How limits to economic freedom are behind SA’s failures
Business Day - 12 SEPTEMBER 2019 byRICHARD J GRANT
Economics is entirely about human relationships. None of the other “scarce resources” would have any value at all without people.
No resources are employed without the employment or attention of at least one person. And there is no “economy” without an exchange between at least two people. We are blessed, though, to have millions of people with whom we might find friendship and with whom we might engage in mutual service through exchange.
Throughout the centuries people have engaged in trade with others near and far. Today we can buy goods made by people from almost anywhere in the world, people we are unlikely to meet. Yet, through a complex supply chain, we have a network of friendships, mostly anonymous and distant, each of which is consummated through the mutual benefits of trade.
Our connection to those people makes possible the lives we lead and the standard of living derived from all the services and goods available to us. Our relationship with them protects us from the loneliness and poverty of self-sufficiency.
It is a common temptation in the months before an election for politicians to promise the moon to those voters they fear might be attracted to the similarly lofty promises of a rival party. But it would be easier to send someone to the moon than to deliver on many of the more shameless promises made by desperate politicians.
The latest attention-grabbing promise, through which South African politicians have made world headlines, is that the expropriation of land without compensation will ... READ MORE
The Bank’s shareholders have little influence over policy, but their involvement is essential for transparency and openness, writes Richard J Grant
03 July 2018 - Richard J Grant
Recent calls to "nationalise" the Reserve Bank imply that the Bank is a private entity, raising questions about the correspondence between legal definitions and the realities of control, policy making, and administration.
In fact, the Reserve Bank is a statutory creation of Parliament, which also determines the main policy goals that the Bank is tasked to fulfil.
More than half of the Bank’s board of directors, including all the executive directors, is appointed by the president of SA in consultation with the finance minister and a governmentally appointed panel. That panel, in turn, approves a list of candidates from which eligible private shareholders may elect the remaining board members.
The proposed Nashville mass transit plan is not exactly what we would call a “lean startup.” With an optimistically estimated cost of $9 billion to be spent over the next 15 years, the new transit plan makes the Metro Nashville 2018 budget of only $2.2 billion look lean by comparison. If the transit money were spent evenly over 15 years, that would be $600 million per year of additional spending, a 27% increase over the existing budget.
Water for all and water for none 27 February 2018 Dr Richard J. Grant
Cape Town is not the first city to face a drought, but it is predicted to be the first major city to run out of water. Municipal water restrictions are in effect and “Zero Day” is expected to arrive in June 2018, at which point the municipality will be unable to supply any water to its residents.
The short-term supply problem is serious and although the current drought might be the most severe in the lifetime of anyone currently living, it is not said to be the worst drought ever faced by the Cape Town region. In the past, Cape Town has prospered and always survived the vagaries of the weather. People choose to live in cities for the very reason that they flourish in the presence of other productive people with whom they exchange goods, knowledge, and companionship. In recent years, Cape Town’s population has grown by more than half a million people per decade. Yet in the city, no one remembers a “Zero Day”. What is different now?
In an amusing modern twist on mercantilism, India has actually been
trying to discourage gold imports. Last month, the Indian government
increased its import tariffs on gold, silver, and platinum bullion
imports to 10%. It also banned the import of coins and medallions in the
hope that it might help stop the slide in the value of the rupee, which
continued to fall to a record low last week. Consistent with the old mercantilists, India already has rules
requiring that 20% of imported gold be used in exported products, such
as jewelry. Last month, the government expanded the categories of gold
to be subjected to this restriction. The stated objective for all this
is to reduce India’s current-account deficit, which hit record levels
this year. It is hard to believe that they expect this to encourage
capital inflows, but apparently they do. India is not a gold producer, but even in South Africa (which is a
major producer) some politicians are perennially dissatisfied with
merely exporting gold. They want also to encourage (i.e., subsidize)
beneficiation of gold and other basic commodities before export. They
believe that policies intended to promote “adding value” would improve
on market outcomes and increase export earnings. Due to American low-interest-rate policies and “quantitative easing,” the central bankers in India and South Africa ...
Mark Shuttleworth is a South Africa born tech entrepreneur and
venture capitalist who is perhaps best known in the rest of the world
for being the second “space tourist” to spend time living and helping
with experiments on the International Space Station. After a year of
training and reportedly paying about US$20 million, in early 2002
Shuttleworth rode on Soyuz spacecraft to spend about eight days on the
Shuttleworth had the wherewithal to buy his space ride since 1999,
when he sold his four-year-old Internet security company to VeriSign for
about US$570 million. Since then, he has used his wealth to finance and
build new companies as well as to fund charitable ventures. But living in South Africa, with its restrictions on capital
movements, created problems for Shuttleworth’s international operations.
This soon prompted him to take advantage ...