10: the poor face double-digit inflation · move our productive economy away from reliance on the...

Movement

for Socialism October 2015

10: THE POOR FACE DOUBLE-DIGIT INFLATION

IN THIS ISSUE:

MfS

March 2016. Volume1 Number1

Karl Cloete

President Jacob Zuma’s desire to continue to hold “fruitful meetings” with big business, but to impose austerity on South Africa’s workers and the poor was obvious - at the State of the Nation Address (SONA), in economic ministers’ subsequent attempts to defend Zuma and in his own reply to mostly incoher-ent parliamentary critics.

The austerity message became even clearer when Pravin Gordhan delivers his budget speech.

The SONA failed to offer genuine economic solutions to our coun-try’s woes.

Then the following Tuesday,

Trade and Industry Minister Rob Davies and on Wednes-day, Economic Development Minister Ebrahim Patel – who come from leadership of the SA Communist Party and Con-gress of South African Trade Unions, respectively – had sev-eral awful tasks:

1. to defend government,

2. to placate an angry society,

3. to soothe international fi-nanciers, and

4. to psychologically prepare us all for the austerity we will learn of in Finance Min-ister Pravin Gordhan’s budg-et speech.

3. The #FeesMustFall movement

showed us in October how to

make student voices clearly

9. Government is looking at

“strategic partnerships to allow

SAA “to draw on private sector

11. Let’s worry more about upper

-class twits running Standard &

Poor’s, Fitch and Moody’s inter-

national credit rating agencies

18. Numsa members marching

against corruption

2

The Movement for Socialism

Davies and Patel failed because these are impossi-

ble tasks in a society whose political aspirations

far outstretch what the ANC government can mus-ter today: genuine liberation from race, gender and

class oppressions, an end to unemployment and a

living wage paid to workers, a healthy environ-

ment, decent-quality and fairly-priced public ser-

vices and no corruption.

Yet in order to disguise how far backwards the

ANC is taking us from that genuine liberation, Zu-

ma feels increasingly compelled to shout the ANC’s

liberation history from the rooftops. Of 10 000

words in last week’s speech, 10% were used to evoke nationalist memories, so as to remind listen-

ers that at one point in our history, the ANC really

was a fish in the sea of our people.

But since neoliberal policies replaced the Freedom

Charter and Reconstruction and Development Pro-gramme in the mid-1990s, and with first Mbeki

and now Zuma brutally suffocating the voices of

the people, the fat-cats have taken power. What

were once fellow fish in our sea are now voracious

sharks.

Zuma also talks left but walks right when trying to

explain “our radical economic transformation

agenda and our National Development Plan.” Real-

ity check: the NDP is favoured by big business and

the neoliberal opposition DA. It is not a “radical” transformation; it is business as usual.

Zuma admits, “Our economy has been facing diffi-

culties since the financial crisis in 2008. We em-

barked on an aggressive infrastructure develop-

ment programme to stimulate growth.” Reality

check: the “aggressive infrastructure development” increases occurred from 2002-07, when as a per-

centage of GDP, state spending on infrastructure

rose from 3% to 7%.

But those increases ended by 2009, as the main

investments in World Cup stadiums and the Gau-train peaked. Since then there has been lower in-

frastructure investment as a share of GDP, reach-

ing a level of only 6% in 2012, although improving

slightly since then.

Zuma is correct that “global growth still remains muted. Financial markets have become volatile.

Currencies of emerging markets have become

weak and they fluctuate widely. The prices of gold,

platinum, coal and other minerals that we sell to

the rest of the world have dropped significantly and continue to be low. The economies of two of

our partners in BRICS: Brazil and Russia - are ex-

pected to contract this year. The third, China, will

not register the kind of robust growth that it is

known for. Because our economy is relatively

small and open, it is affected by all of these devel-opments.”

MfS E-Newsletter; March 2016

Contacts for The Movement of Socialism:

Azwell Banda: [email protected]

Norma Craven: [email protected]

Prof Chris Malikane: [email protected]

mailto:[email protected]

3

But if so, the obvious way to re-spond to these international fac-

tors is to reduce South Africa’s

vulnerability, not only to financi-

ers, as explained above, but to

move our productive economy

away from reliance on the export of mining and corporate agricul-

ture and use our scarce power

and water to revive our manufac-

turing industry and increase food

production for local and regional consumption. All Zuma’s major

projects do the opposite.

