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Seizing the moment

And finding the Phoenix in the ashes of scorched sentiment.

SWELLENDAM – It was raining when I went to bed on August 31 1968. We lived in a flat in Cotswold, within walking distance of the SABC’s Port Elizabeth news office. It was a good sleep, as one has with the hypnotic sound of falling rain. The shrill call of the phone ended it, with the caller asking me to stand in for his reporting shift because his car was “flooded”.

It was the first inkling of a torrent that saw 600mm fall in 12 hours – an event permanently etched in my memory. Those hours have gone down in history as still the worst natural disaster ever to hit a South African city. My own contribution to those annals, captured on a Super-8 Cine camera, can be seen at this link.

And so another of my life’s experience provides a fitting analogy for our times – being distracted by the immediate, the petty and personal while the world around trembles in tectonic shifts. We sleep while floods rage around us. We get caught in our own discord and squabbles, without feeling the earth shake beneath our feet. When we do feel it, we blame someone close; someone visible and identifiable.

Journalists, including wizened old hacks like myself, have a penchant for hyperbole; ever in search of mesmerising headlines. I have the conflicting personality traits of the paranoid idealist, trying to find the Phoenix before there are ashes. But there is a growing sense that seldom, if ever before, and certainly not in my time, has the world experienced an economic transformation of the magnitude and significance as that of this era. Reflecting, as columnists do, much of the more knowledgeable, insightful and leading thoughts in the field, I have written about it on several occasions. Yet I have come to doubt whether I have even scratched the surface.

We have had many glimpses from many angles, including repeated market turmoil, global recession, and geo-political upheaval. Recent contributions to awareness of the greater economic tapestry have come from Joseph Stiglitz, a Nobel laureate in economics (see here) and two of South Africa’s most experienced and thought-leading economists. Writing in Moneyweb, Mike Schüssler speaks of the “depressive commodity super cycle” and Cees Bruggemans in his Economic Insights, puts emphasis on a country perspective. I urge you to read them. They give much depth to this subject, but cannot be fully covered here.

I would add or at least emphasise four in the mix: the explosion of global monetised debt; the declining role of labour in value creation, technology and climate change. (For views from top world economists see this link.)

South Africa is clearly at a fork in its economic road – one that we might miss as we face off against each other. Our obsession with domestic economic transformation, as valid as it may be, pales into insignificance compared with the urgent need for transforming our economy to fit into the vastly changing global context. (See Schüssler comment here.) In short we have to change from a commodity producing to a more diverse international trading nation. At the same time we must boost import replacement, especially through SMEs. It is not a new theme, but it has taken on a completely new and dire urgency.

The way to get there has also been well documented, including repairing the many potholes in the road such as the need for streamlined, prudent, incorruptible, business-friendly and efficient government and SOEs; education and training, and addressing the weaknesses and building on the strengths of those factors routinely listed in the WEF’s Global competitiveness report. To these I would add the absolute need for inclusion and participation of labour. The ultimate point is a fresh re-engagement on all of the issues that divide us; reinventing ourselves to find a common cause in meeting the global challenge and building on a well and tested formula of national success based on an external focus and people development.

Any trader knows that there are two things that earn market share and create competitiveness: quality and price. We have been given some window of price opportunity in a cheaper rand. Quality demands more: innovation, consistency, reliability, concerned service, and a genuine desire to make a difference to others. Already I can hear the defensible howls of derision from many. To be sure, this is not a quick and easy path – perhaps even impossible in these times of shrinking markets. But the journey itself will be a magnificent and noble detraction from the pet peeves we have become so addicted to.

Our so-called “A-Team” at the WEF at Davos will have enjoyed a fruitlessly opulent time if they do not return with this one overriding conviction:

The greatest force of all in economics is something which economic laws cannot explain; which cannot be captured by economists’ spreadsheets; by any economic theory or analytical research. It is attitude. It is a lot more than simply having confidence. You cannot build confidence on old paradigms. Having national pride projects as suggested in Moneyweb here is one way, but it may need an overall inspiring cause.

Attitude gives wings to the Phoenix: as it did for countries like post war Germany and Japan, and beleaguered nations such as Korea, Taiwan, Singapore and others. We have seen some of this spirit galvanise around the devastating drought gripping the country. I saw it in Port Elizabeth nearly 50 years ago.

I have lived long enough to be acutely aware of the things that divide us. But we simply have to develop a national attitude that will forge a common cause in meeting the enormous challenge that we face. Or we can continue to obsess about “things that must fall”.

Until everything does.


