I studied some economics and politics at the University of Cape Town when I was there and I passed all my courses, but when it comes to relating these topics to real life happenings, I’m not the best person for sharing advice or knowledge.
What I do know is that things in South Africa are not fantastic, and there’s nothing more that I hate than a negative blog post and that’s not my aim of this post, I like to think of it more as awareness than anything else, and I think that awareness is hugely important.
People tend to assume things or just go with what the media says, rather than digging deeper. I’m not going to dig deeper, but instead I wanted to share a video I came across online, which shares some really interesting points with all of us and it’s highly relevant to all of us.
Take a watch:
Privatisation is the way forward not nationalisation.
Explain privatisation to me please Richard? My political knowledge is awful :/
I would pay money to put this on TV, just to watch what happened next. (granted the next rational step is forceful take over, but thats already going to happen.)
But I do love a sensible argument even if it will fail and the collapse will happen.
Cool video, clearly illustrates many of the negatives of nationalization.
It does however not even start to illustrate what the long-term effects would be. It is inevitable that corruption would skyrocket, and in the end the poor would get poorer and the rich (the politicians pushing for this) would get richer. And I’m not being pessimistic that corruption would skyrocket – that’s a fact of human nature. It happened in the Soviet Union, it happens in the USA and the UK.
Another problem I foresee is South Africa would isolate itself from the west, putting it in the same situation as in Zimbabwe. No-one would want to invest in SA, resulting in a dramatic fall in the value of the rand. This would lead to inflation, causing loads of other problems.
And then there’s the case of competition. I guess if the mines and banks are nationalized, they would in essence be consolidated into a couple of huge monopolies. If anyone wants to see how bad a monopoly can be for an industry, just look at Telkom. This is years after that monopoly ended and the consumer is still suffering.
Anyways, that’s my rant. Nationalization at this scale is a BAD IDEA, no matter how you look at it. If they do go ahead with it we’re the next Zimbabwe.
Privatisation is the process of transforming government run operations into businesses run for profit by private people.
Governments do not know how to run businesses. In general, the private sector is more efficient. If you want delivery, the government is the last place to look for it.
If the Department of Home Affairs was run privately by competing agencies, you’d be able to walk in, get a photo taken and get your ID / Passport etc. the next day.
@Richard: Good point, we need to go in exactly the opposite direction than nationalization. Competition (thus the private sector) is what drives businesses to perform better. Nationalization will take this away.
Ah, that makes sense Richard, thank you for enlightening me :)
MoralitySA clearly has no idea how mining companies operate within the context of mineral rights in South Africa.
In accordance with the UN Charter of Economic Rights and Duties of States and the South African Constitution, the MPRD Act was introduced (with effect) in 2004. This Act transferred all rights to the country’s minerals to the State.
The State therefore already owns all the country’s minerals. The State currently earns revenue from this ownership in two ways: mining companies buy licences to mine in certain areas (fixed fee to the State) and mining companies pay taxes on earnings (variable fee to the State).
States that want to generate more money from their mineral ownership do so in two ways: i) introduce “super taxes” on mining companies; and/or ii) retain ownership in the licences they grant.
Everyone agrees that South Africa needs to generate more State revenue. The ANCYL suggests one way we do so is by retaining majority ownership in the licenses the State grants to mining companies (i.e. “nationalizing” mines).
This means the State pays R0 to the mining companies (as opposed to MoralitySA’s R1.3 trillion). However, the State earns revenue from their mineral ownership in three ways.
Example: i) R10 billion from license fees, ii) R101 billion from their retained majority ownership in the issued licenses, and iii) R28 billion from taxes paid by the mining companies on their R100 billion profits. Therefore, in this example instead of the State earning R67 billion and the mining companies earning R144 billion, the State earns R139 billion and the mining companies earn R72 billion.
I don’t understand how an extra R72 billion in State revenue (per example) will destroy the country?
@Mario Puzzo
If government retains the licenses then they will have to mine those minerals themselves, unless the mining companies are willing to work for fraction of the rights and do all the work. So this is not true nationalization and is more in line with the government mining company strategy.
The noises coming out of the young lions are not about changing the mechanisms of right transferals so that the state keeps more. Those rights are long term rights that cannot revoked at a drop of the hat anyway. They are after the mining companies themselves, referring to the infamous 60% of Anglo comment by the biggest of the lions. Considering that MoralitySA is 100 percent right in his statements since reports indicate that it is in fact a hostile takeover of corporations.
Beside which, most of our minerals are running near depletion (cost more to take gold out in some of our mines that its worth). Our mining companies make more in exploration in rest of Africa where our government has no control over rights.
What will destroy this country is the lack of jobs being created by both government and the private sector.
Blaming each other won’t help. The answer is somewhere in between nationalisation and privatisation.
Nationalisation is an evil and leads to utter corruption why do you think Russia discarded it? As it is SA is so rotten and corrupt..Please let me know to which part of the world I can emigrate. Am black and am disappointed in my government…
Privatisation is the way to go…you cant run mines wthout investment and nationalisation only leads to short term gains go to Tanzania and Zambia and ask they will tell you…I hate nationalisation and I truly need to start to seriously consider emigrating to the west…