Zuma is correct that “our country

seems to be at risk of losing its

investment grade status from rat-ings agencies. If that happens, it

will become more expensive for

us to borrow money from abroad

to finance our programmes of

building a better life for all espe-cially the poor.”

International financiers are sour-

ing on South Africa. That requires

an emergency response: first, the

tightening of exchange controls and tax compliance measures to

prevent vast capital flight; and

second, urgently lowering interest

rates – not raising them 0.5% as

happened earlier this month (or another 1% this year as many are

expecting).

But perhaps because of the pres-

sures the capitalist rating agen-

cies are imposing, with their threat to downgrade the country’s

credit rating, Zuma truly believes

in the bankers’ logic and cele-

brates their capture of vast

shares of our surpluses.

As he put it, “Compatriots, we are

proud of our Top 10 ranking in

the World Economic Forum com-

petitiveness report with respect to

financial services. Maintaining and indeed improving our rank-

ing is important to our competi-

tiveness as a country.

It is also fundamental to our am-

bition to become a financial cen-

tre for Africa.”

But in reality, the financial sector

is overblown. The Johannesburg Stock Exchange has lost vast

amounts since last October, but

remains one of the world’s most

overvalued casinos.

The sophistication and freedom

enjoyed by the financiers contrib-

ute to the crisis of illicit financial

flows, measured in late 2015 at

R330 billion annually over the

prior decade.

Zuma actually seems to believe

that “our country remains an at-

tractive investment destination,”

Reality check: the January 2016 analysis by the United Nations

Conference on Trade and Devel-

opment showed that in 2015, for-

eign direct investment fell 74%

from already low 2014 levels.

Zuma’s strategy of placating big

business is unsuccessful, and

when Gordhan announces aus-

terity, cuts in social spending and

wages, a rise in Value Added Tax

or other attacks on poor and working people, our society will

rise up in protest.

The #FeesMustFall movement

showed us in October how to

make student voices clearly heard against Finance Ministry injustice

when they protested at the last

Budget Speech.

Numsa learned from that experi-ence how to make a major state-

ment against neoliberal austerity

and nationalist rhetoric, a lesson

we take into the coming battle,

and we link our fight against

these symptoms of the crisis to its underlying cause – global mo-

nopoly capitalism, which is

wreaking havoc to the lives of the

poor in every corner of the world.

Karl Cloete, Deputy General

Secretary of the National Un-

ion of Metalworkers of South

Africa

MfS


MfS E-Newsletter; October 2015 MfS E-Newsletter; March 2016

4

Irvin Jim | 25 February 2016 Irvin Jim says Treasury must accept their right-wing policies are re-sponsible for the economy being in junk status Numsa statement on the Budget 2016 The National Union of Metalwork-ers of South Africa is not disap-pointed with the 2016 Budget de-livered by Pravin Gordhan, be-cause the trajectory of the budget continued to sing to the tune of international and local finance capital, white monopoly capital and credit rating agencies. As so often in recent years, the budget speech can only be de-scribed as an exercise in “business as usual”, a speech which gave no hint that the minister understands the depth of the crisis facing the poor, working class majority of South Africans. There were some passing refer-ences to “the challenges of tough economic times and difficult ad-justments”, “the retreat of capital” and “emerging patterns of preda-tory behaviour and corruption” but nothing about the devastating quadruple crisis of unemploy-ment, poverty, inequality, corrup-tion. He was obviously trying to reas-sure capitalist investors - and ap-pease credit rating agencies who have threatened to downgrade the South African economy to ‘junk’ status - by pretending that every-

thing is under control and no radi-cal changes are required to the neo-liberal policies the ANC government has been follow-ing for the last two decades, which have so clearly failed. The Minister’s approach was a continuation of the GEAR strategy, now enshrined in the National De-velopment Plan, for neoliberal, free-market capitalist policies. Notwithstanding the revolving door of finance ministers, Treas-ury has maintained its neoliberal path through successive annual austerity budgets. The 2016 budget is no different. It contains the hallmarks of austeri-ty, some of which include: - A reduced budget deficit project-ed at 3.2% and declining to -2.4% in the medium term; - Freezing of so-called “non-critical vacant posts” in the public service through which the reduction in the expenditure ceiling of R25 billion will be achieved over the next three years; - Projected real annual average growth in expenditure to be lim-ited to 0.8% in the medium term; - Opening the door to privatisation of state-owned enterprises, de-spite the Minister refusing to de-scribe it as that On inequality there was not even the expected token gesture to raise taxes on the very rich, just the incredibly evasive statement that “our current taxes on wealth

