When I grow up I would like to be an economist. If I fail to come of age intellectually I will, however, simply continue reporting on the subject. The best soccer writers and theatre critics are often failed players, actors or directors. But, having dabbled in both soccer and theatre writing, I can say that neither captures my imagination quite like the dismal
science.
I have yet to encounter a subject that can be applied with such immediacy to so many things, or which can illuminate such a broad and seemingly unrelated range of issues.
As a student at Wits University in the mid-Nineties, the competitive market came to life for me on the streets of Hillbrow among tomato vendors. All sold their wares at a price of R2 a bag. None tried to undercut others with an asking price of, say R1,80. As a profit maximiser, that would be irrational. A vendor could raise his price, and revenues, without harming quantities sold. Besides, taking the discount route would mean risking being beaten up by other vendors.
Economics can also be used to explain the disparity in earnings between South Africa’s top sportsmen and actors. It can define happiness: the quality of life enjoyed relative to expectations. And it can be applied to deduce how people decide whether to marry and, if so, when and with whom.
A modicum of formal knowledge of the subject might help our leaders at the World Summit on Sustainable Debauchery, sorry Development. Take for instance their hostile response to news that a house in Hurlingham Manor is to be rented out to delegates for R30 000 a day. All the owners are doing, like Hillbrow’s tomato vendors, is responding to market forces. If they charged, say, R10 000 they would be overwhelmed by demand.
How puzzling it is, therefore, for Cheryl Carolus, chief executive of South African Tourism, and the leadership of the Congress of South African Trade Unions (Cosatu) to find the development “unfortunate”. They argue that this will scare future tourists away. How come? Both the house owners and the delegates paying the price realise that these are extraordinary market conditions. Moreover, the owners may not be interested in repeat business for such a short occupation period.
Another point that Carolus and Cosatu overlook is that, if many owners of other Hurlingham-class homes close to the Sandton Convention Centre had underpriced the market over the conference period, there would have been a far greater uptake of homes in surrounding areas, and this would have meant less business for outlying suburbs and towns such as Springs on the Far East Rand, which is currently hosting a Japanese delegation. The benefits of the summit would then not have been as equitably spread as they have been.
There is a simple test to apply in these matters. It is this: is there a delegate willing and able to pay the R30 000 a day for a house? Answer: yes. And, as long as there is one such person, even in the event of the withdrawal of the person who originally offered R30 000, there is a market at that price.
The only time a government should intervene in a market is if it yields socially undesirable out-comes, such as if delegates are stranded without accommodation or if homeowners wait on non-arrivals. Thus far, there has been little evidence of the former and only a smattering of the latter.
In the plush decor of the summit’s discussion rooms, economics is the driver of debate. Among the issues will be the effect on Third World countries of the high levels of pollutant emissions by First World countries. Some developing world advocates argue resultant weather patterns cause havoc to their agricultural and other production, making them more dependent on imports and aid, and so worsening their already high levels of foreign debt. These advocates will be taking the discussion a step further: they will also be arguing that First World pollution imposes additional obligations on developed nations to give the developing world much healthier compensation and a more vigorous hand-up to prosperity. Intelligent economic debate on this and related issues offers the best prospect of avoiding a degeneration into posturing in which moral clubs are wielded to clobber the West over the head.
There are some people who insist there is more to life than economics. I remain unconvinced. They point, invariably, to the pleasures of wine, women and song. Yet, as I always point out, again it is economics that dictates how frequently one can indulge in these pleasures.
Economics, moreover, drives the ambition of being black and bourgeois. This striving is, arguably, the main dynamic in South African society today. I am proudly black, and history and my appetites demand that I become bourgeois.
From the swanky pubs in Sandton to the sleazy ones out in Springs, and everything in between, South Africans of all races interact on everything from the value of the rand to the significance of the summit and our sports teams. Though largely driven by race in the past, today it is the economy — and your and my role in it — that rules.
I like to share their views through the base of a whisky glass (single malt, thanks), with one eye closed and a warm feeling in my chest. As I do so, I never forget the invisible hand of economics that serves my drink.
Archive: Previous columns by Thebe Mabanga