Divorced from economic reality

South Africa has been better insulated than many countries at the level of big macroeconomic numbers, but the job market has been punished. (M&G)

South Africa has been better insulated than many countries at the level of big macroeconomic numbers, but the job market has been punished. (M&G)

The row over nationalisation, the attempt to force mining companies into energy-intensive beneficiation when they can barely obtain the electricity they need to keep digging, the content-free proposal to replace the proposed youth wage subsidy with a “job-seeker’s grant” all suggest an inability to confront what is happening beyond our borders and its real impacts here.

As Gill Marcus, the Reserve Bank governor, pointed out in Johannesburg on Wednesday, the situation in Europe is bleak beyond imagination and is likely to stay that way for a long time. Indeed, the emerging consensus is that it will be five to seven years before our largest export market emerges from austerity, weak political leadership and banking wobbles.

And it is not just the rich world. Chinese growth is slowing, Brazil is in near recession and India’s boom is grinding toward stasis.

South Africa has been better insulated than many countries at the level of big macroeconomic numbers, but the job market has been punished, the mining industry faces both investment and production slowdowns and manufacturing is bleeding.
Our economic policy now should aim to capitalise on our advantages. Relatively low debt and a strongish currency, for example, ought to help to get the much talked about, but little implemented, infrastructure programme under way.

Our neighbours are rich with opportunity if only we could open up ­transport policy, trade and investment rules and encourage skilled immigration.

The radical thing to do right now is not to grab mines or create new state companies, it is to face up to bleak conditions and capitalise on our strong public finances, markets and banks to build the rail, power and communications backbone that will create jobs and increase capacity for growth.

It is to look for growth in competitiveness and new markets, not for a ­bigger share of a shrinking resource pie.

That is plenty of ambition for a government that knows how to balance its books, but struggles to deliver textbooks.

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