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yet another “fork in the road – high low road scenario. give me strength. when are commentators going to realise that sa is a FAILED state and will continue to be so UNTIL such time that the country is re-built from the ground up to undo the damage that white rule and apartheid particularly has done since JVR landed in cape town all those years ago. for starters all land needs to revert to the state and users will require to rent it from the state. that’s for starters. just remember no one is going anywhere – the world is FULL of unwanted people as we have seen in the events that have unfolded in Europe over last 12 months. so once we come to that point THEN these scenarios might come into play. until that happens it will be a long slow grind of on-going misery, inflation, violence, demonstrations and of course more people searching for fewer jobs

if you really believe that an economy with no property rights will be such a swell idea, why don’t you rather live in Cuba or North Korea or Zimbabwe?

i’m not saying its a swell idea – I’m saying that this is one way to address the wrongs of the past. now you can either say – nothing to address – well sir you are in for a rude shock. if you say – yes it must be addressed- then lets hear your suggetsions

What bollocks! Please – what about a worldwide reset in that case? Not sure that you would find yourself pontificating from Sydney.

I’m briefly here for one reason and one reason alone and that is to dispel some myths.

The first myth is that a weak exchange rate is good for the country. The belief is that since the exchange rate is now more rands for less dollars this is going to put the brakes on imports and boost exports.This argument has a fatal flaw in that it ignores the marginal terms of trade i.e. the ratio of additional imports that exports will buy. South Africa now has to export a lot more to buy key imports. Talk about giving away the family silver on the cheap. Epic fail, Zuma.

Whatever benefits may appear soon evaporate when the raw materials essential for exports require replenishment and the workers go on strike for more pay as their pay packet no longer buys them what is used to.

The second myth is that of climate change. Let me tell you this, britches: climate change is like plate tectonics. Something that happens, has happened for a heck of a long time and something about which we can do nothing. Relax and enjoy the ride – its a dynamic earth.

I am shocked that intelligent people weave this myth into their discourse as an issue. I would expect them to do a little research on their own and discover the truth for themselves. I have never heard an argument for AGW that does not involve logical fallacies, pasting links or arguments to authority. Clearly it is a new religion about which they understand nothing and believe everything. Blind faith is an unpardonable sin.

Myth 3: the A team. There was no “A team” in Davos – it was tainted by the ANC. Let me tell you this: When the ANC goes to Davos it is like Kaiser Chiefs taking on Manchester United. Are they going to score a brilliant upset? naah they are just not in the same league.

Briefly ?

1. Terms of trade. The historically demonstrated J-curve proves you are wrong. Our key import is in any case oil.

2. Climate change. The cause is not the issue. Our response is. And if we can ameliorate our contribution to that change, however small, it is surely worthwhile …. even for “just in case”. Like praying just in case there is a God.

3. A-tea,. Agreed. But my argument was not what they went there for but what the come back with…a thorough wake up call.

Briefly? seriously? do you really want verbose? okay…verbose it is

Be that what it may let me tell you something about the way of science and the scientific method. In science we have theory and then we have data. Data is synonymous with observations or from the adjective ’empirical’. That is what we observe in the real world. Now people come up with theories to explain our universe. If the facts contradict the theory then which one gets the boot? In all cases the theory is unceremoniously junked if you are calling yourself a scientist. Exceptions don’t prove theories they disprove them.

Now Karl Popper came up with the concept of falsifiability. If a theory is not falsifiable then it is a belief. Beliefs are always correct as they cannot be falsified. Fairies in the garden at 3am are a belief (even if invisible). There is no way to disprove the existence of fairies. We may have no evidence of fairies but absence of evidence is not evidence of absence. Let me give you a brief example of falsifiability. Take the theory of relativity. This is a fairly complex beast and involves such concepts as tensors which are an extension of scalar and vector mathematics. Most people do not have the intellect to understand tensor mathematics. Does this disqualify them from commenting on relativity ? Actually not at all. One of the predictions of relativity is that one cannot travel or even send information faster than c, the speed of light 3E+8m/s. Relativity is thus falsifiable on this basis. All one has to do is communicate real time with the base station orbiting Jupiter the planet. No time delay. Faster than c. Thus a compete amateur wombat can junk Einstein’s finest. Without even understanding tensors, what’s more. Now that has not yet happened but Relativity remains but a theory. Not a belief.

What predictions do AGW make? Firstly the concept of the upper tropospheric hot spot. This is critical as trapped heat is considered equivalent to incoming radiation. A positive feedback mechanism if you like. The fact is that this is destroyed by thousands of radiosonde balloons. Evidence versus theory and *poof* goes the theory. The fundamental tenet of AGW is that CO2 drives temperature. Ice core data reveal that this is fundamental untrue. CO2 lags not leads temperature changes by about 800 years. there is no evidence that periods of high CO2 were caused higher temperatures: *poof* goes the theory. All the AGW models based on the standard model predicted a steady increase in temperature with CO2 rising (1990 to present). *poof* all satellite and ground based observations are at odds with all the models. Hard cold facts.

Now if we are to respond to climate change we cannot just arbitrarily respond however small our response may be. The concept of marginal cost and marginal benefit have crtical importance. That is why Copenhagen collapsed. Someone delegates with a modicum of mathematical literacy pointed out that even if the IPCC climate models were correct (which we know that they are not – they overstate climate sensitivity to CO2) then closing down half the Western world’s industry would lower global temperatures by about 0.01°C. Clearly the concept of marginal cost and marginal benefit would dictate do nothing.

