Eskom’s pall over hol­i­days

In­sis­tance on so­cial­ism is drain­ing the fis­cus when pri­vate en­ter­prise is more ef­fi­cient

Pretoria News Weekend - - OPINION - CHRIS HATTINGH

IN­DUS­TRY grinds to a halt. Traf­fic stands grid­locked. Lights in dan­ger­ous ar­eas go out. Peo­ple sit in the dark. Whereas Christ­mas should usher in a time of jovial spirit, this De­cem­ber once again brings in load-shed­ding for South Africans.

As the sup­ply of elec­tric­ity from Eskom be­comes in­ter­mit­tent at best, along with the loom­ing im­ple­men­ta­tion of ex­pro­pri­a­tion with­out com­pen­sa­tion, the econ­omy is set to be beaten down even more. This is a re­sult of so­cial­ism, of a govern­ment that be­lieves it must rule ev­ery as­pect of our lives, and that only it can pro­vide us with elec­tric­ity.

The tri­als and tribu­la­tions of Eskom are well doc­u­mented. De­spite the re­peated fail­ures, the state-en­forced mo­nop­oly of Eskom has not been bro­ken up. Eskom can fail time af­ter time and it will sim­ply be helped out by the govern­ment.

The prob­lem is, when­ever a fail­ing state owned en­ter­prises (SOE) such as Eskom or SAA goes cap-in-hand to the govern­ment, it is not the govern­ment that has to give the money. Tax­pay­ers fund ev­ery­thing govern­ment does, there­fore we, the tax­pay­ers, are be­ing forced to res­cue an en­tity that no longer de­serves any aid. When an SOE fails, the buck is al­ways passed on to the tax­payer.

Whether it is fos­sil fu­els or re­new­able en­ergy, or both, only com­pe­ti­tion in the en­ergy sec­tor will cure the pre­vail­ing sit­u­a­tion. Eskom has no com­peti­tors to im­prove its per­for­mance. In­stead, it has govern­ment al­ways there to bail it out with tax­payer money. By virtue of the very na­ture of a free mar­ket, busi­nesses have to com­pete with each other to earn the cus­tomer’s rands. Eskom has no rea­son to im­prove its ser­vice, nor to ad­e­quately plan for the fu­ture be­cause it has no one to chal­lenge it.

En­ergy is of paramount im­por­tance to a de­vel­op­ing econ­omy. West­ern na­tions can fo­cus on pre­ferred re­new­able en­ergy be­cause they al­ready have a se­cure base. We, a de­vel­op­ing coun­try, do not. We need an abun­dance of en­ergy, and in­de­pen­dent power pro­duc­ers should be free to gen­er­ate and pro­vide any form of elec­tric­ity which the con­sumer will choose.

With­out a re­li­able en­ergy source, peo­ple can­not trade or grow their busi­nesses. The com­ing job losses will not be a re­sult of free mar­kets and cap­i­tal­ism; they will re­sult from so­cial­ism in the form of Eskom’s fail­ures, EWC, and the na­tional min­i­mum wage.

With­out elec­tric­ity to op­er­ate our wa­ter pumps, the taps will even­tu­ally run dry. Whether it comes from Eskom or a pri­vate en­tity, peo­ple will pay for the elec­tric­ity they need to use.

Why place Eskom at the cen­tre when there are many pri­vate providers who could com­pete with each other, and even lower prices for con­sumers?

Com­pe­ti­tion and choice should be ap­plied to the en­ergy mar­ket, not the re­gres­sive view that govern­ment must pro­vide all we may need. In­de­pen­dent power pro­duc­ers should be al­lowed to sell di­rectly to con­sumers with­out hav­ing to go through the in­ef­fi­cient mid­dle­man that is Eskom.

When a “busi­ness” such as Eskom op­er­ates with govern­ment back­ing, we wit­ness the re­sult of so­cial­ism, of govern­ment con­trol, ev­ery sin­gle time the lights go out. Yes, we can ex­am­ine the role the Gup­tas and state cap­ture played in this whole story. State cap­ture would never be so great a prob­lem if the state was not so mas­sive, and so lu­cra­tive, to cap­ture in the first place.

The philo­soph­i­cal point is that, if we grant govern­ment this much power over our lives, any abuse or fail­ure of that power has de­bil­i­tat­ing con­se­quences for the en­tire econ­omy. When the phi­los­o­phy is so­cial­ism, the con­crete ex­am­ple of that ab­stract con­cept is load-shed­ding, or com­plete black­outs.

The lat­est news re­gard­ing Eskom’s fi­nan­cial sit­u­a­tion is that it will ask govern­ment to trans­fer R100 bil­lion of its debt onto its own bal­ance sheet. This move would add 2% to the govern­ment’s debt-to-gdp ra­tio.

Our govern­ment sim­ply spends too much for what it “earns,” and once an SOE such as Eskom folds, the run on the coun­try’s fis­cus would be dev­as­tat­ing. Ul­ti­mately, it does not mat­ter who is in charge of an SOE. By the very na­ture of so­cial­ism, the premise is that govern­ment can op­er­ate x bet­ter than the in­di­vid­ual or any so­lu­tion the mar­ket would pro­duce. Eskom sim­ply per­pet­u­ates the flawed apartheid-so­cial­ist think­ing of the past.

Al­ways keep in mind that noth­ing is ever “govern­ment funded”; all govern­ment projects are tax­payer funded. South Africans al­ready pay higher taxes for the fail­ures of govern­ment; for Eskom to take even more from us just adds in­sult to in­jury and we can­not al­low this to con­tinue. So­cial­ism means govern­ment is paramount; so­cial­ism means the govern­ment’s power over our lives be­comes more en­trenched year af­ter year. If the prob­lem is not tack­led at its root, Eskom’s con­tin­ued fail­ures will leave us in the dark for many years to come. Hattingh is a re­searcher at the Free Mar­ket Foun­da­tion. This ar­ti­cle is reprinted with their per­mis­sion.

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