THERE it was again today: Another piece of disingenius analysis which turns the basic elements of economics on their heads to conjure a false enemy.
Cosatu’s Zwelinzima Vavi says: “The underlying cause of the crisis that is now ravaging working class communities is the mistaken policies between 1996 and 2004, of cutting tariffs and privatising basic services and the conservative fiscal and monetary policies pursued in those years, centred on the misguided belief in inflation targeting and the urge to appease the narrow interests of financial markets. There are still some who continue to hold on to this wrong belief.
And: “Relying on market forces has not only entrenched the inequalities of the past but further widened them, making us the most unequal society on the planet.”
What a load of nonsense.
For one thing, “market forces” did not cause inequality. It took centuries of state intervention to skew the markets in favour of white South Africans. The Apartheid state interfered with “market forces”, encouraging the impoverishment of black South Africans and the enrichment of whites, a tiny minority. The income gap which resulted was enormous.
The removal of some of the state’s interference in the markets has resulted in a rapidly changing racial composition of capital. Just last week it was revealed that Patrice Motsepe is the wealthiest man in the country. Was this celebrated as a triumph of de-racialisation? No, it was not. Cosatu wants Mostepe’s money taken away from him and “nationalised”. Go figure.
Vavi’s assault on the “mistaken policies between 1996 and 2004″ is also off the mark. Let us consider what would have happened if the global financial crisis had hit us without this policy framework having been applied.
South Africa would have been servicing massive debt at the expense of capital expansion. See all those World Cup stadiums, road improvements, new buses, new trains and the Gautrain? See all those new jobs for unionised workers in the construction sector? Well, they have been made possible by reducing the state’s spending on debt and increasing its ability to direct spending at infrastructure. Did the state form a state construction company and build these things itself?. No, it went to the private sector where efficiency, competition and the desire for profit have led to deadlines being met, costs being contained and a high standard of product.
If we had been servicing massive debt the cost of doing so would have risen dramatically and we may have found ourselves struggling to borrow. Instead we were in a good position to deal with the crisis. No South African bank has had to be bailed out by the state, no major South African corporation has failed.
But wait, there was one dark corner of the economy where the progressive fiscal and monetary policies failed to penetrate.
Yes, a very good illustration of Vavinomics is the Eskom crisis. The state, against its own advice failed to diversify electricity production and distribution by introducing private sector competition and efficiency. The result? The state run behemoth proved wholly unable to assess the needs of the economy, plan for them and respond in the agile manner required of businesses in this millenium. What happened? Black-outs, slow turn-around time in response to the crisis and, now, the inevitable demand for more public money.
That’s how Vavi wants the whole economy run. Banks that call on taxes to fund their shortfalls, mines that call on taxes to fund new shafts which are not competitive. Massive state monopolies that gobble up taxes and spit out inefficiency. Not good.

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3. South Africa safe from global financial storm
4. Why is the US attacking the markets? Just asking
5. SABC tax – A philosophy for a failed state