Trevor Manuel's NDP will destroy South Africa

2016-01-18 14:28

Trevor Manual's National Development Plan (NDP) for South Africa is at best an irrelevant pipe dream and at worst a recipe for disaster. This fact must be understood by all citizens of South Africa as a matter of urgency. Read on to understand why.

Firstly, the NDP’s fundamental tool with which to create prosperity for all South Africans is creating jobs.

Jobs, jobs, jobs, jobs.

Specifically, reducing our unemployment rate from what it is today down to 14% by 2020 and all the way down to 6% by 2030. Increased exports is supposed to play a major part of this job creation miracle.

Secondly, the NDP states that we must either save more of our money or get foreign investment in order to grow our economy and in the process create jobs.

Well, the bad news is this:

the NDP is nonsense.

The truth is that the vast majority of our 8 million unemployed will never find jobs. The truth is that the “smart” people that wrote the NDP fundamentally do not understand where the world is going, what money is, how money is created and how money is destroyed.

If we try to follow the NDP as is we will fail miserably and our country will most likely go up in flames as the have nots take from the haves, and rightly so.

The intentions of the NDP are good, but its approach of jobs for all is ludicrous and its underlying money mechanism of increased savings and foreign investment is also ludicrous, therefore the plan as a whole is ludicrous.

What is needed is a fundamental change to how our society works, as I propose in my freely available book Societal Renaissance. Without these changes, the NDP is doomed.

Or am I deluded and everything will be just dandy? I sure hope so, but I fear not. How about I explain myself in more detail and you make up your own mind on whether we are doomed by the NDP or not?

Let’s look at jobs first. Why will our unemployed not get jobs?

Because their current skills are not needed by the rest of the world, nor by our current South Africa. Worse, the majority of future skills that our current unemployed and youth can gain are also not needed.

Increasing the production of various goods and services is supposed to lead to more employment, especially products and services needed by foreigners with money. You see producing more goods and services desperately needed by our own poor fellow South Africans would be pointless, since they do not have the money to buy the goods and services. More on this absurdity later. So raising exports is supposed to be a crucial component of how we create millions of new jobs, according to the NDP at least. Is it realistic to expect exports to create millions of jobs? Sadly no.

The production of agricultural products, processed foods, manufactured goods, chemicals etc. is already largely automated and will be increasingly automated to the point where they are essentially fully automated by 2030. In the developed world we already have less than 20% of people occupied by growing and processing food and manufacturing stuff.

Have you seen what a modern factory looks like? See here and here. Where are the 1000’s of people manufacturing stuff in these factories? Nowhere. It’s 1000’s of machines, few people.  Machines manufacture stuff. Humans are only needed to design stuff, not manufacture them.

Modern automated factory, sans humans.

Even the distribution of stuff will be fully automated, with things really kicking off in 2022 - just seven years from now. Huge warehouses empty of people with only robots scurrying about packing boxes to fill customer orders. Millions of self-driving trucks and small local delivery vehicles bringing stuff to homes and shops all over Europe and the US. No human drivers, packers or movers needed. No humans needed. See here and here for more information on logistics automation.

How about services, such as call centres? Maybe we can have millions of people in South Africa explaining to Europeans and Americans why their account was deducted from, why they did not get the frequent flyer miles, why they cannot claim medical aid for cosmetic surgery?

Sadly no. Amelia and her digital clones will do this just fine. No humans needed.

Amelia, the AI coming to a call centre near you.

Instead of being driven to create jobs, the truth is that our agriculture, manufacturing and service industries are driven to remove jobs through automation. As they should be. The same applies to production for our local consumption. Why would we want people doing work that machines can do better and cheaper?

We will surely be producing and distributing an enormous amount of goods and services globally. Surely we in South Africa can export much more, but the production and distribution of safety and sustenance related goods is already heavily automated and will be essentially fully automated by 2030. To believe that our 8 million unemployed will play any significant part in this increased production is laughable. Sadly.

So the NDP stating that we will create jobs for our 8 million unemployed through increasing production and exports is complete nonsense.

Do I sound nuts?

Well, see here and here and here and here and here and here and here and ………….

Johann Rupert, one of South Africa’s richest men, thinks so too.

The 2016 Davos meeting of the World Economic Forum (WEF) is under way in Switzerland. Their topic? The impact that broad automation will have on the world, and the potential of broad unemployment as human labour is replaced by machine labour. The WEF finds that by 2020 more than 5 million existing jobs in the developed world will be replaced by technology. See here and here.

The production and distribution of food and manufactured goods will be largely automated by 2030.

I am not nuts. Trevor Manual and our politicians are nuts, or wilfully ignoring reality or purposefully misrepresenting it.

So the NDP’s focus on jobs for all as its overarching approach to a better and just South Africa for all is nonsense. So what should the goal and approach of the NDP be?

