The national plan entails spending a bit more than 10% of South Africa's entire annual wealth and its gross domestic product.
As Richard Calland complains (“<a href="http://mg.co.za/article/2012-08-24-00-marikana-mine-massacre-illustrates-the-need-for-a-development-plan" target="_blank">Marikana massacre illustrates need for development plan</a>”, August 24 to 30), this horrid squawk about a few proles dealt with appropriately by the security forces has spoiled the publicity campaign with which the press meant to welcome the Great National Plan. But the massacre of workers is an essential foundation for the looting campaign represented by the plan.
It is actually a “supply-side” measure based on the assumption that if the government would only get out of the way of the free market, then the supply of goods and services would increase. Of course, “get out of the way” actually means “give gigantic subsidies to”.
These policies were tested in Britain and the United States in the 1980s and 1990s, leading to the collapse of heavy industries, the decline of light industries and the rise of financial services.
The national plan entails spending a bit more than 10% of South Africa’s entire annual wealth its gross domestic product every year for the next 10 years on improving railways for mineral ores to get to the ports, on improving ports for mineral ores to be shipped overseas and on power plants to keep the lights on in mines for mineral ores. That is a lot of money, considering that no new railways or harbours will be built and almost all the cash will be spent overseas.
At the moment, the state cannot provide adequate public services with the money it spends. Diverting R330-billion a year away from housing, healthcare and education will not improve this. The money will have to be borrowed. As long as the bond rate is only about 6%, we would have to pay R18-billion interest a year and we can easily afford R18-billion out of the budget, right? Yes, if the bond rate does not go up, as it has in every highly indebted country in the world.
The plan says we will be able to pay this bill, because it will enable mining companies to make more mines. More mines would mean more revenue for the state, if we had not exempted multinational mining companies from company taxation. They would mean more employment, if the mines were not going to be heavily mechanised. Although the plan is to subsidise (well, bribe) multinationals to come in, there is no sign that anyone wants to invest in any fixed plant in South Africa. Why should they, when the known effect of supply-side measures is to promote financial instruments? They will put their cash into bonds and wait for the yields to go up.
What we will have after 10 years is an oversupply of electricity, a mass of unused transport capacity and a R3-trillion debt we cannot afford to service along with increased unemployment. In other words, the national plan aspires to the condition of Greece. Mathew Blatchford, University of Fort Hare