‘Struggle’ talk serves no one
Radical economic transformation, whatever it comes to be defined as, will need money. It will need a currency that is not valueless.
It’s said that when you live close to a monster the worst thing you can do is to not factor it into your plans when mapping out your life. The ruling party seems to be unaware of the monster called the free market and as a result they go on announcing “investigations into the possibility of making changes to the SA Reserve Bank’s mandate and ownership”.
Watching the goings on at the ANC’s policy conference last week any sane South African was bound to ask themselves: do we live in the same country, or even on the same planet? Were they not there when the public protector made the same announcement less than a month ago and markets responded negatively?
The usual refrain is “we can’t live in fear of the markets and the unpredictable rand”. That’s all very noble, but then please outline your plan to respond to the devaluing of the currency that always comes as a result of these very shallow announcements. The rand and the markets do not care much for struggle rhetoric about “ensuring that the Reserve Bank serves the interests of the majority”.
Fair enough, ways must be found to ensure that the economy serves its poorest citizens, but who does it serve when the economy is devalued because of rash announcements about the mandate of the Reserve Bank?
Public debate on the economy and any radical changes made to our financial institutions are not a no-go area. Change has to happen. But in effecting that change, the country – and especially the ruling party – do everyone a disservice in acting like cowboys and pretending there are no holy cows in addressing past injustices. The past injustices must never serve as a licence to reckless individuals to say and do whatever they like about the economy.
It is this kind of thinking that has led to nonsensical pronouncements about devaluing our currency “and simply picking it up from the floor and giving it to the previously disadvantaged”.
Whether we like it or not our economy is part of a global system controlled by investors who care nothing for our country’s past. Theirs is to make money – and make a lot of it. We cannot change the rules to suit us, but we can play our best hand within the current set-up while we continue to seek suitable ways to address what matters to us.
It doesn’t help anyone when the deputy finance minister says things like: “The role of the Reserve Bank is a contested space. Let’s not be intellectually lazy; let’s not accept these things as gospel truth.” Yes, these things must be debated, but to what end? As part of which bigger debate? If the answer is radical economic transformation, flesh out this ill-defined beast for everyone to know why it’s necessary to tinker with an institution central to our economy.
The dangerous thing about tinkering with sound economic institutions is that it creates uncertainty around our currency, and this uncertainty is the monster that we must always factor into our planning.
Radical economic transformation, whatever it comes to be defined as, will need money. It will need a currency that is not valueless.
Lessons from our neighbour Zimbabwe are plenty about ignoring the markets and tinkering with the Reserve Bank.
Bad economic policies can destroy a country’s currency.