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Vote for political leaders in Elections 2009 who also understand the economy

Artikel in Afrikaans Hieronder

Barend la Grange

Barend la Grange

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!!

Barend la Grange

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2 Responses to “Vote for political leaders in Elections 2009 who also understand the economy”

  1. 1
    Eric Savage:

    Managing an economy is a juggle between purism and sentiment. From a purist point of view, the free market system is understandable – the cycle comes up, the cycle comes down, and then it comes up again. The low point is the tricky part. From a purist point of view, this is an important part of the cycle, where malignant companies like GM and Chrysler get culled and where entrepreneurs come out of the woodwork as they are forced to innovate to survive. Ultimately we lose out on progress by avoiding the downturns.

    Sentiment then is the worst enemy of this benefit. Just say “jobs are lost” and the tears begin flowing and politicians come under pressure to provide miracle remedies. The mistake is stop the flow of the conversation there … which jobs were lost? Were they sustainable jobs? Did they find new work? Did they take on new studies to improve their skills to become employable again? Did they cut back on unnecessary family spending? Did they end up innovating instead of coasting along?

    What Obama did in America was vandalism. It was a big lie that pretended to provide a solution, but sustained poor companies and lurched America into more debt than ever. Maybe there’s value in giving a sense that everything will be “fine” again, but the truth is that the net end result was worse than before. For America to become competitive again, they needed a health dose of reality, and they were denied that because of sentiment.

    With my involvement with the ACDP, one of the things I’ve enjoyed the most is exactly the sense of minimalist pragmatism that you suggested in your article. Government serves its country best by enhancing a competitive economy, not by being another “big business” (funny irony that socialism is a big capitalist, monopolist business). There is a time to be involved, and there is a time to step back. The ANC has failed on both accounts.

  2. 2
    Gabriel Le Roux:

    I have been meaning to comment on these blogs for such a long time. Thank you Barend for quality of blogs and the insight you provide. I enjoyed the blogs and comments very much. My wife and I had the privilege to cast our vote over seas last week. We are positive about the future of our country and believe we all should take more responsibility to play our part in the future of our beautiful country. For too long have we sat back and complained about things (government) not going the way we like and criticizing! It’s time though to play an active roll in the development and future of our country, then you can argue and criticize in an constructive way. I believe Ralph Nader said that there can be no daily democracy without daily citizenship. Thank you for taking such an active roll in our country and it’s politics!
    Lastly I believe it’s George Jean Nathan who said: “Bad officials are elected by good citizens who do not vote.” I want to encourage every citizen of the Republic of South Africa to make sure their vote is counted tomorrow!
    May God bless our country and it’s people!

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