Must take into account entire economic system
ADVOCATE Busi Mkhwebane shocked many with the utterances she made about the need to amend the primary objective of the central bank.
More shocking was the support she received on this issue from the trade union federation, Cosatu.
Since the inception of formal inflation-targeting in 2001, Cosatu and its leftist allies has always opposed the policy fervently.
Whether the trade union federation is only opposed to inflation-targeting as a tool of monetary policy, or to the bank having as its primary objective the protection of the value of the currency in the interest of balanced and sustainable economic growth, would prove foolhardy if the foundations of the system in which the policies exist remain unchanged.
Ours is a predominantly free market economic system where prices are set through the interaction of the forces of supply and demand.
In this type of an economy, price stability is a sacrosanct objective.
Inflation is as much a problem for the wealthy and the middle class as it is for the working class and the poor.
The responsibility of maintaining balanced and stable price levels is bestowed on the South African Reserve Bank as per the provision of section 224 of the constitution of the republic.
Cosatu and Mkhwebane have as much a right as any other group or individuals in this country to critique government policies and propose alternative policies.
However, in doing so, the alternative policies they would propose ought to be compatible with the broader economic system where their undesired policies exist.
One is tempted to charge that their stance on this matter exposes their illiteracy on the subject of economics, but then again politicians are masters of deception.
They have no qualms about posing as being oblivious to glaring facts before them as long as there’s a possibility of gaining hegemony.
In the absence of compatible alternative policies emanating from the likes of Cosatu, the only option left for the left would have to be the intensification of its resolve to end capitalism or diminish its dominance.
As long as our economy remains a predominantly free market, inflation will be a real threat to economic growth.
Inflation targeting, as stated above, is not prioritised only to protect the wealthy but also the poor who are always the hardest hit by the impact of rising food and fuel prices.
Most of their income is expended on food and transport.
Ntsikelelo “Sparks” Limba, Motherwell, Port Elizabeth