machine, distributing the notes it produces freely to a horde of unproductive people can only make a mockery of the concept of money.

The South African Conundrum

Instead of giving the German nation purchasing power, Von Havenstein, by printing more paper money, unwittingly created a national storage crisis; Germans now needed more bags, more wheelbarrows, more laundry baskets, more hampers, and even more baby carriages to store 250 billion marks only to afford a kilo of butter.

“In January 2011, what do we South Africans have to do with the stupidity of a German central banker in the early 1920s?” a curious reader might ask.

There is no time better than now for South Africans to be warned of a "Von Havenstein syndrome". In plain language, here is the South African Conundrum: How can we address the skills shortage crippling our economy?

As was the case in Germany in the 1920s - when many governments fell on the German Conundrum - many Ministers of Education in South Africa have indeed fallen on the South African Conundrum. From the tired Sibusiso Bengu to the energetic Naledi Pandor, none seemed capable of providing answers.

It is now the turn of the Angie Motshekga and Blade Nzimande to give us answers. Although they are not central bankers, they face a question very similar to the one that confronted Rudolf von Havenstein. When the Germans did not have money, Von Havenstein attempted to solve the problem by simply printing more money.

Faced with an acute shortage of skills, Motshekga and Nzimande seem attracted to the Von Havenstein method: produce more students!

Easier examinations

In 2009, a PhD student at the University of Kwa-Zulu Natal wrote a newspaper article, warning Nzimande that his intensions to relax admission requirements at our universities would devalue our education system. Fortunately, this inexperienced Minister of Higher Education listened and did not carry out his "Von Havenstein" intents.

On the other side, Angie Motshekga seems very determined on her "Von Havenstein" tracks. Faced with a lower mathematics and physics pass rate, Motshekga decided to make examinations easier so that many students can pass. This is what she wrote in The Sunday Independent of 16 January 2011:

Certainly, following an outcry last year over the excessively difficult physics and maths papers, exam guidelines were issued to correct the situation. We provided assessment guidelines to teachers, ensured that exam papers were more accessible and marking guidelines less punitive.

From her exuberance and gloating, even the blind can see that Angie Motshekga is as happy to have lowered maths and physics standards as was Rudolf Von Havenstein when devaluing the German mark.

How dangerous is "Von Havensteinism" in our education system? Statistics on university drop-outs are in the public domain: out of 120 000 students who enrolled in higher education institutions in the year 2000; more than 30% dropped out in their first year of study; 20% dropped out in their second and third years; and only 22% of the remaining 60 000 graduated within their record timeframes. Indeed, little has happened to alter this trend.

Clash of logics

A student who has dropped out of university is as valueless to our economy as were Von Havenstein's printed billions to the German economy. Hopefully, our universities will not allow Blade Nzimande to "correct the situation" by lowering the quality of exams, as Angie Motshekga proudly announced in The Sunday independent this month.

Should Nzimande be allowed to lower standards at university, the value of a South African graduate might plummet to the lamentable levels reached by the German mark in November 1923. Indeed, this would further complicate rather than solve the South African Conundrum: How can we address the skills shortages crippling our economy?

Those who know something about university ratings would know that the best universities in the world - the Ivy League - do not owe their prestige to "accessible exam papers", but to what Angie Motshekga might call "excessively difficult papers". Indeed, we are dealing with an irreconcilable clash of logics. While first world countries raise standards to solve their skills crisis, Motshekga is happy to "correct the situation" by devaluing the South African student.

National crisis

In the same way that the stupid German central banker, Von Havenstein, created a national storage crisis, by printing more worthless money, the snaky admission queues at our universities suggest a national crisis of the South African kind.

Let us hope that, in future, the pens of historians will not be as unforgiving to Angie Motshekga and Blade Nzimande as they rightfully are to Rudolf von Havenstein.

Fortunately, the Germans did not take ages to realise that Von Havensteinism does not work, and they were indeed very lucky to receive assistance from the Americans and the British in restoring the value of their currency. When the dust of Motshekga's adventurism finally settles, only God knows who will assist us to restore the value of the South African graduate.

- Prince Mashele is Executive Director of the Centre for Politics and Research ( and a member of the Midrand Group

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