The focus is that by 2030, if possible well before then, every South African citizen must be assured of safety and sustenance. A house to live in, food to eat, water to drink and some joy / entertainment such as time with friends, family, a television to watch shows and movies. Achieving that does not mean jobs for all as we understand it today.

It is likely that machines do 70% of the work by 2030, with jobs for only a few. Is that bad? Are you ecstatically happy on Monday mornings and clinically depressed Friday afternoons? Do we all live for our jobs? No, most of us live for the time when we are not doing a job. By 2030 we could all have 5 Saturdays a week.

Therefore, our focus for 2030 must be automating the production and distribution of safety and sustenance. Our major obstacle?

The second critical flaw in the NDP.

You see, our leaders and the authors of the NDP fundamentally do not understand what money is, how money is created, allocated and destroyed. Money is the crux of how our society works, or in many respects, does not work. By 2030 our current societal system based on our current system of money and jobs will have broken down completely. By 2030 very few of us will have a job, since machines and artificial intelligence will be able to produce most of the goods and services.

But, if you do not have a job then you don’t get some of these scarce points we call money, and without these money points you cannot buy a house and food and manufactured goods. If you do not have the points to buy a house and food and manufactured goods, then no-one is going to create automated infrastructure that will produce and distribute food and goods, since they also need points to buy their own house, food and goods.

Economists call these the demand side and supply side. If no one has money, then there is no effective demand. If there is no effective demand, then no one will want to supply.

A veritable catch 22.

What would a workable 2030 then look like? Well, we would need to fix the demand side. Everyone needs at least some money to buy the food and goods produced by the machines. Not a fortune, just enough to get by. Everyone would get this money, whether they have a job or not. Money for nothing. Otherwise known as a guaranteed basic income. More information here and here and here and here and here and … Surely an idea who’s time has come?

Others that design new machines and automate more or produce entertainment for us would get more of the money, so they could have a bigger house and fancier toys. Fair enough.

In South Africa and other developing countries we are already experiencing the most critical problem facing global society today: automation means no jobs means no money means poverty means our societal system breaks down.

So we need to create more money so that more of us in South Africa can:

  • build core infrastructure such as urban homes, water reticulation, solar power and road infrastructure for all
  • build automated infrastructure to grow, process and distribute food
  • build automated infrastructure to manufacture and distribute basic goods – clothes, beds, chairs, washing machines and other basic domestic machines

We need a LOT of infrastructure. The majority of the newly employed would be working on building core infrastructure such as homes, water reticulation and roads. Not in agriculture and manufacturing, since these are already highly automated and will be much more automated during the next 10 years. So perhaps we can employ our unemployed millions in building the core infrastructure they and we need, and by 2030 we can all be in comfortable homes enjoying goods and services produced by machines. Fantastic!

Unfortunately the following three facts make it impossible for us to create the money we need to co-ordinate a massive increase in local production:

  1. the manner in which we currently create money
  2. the uncontrolled nature of our current form of money
  3. fear of inflation, corruption, collusion, inefficiency

Let’s start with money and banks. The authors of the NDP still believe that banks do not create money. They believe that banks wait for deposits and then lend the deposits to others. Therefore they want us to save more by depositing money in banks, in turn enabling banks to lend the deposited money on to others that build infrastructure and produce more food and create new manufacturing capacity. They believe that we can only save so much of the money that exists in South Africa, so we do not have enough and therefore we need foreigners to invest their money here so we can again build more infrastructure. It all sounds quite reasonable.

In fact, it is complete nonsense. An incredibly awful nonsense that is destroying Africa’s ability to create prosperity for its people.

Here is a well-guarded and astounding fact: banks do not have the money that you lend from them. When you lend money from a bank, the bank creates the money on the spot, moves it into your account and records that you now owe the bank the money that it created, plus interest of course. New money can only be created on the back of new debt, and mostly this occurs when the rich and banks think they can make a profit in the process.

Don’t believe me? How about believing the Bank of England, the oldest bank in the world? See what they say here.

How about local savings and foreign investment being the only possible source of money to build the infrastructure we need and grow our economy? Nonsense, as explained here. Specifically, see the following text extract:

“The findings also have broader implications for policies to ensure economic growth and minimise unemployment, as well as policies for developing countries concerning the question of how to maximise sustainable growth. As was noted above, the Keynesian growth models by Harrod (1939) and Domar (1947), following the financial intermediation theory of banking, argue that savings are necessary for investment and hence economic growth. These theories have, together with more recent theories, been deployed by the IMF and the World Bank in their policy advice to developing countries to obtain the allegedly ‘necessary’ savings for investment and economic growth from foreign lenders, and to substitute for their lacking ‘domestic savings’. The international banks usually came on the heels of the Washington institutions and, whenever a developing country had resources or attractive assets, were keen to lend.”


