As winter approaches, food shortages become more acute in the townships. You might say it is unfortunate we do not suffer from drought or famine: if we did, international agencies would feed people who are now starving. There would be places people could go to get blankets and warm clothing, or to take in children without caregivers.
In winter hundreds of thousands, including schoolchildren, don’t leave their feeble shelters because only blankets can keep the cold out and they can’t afford to lose calories. The people you brush off at intersections are trying to keep starvation at bay. Hardly surprising if they turn to crime. Wouldn’t you?
And while half our people live with hunger every day of their often short lives, our food farmers go bust because they are trying to sell into an “over-supplied” market. Of course, this does not mean too much food is being produced, but that people don’t have the money to buy the food they desperately need.
Meanwhile money — the stuff that is supposed to bring supply and demand for goods together — is being hoarded. Money has no intrinsic value; it is useful only if it enables commerce between producers and consumers. Without it, as in the townships, people’s skills and capacity lie idle because others don’t have it.
Where is the money that would put people to work and allow people to buy? Millions in taxes lie idle in government departments because they are desperate not to “waste” taxpayers’ money. Our government, like all others, seeks to hold reserves against “external shocks” to which the global market periodically subjects us. Money is kept out of circulation.
Billions are hoarded in the financial sector. Metropolitan Life, Sanlam and Liberty, for instance, are reported to hold R10-billion in “surplus capital” because they cannot decide how most profitably to invest it.
“Local venture capital and private equity firms are sitting on more than R37-billion in unallocated funds,” ThisDay recently reported, adding that the amount excludes the funds held by the large metro investment funds like Gauteng’s Blue IQ. The report concludes that “South Africa’s business financiers have distributed less than 10% of their funds in the last four years”.
Next time you hear how much we need foreign investment, remember how much surplus capital is swilling around in banks and other corporate institutions. The mystery is that we allow our money to leave in search of more profitable investments elsewhere — though it was accumulated by South Africans from South African resources. Because we allow it, we have to distort our economy and compromise our objectives to woo foreign money here.
The search for foreign money seriously inhibits policymakers. It makes inflation the worst enemy —not starvation, not unemployment, not uneducated and malnourished children, not whole communities living off crime and drugs.
Why is inflation so terrible? If you ask this, you will be referred to extremes like Germany between the wars, and Zimbabwe under lost-marbles Robert Mugabe. We are in no danger of such loss of control.
The explanation is otherwise. Owners of capital prefer deflation to inflation, because deflation enhances the value of capital. So if we are wooing capital from overseas, their priorities must be ours. Inflation must be our top priority. And all government expenditure is seen as a potential threat to inflation.
Talking of food, one contributory factor to government’s fiscal limitations are the huge perks it allows the rich and businesses tax-free. “Free” lunches happen every day of every week — at the taxpayer’s expense.
Who do you think is paying for the lavish hospitality at sporting events, the company celebrations, award ceremonies, Christmas bashes, diplomatic dinners, the free cars, “customer holidays”, the endless “functions” at which the already well-fed gobble and imbibe? Is it company MDs or shareholders?
No. It is you and me, the taxpayers, who have forgone large revenues. Legitimate expenses are tax-free, as they should be. But because we want foreigners’ capital we have to give them “world-class” expense allowances, so that their top tables groan with free foods poor people live and die dreaming about.
Margaret Legum runs the alternative economic think-tank SANE