Business Day
*The Thick End Of The Wedge: The Editor's Notebook* *Peter Bruce, Business Day, Johannesburg, 29 November 2010*LIKE a batsman trapped hurrying his shot, Economic Development Minister Ebrahim Patel must be hoping his second innings will go better than the first. That chance starts this week after the disastrous launch last week of his New Growth Path, a proposal to remould the entire economy along a developmental path.
Patel would probably admit it didn't go well. A launch was planned for last Thursday, but on Monday, when this column first warned it was coming, it was brought forward to the next day, Tuesday. Why, one wonders? To wrongfoot people who may already have seen it?
There is something frankly odd about the plan and the way it is being handled (or outright ignored) by the rest of the government. One would have thought President Jacob Zuma would by now have appeared on the stage somewhere with the policy document rolled up in his hand. But, we cannot be sure that he has even read it yet. I have not heard any noise from any member of the Cabinet about it.
That may be because it isn't, as we thought, a policy document. Perhaps it's just a proposal. If it is, then it would be Patel's alone. It is beginning to look like that. The unions don't like it. Business doesn't like it and it's hard to find anyone in the government to stand up for it. Patel wanted agreement from all these partners by the end of January, before the February budget, but it ain't going to happen.
In fact, because he and he alone has so badly bungled the launch --- he didn't consult in detail with business and he only met Cosatu on the plan the day before he released it --- and with the Xmas and New Year's holidays coming up, it may vanish altogether.
That would be a pity because Patel's document is the first proposal a South African minister has produced since 1994 that is genuinely capable of being debated by all South Africans. The salary and wage caps have been prominently reported already (and you have to ask yourself what madness would have induced him and the plan's drafters to put actual numbers to these suggestions) but there is much else to do. It should not be allowed to exit the stage.
But that will happen unless Patel comes back and bats again with determination. He needs to take on his critics, join public debates, resist scoring political points and stop being so shy. Not everything can be arranged in a back room. There is lots to talk about in his plan. What should our industrial policy look like? Should we even have one? Is there a trade-off between growth and jobs? Are there limits to the state's role in the economy?
Looking at the plan and all that has been written about it, I have my own opinions, the principal of which is that no matter how simple a plan might be, President Zuma's administration would probably be too divided to implement it anyway. But assuming a president with a vision beyond his own survival, we would need to do four core things as economic priorities in any plan:
First, agree that you can't create jobs you can't pay for. So if you want to create 5-million jobs, as Patel does, you have to first create the money to pay for them, or at least to start paying for them. That means you have to create wealth before the jobs.
So, second, agree that the only way to create wealth to pay for jobs is to grow the economy. That then becomes your first and only true priority. Growth. Growth. Growth.
Third, to get growth, free up the private sector to achieve it. They're the only ones who know how. It's the reason they exist. As the left and the loonies keep reminding us --- business is only interested in profit. That's the point of business and if you can't celebrate it, and see how healthy it is, you're a child.
And fourth, once you've got business pumping and you're making a millionaire a day, don't forget to tax them. That tax is the only free money you'll ever get to create your 5-million jobs. Everything else you have to borrow. And economies are just like big households --- debt hurts and it means that money you could spend on the house you have to use to pay your creditors.
Government could and should rule the playing fields on which business takes place. But, once it's done that it should sweat buckets to make sure that, in business, SA is where you can make the fastest buck in the shortest time anywhere in the world.
*From: http://www.businessday.co.za/articles/Content.aspx?id=128092* ** ** -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] .
<<image/gif>>
