Downgrades are political
REGARDING your editorial of least week comparing the ANC government with Marie Antoinette over the activities of the ratings agencies, a few things need to be said.
First, this editorial is a bit boring, the same imagery has been used by several other newspapers. It’s almost as if none of you has anything original to say.
Second, by any standard of capitalist investment, South Africa is an excellent investment destination, with a strong and stable government, the best higher education system in Africa, a high unemployment rate (hence cheap labour) and a large internal market which is ripe for development.
The downgrades, therefore, are predominantly political in nature (as with similar downgrades elsewhere, such as the Russian and Iranian downgrades) and we should not have to agree with them.
Hence mocking the downgrades is not as ridiculous as you claim.
Third, the downgrades might be justifiable on the basis of the serious structural economic problems with the South African economy – our stagnant economic growth, our fragile currency, and of course our immense socio-economic inequality.
These downgrades can thus be blamed on the policies of the South African government and it has been argued that under such circumstances, firing your finance minister is a very bad policy.
However, the counter-argument is that the finance minister is, rather clearly, responsible for those structural economic problems because of the extremely unwise policies which Pravin Gordhan and Nhlanhla Nene pursued.
No doubt one cannot ignore the fact that President Jacob Zuma allowed Gordhan to get away with it, but one could argue that at least he has belatedly fired the man and perhaps some improvement might be expected (although with Zuma that’s probably a hopeless task.
Incidentally, the policies which Gordhan and Nene pursued, the National Development Plan and related matters, were developed under the supervision of Cyril Ramaphosa, the man who would take charge if Zuma steps down. This is not a pleasing prospect. So on the whole, perhaps we should not uncritically obey the political commands of American-based institutions that serve the short-term interests of the richest banking institutions, and which have been spectacularly and destructively wrong in the past.
None of this means Zuma should be president. It just means nothing is so bad that it can’t be made worse. — Mathew Blatchford, Alice