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More than mumbo-jumbo

Sep 16 2010 23:00 Jan de Lange

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TRADE federation Cosatu has had so many different economic policies in the past that no one could be blamed for again rejecting its latest effort, A Growth Path Towards Full Employment, as more left-wing mumbo-jumbo.

And several observers and analysts have already done so. However, they may be making a mistake.

Forget about what Cosatu has to say about monetary policy in this document, as well as its other macroeconomic demands. It's a good deal more moderate than what it was saying a few years ago, but it's still unlikely to pass muster.

It's more important to note that this set of economic proposals is considerably better thought out than the previous ones.

Some sections are still poor, but in others economic development strategies are laid out that one could actually become excited about. The ideas about industrial development, especially, are completely new.

Nationalisation and the dismantling of monopolies are issues that have been ridden to death years ago. But who can deny today that South Africa's steel market is dominated by a big player, ArcelorMittal, which is exploiting its hold on the market to the hilt to make exorbitant profits?

At the same time, the manufacturing industries dependent on steel are struggling to survive. And this is a labour-intensive sector with possibilities for skills development – exactly what South Africa needs to make inroads into its unemployment problem.

The situation will clearly never change without state intervention. Cosatu's growth plan makes specific reference to this.
The platinum industry also has enormous growth possibilities. If South Africa plays its cards right with this sector, it could make a larger contribution to industrial development than did gold in the previous century.

We are sitting on more than 80% of the world's platinum reserves. Citibank calculated earlier this year that the value is $2.5 trillion, but once again this is a sector with two or three large players which mainly export raw material.

The Motor Industry Development Programme launched by Alec Erwin in the 1990s paved the way for the establishment of spares manufacturing, one of the country's few success stories with industrial development in the democracy period.

The use of platinum in the manufacture of catalytic converters for motor vehicle exhaust systems created a large number of jobs. Today we are a world leader in the field, but this is merely a drop in the ocean and a small illustration of what we can achieve with platinum group metals.

However, nothing will be achieved without state intervention – not by means of nationalisation à la Julius Malema, but with a partnership relationship between large producers and the government, the way De Beers is running Botswana's diamond industry in partnership with that country's government.

That's the only way we will establish the future Sasol of platinum utilisation.

Old Nat policy by a new name

This is how Cosatu secretary general Zwelinzima Vavi, speaking at the announcement of the growth plan, outlined the trade federation's view of what it understood by nationalisation.

And this was no more and no less than the industrial policy of the old National Party governments, which led to the formation of companies like Kumba, ArcelorMittal, South African Airways and Transnet.

But there's a second, and perhaps more important, reason why Cosatu's proposals cannot be ignored: the politics of economic development has changed completely since the days when former president Thabo Mbeki could politely, but with cold disdain, shove Cosatu aside.

It has less to do with the fact that President Jacob Zuma is indebted to Cosatu and a lot to do with the fact that virtually all socioeconomic indicators for job creation, health and education are moving backwards.

Cosatu blames Mbeki's free market policy Gear, in Cosatu's South African Communist Party (SACP) speak "the 1996 Class project", for this. That's not the only reason. The decay of the public service also has a lot to do with it – especially in the health sector and the dysfunctional education system.

However, the insistence on policy changes is just too great to be ignored. And it's considerably more rational and meaningful than before. It's even more rational than the ANC's Polokwane resolutions of 2007.

But regardless of how fine and how good the economic policy is, it's worthless without an efficient public service. And the only efficient part of that at present is the protection units for VIPs.

There's a section about this in the growth document, but time will tell how serious Cosatu is about this. Vavi has spoken sharply about the problem in the past.

There are distinctly divided opinions in the ANC, which could once again surface at the general council meeting next week. There are many groupings, but the main power struggle is still between the Charterists and the black nationalists.

Cosatu is squarely in the Charterist camp, but the dividing line has not been clearly demarcated yet.

South African Mining Development Association (Samda) president Bridgitte Radebe attended the announcement of Cosatu's growth plan. During question time, she delivered her own address about Mineral Resources Minister Susan Shabangu's reluctance to punish mining companies for failing to comply with the empowerment targets in the mining charter.

This document could be a charter, but Samda members aren't Charterists. Nevertheless, Vavi grudgingly supported her.

Vavi is on the central committee of the SACP, which decided at the end of August that it would in future be considerably more outspoken about the "predator elite" – an appellation that would definitely include a considerable number of Samda members.

 - Fin24.com
zwelinzima vavi
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Predatory elite

2010-09-13 10:10

 
 
 

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