IT’S BUSINESS AS USUAL
In this budget week, some trade unionists will continue to be angry with the measures announced by Finance Minister Pravin Gordhan. Others will perhaps register faint praise, especially because there will be no increase in VAT. But nothing, really, has changed. South Africa still faces a frighteningly high national debt, as well as gross and growing inequality in a country where the cost of services to citizens has consistently outstripped official inflation.
Far-reaching and innovative steps are clearly needed.
But for all the talk about radical economic transformation, against a background of currency dealers in major banks fiddling exchange rates, it will still be business as usual.
And part of that business is to gamble with money as a commodity.
This is the reality that Gordhan and other finance ministers around the world have to deal with – they have to try to stabilise an inherently unstable system.
So they tweak and manipulate, and increase or decrease the level of one or other tax – and hope for the best.
Once upon a time, and not too long ago, the words “I promise to pay the bearer on demand the sum of...” were printed on all paper money.
In other words, the piece of paper, which had no worth itself, was a promissory note based on a store of wealth held by a government, usually as gold.
And many exchange rates – how many dollars to the pound or whatever – were fixed.
This was an attempt to provide economic stability, a policy sticking plaster that could not hold because governments and banks simply created ever more money – much of it an illusion.
For example, a bank does not wait until savers deposit R1 million before lending R1 million.
This debt merely becomes an asset in the books of the bank and a debt to the borrower.
This, in simple terms, is what happened with the subprime mortgage issue in the late 2000s that triggered the global financial crisis.
Banks lent money that did not exist to borrowers who could not repay the loans. They then often sold these supposed assets to other banks at a discount.
Eventually, the whole rotten edifice collapsed.
Much the same applies to the foreign exchange dealers in banks that now face fines.
But collusion was the only sin perpetrated by the dealers – they are not supposed to gang up to better pillage hapless treasuries and the citizens who rely on them.
Some dealers are also supposed to, from time to time, lose in this insane and unproductive game where the livelihoods of millions of people, who have no agency, are the luckless victims.
It is a totally fixed game, but one where the remedies proposed merely tweak the rules.
And that is what has happened and continues to happen with budget after budget in South Africa.
To give most unions their due, inflation targeting is a measure they have consistently opposed because of the adverse effect this has on economic growth and jobs.
And they successfully opposed VAT increases.
But is it not time that organised labour, and all of us, realised that we cannot solve our problems with the same thinking, methods and institutions that created these problems in the first place?
A building at a camp that has been home to people demonstrating against the proposed Dakota Access oil pipeline in Cannon Ball, North Dakota, is set alight by protesters early on Wednesday morning. Most of the pipeline opponents abandoned their protest camp on Wednesday ahead of a government deadline to get off the federal land, and authorities moved to arrest some who defied the order in a final show of dissent. Some of the last remnants of the camp went up in flames when occupants set fire to makeshift wooden housing as part of a leaving ceremony