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Fin24 user Jarred Myers writes:
EUROPE lay shattered in the aftermath of World War 2.
Survival was the continent's top priority and nationalisation was Europe's salvation, providing a coordinated approach to production and supply and a means to economic prosperity in the decades which followed.
Nationalisation has many such benefits, including the achieving of economies of scale as well as employment generation and providing access to essential goods at affordable prices in the absence of a palatable market solution.
In South Africa today, we perceive the nationalisation debate as a pugilistic battle with fatigue-clad, beret-bearing, assegai-toting Julius "kiss the Boer" Malema in one corner, and a dark-suited, nondescript, accountant-looking 50-something white guy in the other.
The reality, however, is far less polarised and far more complicated.
We live in a generation where communication is fast and furious, where a brief hiatus without cellphone reception leaves us feeling insecure and erects a barrier of dissonance between what's going on and our knowledge thereof.
In reality however events still happen at the same old pace; we're simply less tolerant of the nature of things. This impatience catalyses our need for sound bite solutions creating an expectation where no solution is un-tweetable, untreatable, untenable and unattainable.
And it is into this reality that firebrand tweetsters chirp away, offering solutions which they do not understand to problems which they are too removed from to comprehend.
This omnipresent communication biome fires constantly, omitting tweets, links, feeds, beeps, buzzes and bytes. Ironically, rather than creating a historically unprecedented well-informed audience this unrelenting assault lathers groupthink into the population, where the question asked is "did you get my link?" rather than "what do you think?" and FYI is for your information, not for your interrogation.
The nationalisation debate is prone to the same abundance of noise camouflaging the signal within.
Exploring the noise in the debate, what are we hearing, who are we hearing? Populist, firebrand, disenchanted breakaway leaders are claiming to be the voice of the proletariat, the real mouth of the people, and what are these mouths mouthing off?
Shared wealth, equality, unfair profiteering, and a need to change ownership from private to state.
So let us explore whether nationalisation will solve their problems. Historic precedence elucidates how nationalisation actually works: socialist regimes nationalise heavy industry not to increase productivity, but rather to place union leaders in a position to dictate terms for the benefit of the workers.
But the workers never attain control, they just swap their masters.
So what is the signal in the noise emanating from this populist would-be junta, what are they really protesting?
They are protesting the gaping hole between promises heard and delivery seen, they are protesting the lifestyles of the downtrodden versus the lifestyles of their incumbent representatives, the haves versus the have nots, the hypocrisy, the nepotism, the inequality, the disparity, the Gini coefficient, the delta.
They are yelling why them and not us with a primordial scream, why else would you enter wage negotiations with a spear and not a pen? Because this is not homo economicus tussling with the zone of potential agreement, this is the war cry of those perceiving their status as serfs, indentured servants, chattels devoid of human dignity.
If we are to posit a solution to the protesters, we need to ensure we are treating the cause not the symptoms, the signal not the noise.
This cry for nationalisation is folly, the folly of seeking utopian outcomes while deploying the tool of a dystopian economic Hiroshima.
While I do not doubt the sincerity of those calling for nationalisation, I equally do not doubt their lack of understanding of what they pursue. There is an old joke about a dog chasing a car and what is the dog going to do when it actually catches the car; let’s explore how events would transpire if the dog were to catch the car.
The mining industry is nationalised in good faith, management is incentivised to remain and most do.
As long-term capital projects come to the fore to improve efficiencies and productivity of mines, they are pitted against urgent short-term social, educational and health projects.
With political stability trumping long-term planning, the mines are starved of capital. Mining output stagnates, mine maintenance is slackened, mine outputs decline, and mines are now in trouble.
Government responds, budgets are approved, increasing expenditure is required to maintain mining outputs, austerity has prevented equipment maintenance and replacement, productivity declines further, more and more resources are deployed to prop up less and less mining output.
Brain drain hits the fast track, engineers and scientists head for Australia, Canada, Brazil and China, the mining industry collapses.
Private equity firms and mining behemoths begin circling, but unlike vultures they are now the belle of the ball.
Government puts up and promises generous incentives and subsidies to lure the skittish suitors. Private enterprise dips its toe in the water, but - once bitten twice shy - these firms maximise risk aversion.
Skilled staff are scarce and beneficiation is untenable at any price. This means that resources will be exported as early in the value chain as is logistically feasible, resulting in the bulk of profits from resources being realised abroad.
The result is a historic first for mankind, the first nation to artificially inseminate Dutch disease, the resource curse.
So let it be abundantly clear, there is a case for nationalisation; it is in the best interest of the mining companies which will salvage the remnants of a once-thriving industry in decades to come.
But it is not in the interests of those whose mouths demand it - it will mock their past, it will destroy their present, it will disable their future and it will disembowel their children's heritage.
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