Now lets look at concept of floating currencies and devaluation. The J curve states (somewhat seductively) that the trade balance would auto correct. This was indeed Milton Freedman’s argument to Richard Nixon when he told Tricky Dicky to go off the gold standard – and go of the gold standard he did. How would the J curve be falsifiable? simply put the trade balance auto corrects with currency devaluation.

Now what happened to the US trade deficit and the US $ ? Let me tell you this history tells us that the trade deficit with Japan increased 10 times and the US$ value versus then yen decreased 5 times over the next few decades. This is the J curves “faster than C moment”

* poof *

Now MW has a journo who’s gems are probably lost amongst the filibuster of Schuster, the-rand-I- told-you-so hubris of Heystek and the fawning adoration crowd-heaped on Schuitema. His name is Sungula Nkabinde. He tells it like it is not what the folks want to hear. Unassuming and unpretentious. Under the radar; quietly on top of the job.

He wrote a piece recently at odds with J curve (which is just a falsifiable theory)

Facts folks. Hard cold facts. Unpalatable hard cold facts.


As a final note the “just in case” argument is a logical fallacy. We could spend half the GDP moving cities underground just in case we are invaded by grey aliens. The real question is not the consequence of being invaded (death, destruction, enslaving our women as sex slaves etc) but rather what is the evidence we have of this happening?*poof* There is none.

They even have a name for this false logic: argumentum ad consequentium

Richard, let’s suppose for a moment that you are right about climate change with a 99% certainty. That leaves a small risk that you are wrong. Is it not better to insure against the 100/1 long shot by some effort to reduce carbon emissions and all the rest of the anti-climate and GW measures? It is trite but true that we have only one planetary home. Bugger it up and we’re toast – literally.

Thank you Jerry… The ashes are here. We cannot change that. We can, however, endeavour to find our own phoenixes within. Mine is there… I can see it. But it will require focus to get to it.

I just heard a most depressing interview on the radio with the head of SADTU. SADTU refuse to let their teachers be monitored or tested so that their ability can be assessed. Their reason is that they teachers who do not pass the tests will be removed from their teaching posts. This sums up the pathetic and hopeless South African mindset of the labour unions. How depressing. No wonder the education system is dysfunctional. All on Zuma’s watch. Terrible.

@robertinsydney: If a couple are fighting in their home (South Africa) would they continue to throw pots about JVR at each other is there was a robber (Global economy) breaking into their home?

until such time that the whites realise that they need to address the wrongs of the past not only will they continue to throw pots at each other (to use your comparison) abut will continue to ignore the robbers – which is exactly the case at the moment if the “A Team” behaviour at davos is used as an example

@Richard the Great.


1. Terms of Trade: The historically demonstrated J curve proves you are wrong. Our key import in any case is oil — cheaper in Rand terms.

2. Climate change. The cause is not the issue. Our response is. If we can ameliorate our contribution, however small, it is surely worth while. Even for “just in case”.

3. A-Team. Agree. But my argument was not about what they went there for, but what they come back with .. hopefully a wake up call.

Sadly, when you do not have the capabilities to actually put policies into practice, (refer the dysfunctional SOE’s) the easier thing to do is to “continue to obsess about “things that must fall”.”

When will this mindset change? Not for quite a while it seems. This morning on Radio702/567 there was a discussion about interns at Marie Claire being paid R30 a day and several people felt that interns should be paid a salary of +R3000.
So many it seems, will rather stay at home unemployed than work two jobs to become a reasonable success.

Until we realise that no one in the world really needs South Africa or anything we produce, we will continue to waste time and energy with the “debates and protests and soul-searching about “the struggle” race and hate speech while the realists like Hong Kong, Singapore and now Tanzania leave us muttering in the dust.

Well said Jerry Schuitema. And as for Robert-in-Sydney – how do you know if South Africa is a failed state if you are swanning around in Sydney? You should keep your negativity to yourself.

It is time for all of us in the country to put more energy into making it work, and less energy into moaning and being negative. If we want a bright future, we need to work towards it – it is not going to happen by itself.

as I have said before – this is an open discussion page. how do I know what’s going on – maybe I still have assets/family there and maybe I have just returned from a visit. also as regards your vague “if we all work together it will all be fine”. well based on what’s happened since 1994 – no one has worked together – the future of the country has nose dived – racism has reared its ugly head again and as for the economy – least said the better. before moving forward it is essential that the wrongs of the past be corrected – without that there will be “bright” future for anyone

@RobbersofSydney – hope that you post as vociferously in Aussie and USA as you do on the forums here in RSA – your rearview mirror approach must be a real hoot in those countries as well. Also I fail to see the value of the state reclaiming all land from its citizens and then redistributing on a rental basis would really work when they can’t distribute the land they already have, and oh of course it would be interesting to see how tribal trust lands would be distributed

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