2016-06-14
Whitewater rafting is the ultimate way to find your buddy in life (just don't tell your wife, she won't ever understand – unless the buddy). Sharing your oxygen supply with a friend in distress 100 feet below the surface isn't (he won't give it back…).
Why does this hold lessons for Team SA as we struggle to redefine the mission? In the one instance we stand together through thick and thin. In the other, self-preservation takes over. Both rely on very basic human emotions.
As we quibble about being in recession (does anyone doubt the severity out there?), there is a deeper reality playing, internationally as much as locally.
Globally, financial conditions are becoming ever weirder (ever more negative yields under pressure from excess liquidity creation), yet apparently having little success in making growth faster. If anything, global growth is still easing, and the commodity super bust may have further adjustment to impart – not excluding oil or iron ore.
Consumers are cautious (and angry!), businesses are cautious (and fearful), governments are cautious (and inert), and even central banks are apparently becoming a little unnerved (it isn't working out quite to plan, is it…?).
This may mean the slow global recuperation will just take much longer than ever envisaged at extremely low bond yields. These low yields are manna to risky Emerging Markets, but the slowing global growth is akin to a starvation diet. A mixed blessing, the full reach of which has still to show itself.
But this is putting a pleasant veneer on a very unpleasant reality. Is the world steadily sliding towards a financial discontinuity of some kind? With fear slowly deepening (is it?) and the policy tool box having nothing powerful to overcome it (does it?), could a collective pullback globally create a major recession?
Alternatively, in a Time of Anger and Dissatisfaction (remember the 1930s, but also any weakened country ready to elect a strongman to lead it to the promised land, of which Latin America had a few, and Africa too), are we about to meet a new US president five months hence who will act like a bull in a China shop in 2017? Thinking trills of tax cuts, spending packages. Ending trade pacts. Starting currency wars. And not afraid to think nuclear?
Is that the way to break the current global impasse. Or double up on unleashing uncontrolled turbulence?
Within this larger planetary experiment we are conducting our very own, with very mixed results so far. Minister in the Presidency Radebe last week reported we are nicely on our way realigning policies with the National Development Program, with 14 ministers this week apparently reporting back on how things are going in their neck of the woods. Simultaneously advocate Matthews Phosa talked of growing distrust and that we had to stand together for otherwise things wouldn't work out.
Both predictable messages, one might say. But these reflect deeper realities, too.
The government has a clear blueprint, it seems, even if some of its parts aren't quite NDP. But that doesn't seem to bother it or the larger part of the electorate. Here is a very clear mission. Its mission isn't quite western, going by the company it prefers, and it isn't quite market capitalism either, going by its many interventions.
That everything hasn't been quite working out these past five years has become rather clear, with the threat of rating agencies declaring us junk having had a belated galvanising influence (though only on some, not all?).
Tellingly, we hear echoes of 1994-1996 Mandela, as today’s ANC government also does not want to end up as a financial dependency of the IMF or any other wester-controlled bodies, giving these heightened leverage to prevent what it calls the revolutionary democratic transformation.
But having to impose discipline on yourself in order to prevent others from imposing it on you has its own logic, as we could observe in the 1990s.
In view of the fact that the Brics alignment is showing many financial cracks, Western financial bailout coupled with its stringent conditionality becomes evident, as is now again happening to Mozambique (IMF) and others when domestic discipline fails. It is something SA apparently wants to prevent.
One is being told the succession is sown up, with the Zuma legacy intact. So that is the overlaying governance framework clarified.
Yet simultaneously there is effort of trying very hard to reassert discipline. This comes in various dimensions.
Treasury is doing it in procurement and budget, promising SOEs (State Owned Enterprises) will be addressed by yearend (no explanations forthcoming).
Others are addressing the labour field, with the CCMA apparently allocated a bigger role in events (?), a secret strike ballot on the cards (eventually) with as payoff a national minimum wage (which may not bite too hard and damage jobs too much?).
In yet another area, the mining charter seems to be transforming in ways only lawyers can explain, but the bottom line is that litigation is being abandoned (suggesting some kind of meeting of minds)?
Now, if only it could rain our collective happiness would be complete.
Except that on the most exclusive golf courses the bitching about the Zuma legacy is never ending, just as presumably in other quarters the bitching about white monopoly capital and assorted illnesses is similarly persistent.
A poisoned chalice, where the Phosa remark about growing distrust appears right on the money, not so much reminding of 22 years of whitewater rafting finding your buddy as trying to fight each other for that oxygen mouth piece in 1000 fathoms of water.
All of which offer a few reality checks. Three in fact (locally).
One is about the unwillingness to see and do things “our†way. The other about the unwillingness to do things “their†way. And the third one a heroic attempt to reintroduce the kind of disciplines that will meet basic minimum requirements for the main power blocs in society to re-engage rather than continue spreading dysfunctionality and sink ingloriously.
And the key question: is it enough?
It turns out we all have different opinions on this score, which isn't promising with 54 million South Africans on the loose.
My sense is that government and the dominant party are set on their mission, though apparently realising a few things need to be done differently. And thus the budget, labour, mining and SOE noises, and possibly movement in other areas as well as yet not in the open. But as yet only clarity on the budget, and no certainty as to what the ruling governance frame will offer us next.
That uncertainty, bound by no rules apparently, is a major stumbling bloc.
For the remainder, society remains very noisy, with delivery protests and local elections approaching. Quiet as the grave are unions and business, except that unions continue to plan for action in certain sectors where wage rounds are due, and individual businesses keep reporting daily about new global ventures of ever greater magnitude.
There is a disconnect here, between the position held by government and the Gordhan A-Team bridge building (his equivalent of whitewater rafting?) and the silent mouthing in union and business ranks, best observed by what they do rather than the silence of what they say.
Are we mobilizing to meet the Phosa call to stand together, or is it the growing distrust between implacable world views that remains the real reality, which teambuilding olive branches may not quite succeed in overcoming, for deeper issues are apparently far bigger?
That, and the larger world explored earlier, will set our growth scene into 2017, and presumably guide markets and rating agencies in assessing our efforts.
Cees Bruggemans
Bruggemans & Associates, Consulting Economists
Website www.bruggemans.co.za
Email economics@bruggemans.co.za
Twitter @ceesbruggemans
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