Pointless Reserve Bank debate a distraction from serious issues
As long as acute poverty and inequality survive, we will battle to tell the difference between real ideas for change and get-rich-quick schemes.
News that the EFF plans a motion in parliament calling for the Reserve Bank to be “nationalised” revives our most pointless debate.
The fact that the Bank has private shareholders is highly unusual – virtually all central banks are owned by the state. But this oddity has no impact on anyone’s life.
The Bank’s ownership does not affect anything it does. Its decisions on interest rates, which do affect people’s lives, are not influenced by its shareholders; they have no say over who sits on the monetary policy committee that decides rates. Nor did shareholders draft its constitutional mandate, which is narrower than that of most other central banks and does affect people’s lives.
If we want a Reserve Bank that cares more about growth and development, we should change its mandate, not its shareholding.
An end to the Bank’s private shareholding will make no difference to the fight against poverty and inequality. But it is also not, contrary to the usual knee-jerk reaction in parts of the media, an attack on the market. It is a sideshow – a distraction from serious conversations on how to build a stronger and fairer economy.
So why is this demand taken seriously by the EFF and the ANC, which adopted a resolution at its last conference endorsing the Bank’s “nationalisation”?
Probably because the economic debate here is stale and predictable.
On one side, anything that means a smaller role for private owners and a bigger one for the state is assumed to be good for the poor even if, as in this case, it will be of no help to poor people. On the other, private ownership is always good, the public variety always bad, even if it makes no difference to the economy who owns the Bank.
But another claim about what may be afoot is doing the rounds.
Some of the Bank’s shareholders, it is said, are encouraging talk of nationalisation because they hope the state will buy them out so that they can make money off the deal.
There is no evidence that Bank shareholders are doing this. But it is easy to see why people suspect it. The shares, ironically, attract very little enthusiasm in the marketplace. Analysts say they are not bought and sold because virtually no one would want to buy them.
Some other supposedly radical schemes for change have turned out, on closer inspection, to be a way of making a few rich people richer.
When you read the fine print, the demand for nationalisation of the mines is a recipe for bailing out, at the public’s expense, people who own mine shares that are worth very little; if the state bought them out they could turn a profit. Suspicion is also fuelled because it has been common here for people who want to get their hands on public money to claim that they are fighting economic power holders.
We do not know whether anyone is pressing to end the Bank’s private shareholding because they want some shareholders to make a profit. But we do know that poverty and inequality offer opportunities for some to profit by claiming to fight it. And that suspicions about the motives of those who want this change would have less traction if it seemed to serve a useful purpose.
Fixation with the bank’s shareholding shows that we are not debating serious ideas for economic change.
Until we do, we will continue to be distracted by nonsolutions, some of which may seem more like plans to enrich the few than to help the many.
● Friedman is research professor with the humanities faculty of the University of Johannesburg