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It is a good thing for politicians to debate issues such as democracy, protecting the constitution, respecting legislation, group rights, human rights, street names, etc. People have certain basic needs, however, such as having food to eat, clothes to wear and a place to stay. They therefore need work, and for this purpose, a workable economy is a prerequisite.
Certain people too, boast that we have the best constitution in the world. This may be so, but if people do not have a job or food to eat, it does not help at all.
Ronald Reagan once remarked: “You know it’s said that an economist is the only professional who sees something working in practice and then seriously wonders if it works in theory.”
What economist, for example, made the forecast that the oil price would tumble from a height of $147 to under $40 within a few months? I could not find one. The fact remains, however, that it did indeed happen, and Reagan’s remark was justified again. The oil price came down but the rand weakened ,interest rates went up and certain precious metals decreased to unexpected low levels , which resulted in the closing of mines and thousands losing their jobs. The ripple effect on our economy is tangible and appears to escalate even further.
It is however a fact that any economy moves in cycles and these changeables must be managed. Only the government of the day can play the overall role of creating an environment within which the economy can recover and thrive to the benefit of all in the country. In my opinion, too little emphasis is placed on the capability of our political leaders to govern the economy of our country. They are extremely capable of setting up legislation and formulating policies – including economic policy – but it is the enforcement where the problem arises and the political will is sometimes lacking. For many years there has been the debate regarding separate development (apartheid) and the party who fared the best in the debate was elected and considered capable. Nowadays those are elected who have the best “struggle credentials”. In the meantime, job creation and services are deteriorating.
The free market system is accepted by many as the most effective economic model for creating wealth, to ensure growth, create jobs and general financial prosperity for all in a country. A free market, however, does not mean that there should not be any rules and everything should be left to market forces. In the most recent past, it once again became clear with the total collapse of financial markets in America and the worldwide effects resulting from this. That economists with high expertise and financial experts were in the service of the biggest banks in the world, and still are, is no guarantee that they would make the right decision. Not that they did not know that things were heading for disaster. Even a first-year student with some knowledge of the economy would be able to foresee that if you deviate to such an extent from basic economic principles, it would result in disaster. But gluttonly makes people blind for reality and as long as you can glean, you just carry on, until…
The private sector therefore cannot merely be given a free hand without specific rules and regulation. The question is, who bears that responsibility? No one else than the government of a country. Someone must supervise the overall situation and maintain the balance. The banks in America considered their own interests only and allowed the rest of the country and its people to land up in a financial swamp where everyone would have to bear the burden for a long period of time. And where did the banks go and ask for help? With the government!! What this signifies is: draw the benefits of the capitalist system when all is going well, but not being prepared to run the risks if it does not go well at all – a general principle of the free market which is being violated. And the American congress gave in and helped – and just to start up the financial machine again, the lending rates are lowered by the Federal Reserve to between 0 and 0,25%. If this can be overlooked because the whole population is affected by what happens at the banks, the motor industry (GM and Chrysler) is also assisted with tax moneys. This is actually ludicrous. It delays the pain and the final fall of the economy will just be farther and harder. These are the decisions made by America, but unfortunately the dollar economy is so big that the rest of the world will be affected.
South Africa’s banks are better regulated, but still there is no lack of gluttony. The recently published report of the Commission on Competition which the large banks now so desperately want to withhold, gives shocking figures of extreme bank costs. They just want to reap, regardless of how tight people’s finances are, but who are actually “compelled” to keep on making use of banking services. ABSA has for example over the past five years increased its clientele from 4 million to 10 million. Many clients who earn meagre incomes who are exploited. Once again a case of reap whilst you still can. Just wait till someone complains – as in the case of the commission; there is no sign of caring for the people. After all, the CEO’s package of some millions per year must be paid, and the other top management members should not be allowed to earn too little either. This, in a country that is characterized by high unemployment, poverty and extreme inequality. More evidence that the private sector cannot just be left to their own devices. This is but one example. What applies to the banking industry, also applies to every other industry.
No industry should be allowed to draw advantage for itself at the cost of others. The aim should eventually be the wellbeing of the total economy so that all inhabitants of the country can share in that prosperity. This is where the government has a big role to play – even in a free market economy.
To achieve this after elections 2009, you need government leaders who understand the economy and have sufficient expertise to govern the economy on behalf of the people of the country who placed them in control. Inflaming speeches and chanting of freedom songs will not put the food on the table!!
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