“To add insult to injury, it is now established that the foreign loans were not necessary for domestic growth, after all: the foreign lenders merely created the money out of nothing through bank credit creation, something the borrowers could have done themselves at home without the foreign loans.”

and specifically

“The alternative to this Washington Consensus approach to ‘aiding’ developing countries has been showcased in East Asia. The highly successful economies of Japan, Taiwan, Korea and China all used mechanisms to guide domestic bank credit to productive use, funding import substituting domestic and exporting industries, as discussed above in section 5.3. The findings in this paper provide fundamental support for this argument.”

Waiting for the local and foreign rich and banks to “invest” will fail. See, the chances of making any profit as we create the infrastructure we need is essentially zero, since most of the folks needing housing will not have jobs, nor will they ever have jobs. So the only workable way for us to create the needed money is at a social level via cooperative banks, with no interest attached to the debt. No profit driven bankers or investors needed. See my previous article for how and why we must do this. Over time we introduce an ever larger guaranteed basic income, or more clearly stated: money for nothing with no strings attached.

Now for the fact that we have too little control of this thing we call money.

As we pay salaries with the money we created to those now building infrastructure, they either spend the money for consumption or invest it into asset creation or asset purchase. The majority of new money will go toward consumption, since construction workers spend most of their money to just get by.

Much of what the construction workers will buy will come from overseas. We have massively integrated global value chains. How much of what you can buy from Makro or Checkers is made locally? “Made in China” is everywhere. This is a problem since the rate at which we can buy stuff from overseas people must be matched by the rate at which we export to overseas people. If we consistently import more than we export, our currency the rand will become worth less and less since overseas people will not be prepared to swop their currency for our rand, because we want all their stuff whilst we do not have stuff they want in return.

So we face the very bad situation that even with correctly created money our millions of unemployed could still not build needed infrastructure since they would then buy too many imported goods, leading to our country’s bankruptcy with respect to other countries. Our rate of collaboration toward national goals has become tied to the rate at which we can export. This is an enormous challenge to all the countries of Africa, a challenge which cannot be solved within our current system of money.

The ironic truth? Europe built the majority of its infrastructure before the world economy was so heavily integrated. They knew that most of the money they created would stay within their countries, and where needed they put laws in place to ensure it does. Africa must force the same situation else we will have many more millions living in slums.

In terms of buying existing local assets (usually houses) vs. consumption, if we simply create more money and do not create more assets (or consumable goods) with it, then the price paid for existing assets such as houses will increase and drive asset bubbles, as occurred when the US housing market bubble burst in 2007/2008.

The keyproblems that needs solving then is that we can and must activate our unemployed millions toward building our needed infrastructure

  1. at a much faster rate than we can increase our rate of export
  2. by using locally constrained, digital blockchain money created via social cooperative banks with no interest attached
  3. and whilst doing so we must not create asset bubbles

I will explain more on this in follow up articles, or check out my freely available book. Now let’s look at the next problem: fear of corruption, collusion, inefficiency.

What we want is the building of infrastructure that we need. We do not want the building of white elephants, nor inefficient low quality building by incompetent but connected contractors, nor do we want the money we create to fuel construction ending up in the pockets of a few connected construction company bosses.

How do we solve these challenges? By creating an Open Economy:

  • establish construction and related co-operatives across the full housing creation value chain, from raw materials to water reticulation to construction to plumbing to electrification to solar to furnishing to low tech appliances.
  • All co-operatives manage their businesses on a single, government funded multi-tenant ERP cloud platform – basically one single software platform accessible by all
  • every citizen has full view of the financial transactions of open economy co-operatives as well as complete transparency of income for all in the open economy
  • co-operatives compete for socially funded construction work
  • non open economy construction firms may consult and train, no more, with all transactions and payments fully visible to the public

Why an Open Economy?

Because we need housing and related infrastructure through the broad application of underutilised labour. What we do not need is enrichment of the connected few. Neither do we need asset bubbles and too much inflation. Therefore broad based economic activation using locally constrained money.

The increased supply of broadly distributed local money will stimulate the economy. The Open Economy goal is not iPads and Gucci for all. The open economy goal is communities of our people with decent European quality social housing, nutritious food to eat and schooling for our children, in conjunction with transport and other services. A stimulated economy means there are people earning money that can rent the housing that has been built. Over time we move to a guaranteed basic income, or as I stated above, money for nothing. We need that demand side if we want smart, ambitious folks to do the supply side…

Rental based social housing is how most of Europe created its core housing infrastructure. Those employed in the social housing construction sector will also likely be the first residents of social housing. In the process we create broad construction value chain production capacity that can supply Africa’s infrastructure build out that will occur through the next 30 years

When all is done and dusted by 2030 we are in what I call a joy economy.

Reorganising our society is an imperative, not a luxury.

The National Development Plan as is will not work. It has the wrong goal of jobs for all. It does not address the fundamentals of how we create and allocate money, and how we must all get some of it for nothing …

Our current societal system is facing systemic meltdown due to the ever increasing automation of the production of safety and sustenance.

We must work together now to enable a Societal Renaissance.

For more information see and get my book Societal Renaissance for free here.

Follow me on Twitter @LionelBisschoff

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