are under review by the Davis Committee”. Within a context of shortfalls in revenue collection it would have been appropriate to finally introduce a wealth tax, with added benefit of reducing rising inequality. One of the biggest reasons for the massive levels of inequality is the illicit flows of capital to tax havens and what Gordhan himself de-scribes as “abusive practices by multinational corporations and wealthy individuals”. Yet the best he can offer as a solu-tion to these problems is a prom-ise that “with effect from 2017, international agreements on infor-mation sharing will enable tax au-thorities to act more effectively against them”. This lame state-ment demonstrates that the ANC government acts in the best inter-est of capitalists with no political will whatsoever to stem the tide of illicit flows of capital. But while putting off action to tackle millionaire tax dodgers, there is no good news for the poor. Last year Nene cut the welfare grants budget in real terms by sev-eral per cent. In this year's budget, there is a 6.4% nominal increase for the larger grants: "Old age‚ dis-ability and care dependency grants will rise by R80 to R1‚500 in April 2016‚ and by a further R10 to R1‚510 in October."


MfS E-Newsletter; October 2015

Pravin Gordhan tried to reassure capitalist investors


5

So R1505 is the average 2016-17 payment to people, an increase per month of R90 (6.36%). The child support grant will rise by R20 to R350 (up 6.1%). The foster care grant rises by R30 to R890 (3.5%). Given however the anticipated double-digit food prices, a potential 16% Eskom increase and high transport price rises, inflation for poor people will be more than 10%, so there will be a real cut in living standards, as the increase for the average grant recipient is in the range of 3.5% to 7%. There was nothing concrete on the long-promised National Minimum Wage, Comprehensive Social Secu-rity Plan and National Health In-surance system. The only crumb of comfort is that he took a similar vague view on the planned nuclear energy deal, which Numsa strongly opposes.

All he said was that “Minister Joemat-Pettersson is overseeing our renewable energy, coal and gas IPP programme, and preparatory work for investment in nuclear power.” Such a half-hearted refer-ence to what President Zuma saw as a key project, suggests that it may also have been put on the back burner.

On higher education the minister did nothing more than Jeff Radebe had already announced. He has giv-en R5.4 billion a year "additional" to the R63.7 billion "Post-School Education and Training" line item. An additional R16.3 billion has been allocated for higher education over the next three years. R5.7 bil-lion of this addresses the shortfall caused by keeping fees for the 2016 academic year at 2015 levels, and the carry-through costs over the MTEF period. R2.5 billion goes to the National Student Financial Aid Scheme to clear outstanding student debt, along with a further R8 billion over the medium term to enable current students to complete their studies.

As even that party pointed out, [the Ministerial Committee] found that South Africa’s budget for universi-ties as a percentage of GDP was only 0.75%, lower than the Africa-wide proportion of 0.78%, the world-wide proportion of 0.84% and the proportion spent by Organ-ization for Economic Cooperation and Development countries of 1.21%. “The report also noted that be-tween 2000 and 2010, state fund-ing per full-time equivalent student fell by 1.1% annually in real terms, while fees per each of these stu-dents increased by 2.5% annually in the same period…” (Democratic

Alliance, Oct 2015) The minister announced the ta-bling of the draft Revenue Laws Amendment Bill, which is intended to postpone by two years the com-pulsory annuitisation of provident funds. As Numsa has previously indi-cated this is too late as the Taxa-tion Laws Amendment Act is scheduled to be implemented in less than a week on 1 March. Furthermore this belated bill will not address constitutional problems in the original act as it was incorrectly processed as a money bill. The budget is presented within a context of threats of further invest-ment ratings downgrades for the country by international credit rat-ings agencies, and makes the ad-mission that debt-service costs are the “fastest growing category of

spending”, with an annual in-crease of 11.4% over the medium

term. The bulk of this is drawn from for-eign funding sources, which leaves us at the mercy of volatile ex-change rate fluctuations and for-eign interest rates that slavishly respond to the tyranny of credit ratings agencies, thereby increas-ing debt servicing costs. The time has come to consider lo-cal sources of financing. The Public Investment Corporation

(PIC), for example, controls assets

worth over R1, 8 trillion, the bulk

of which is composed of the Gov-

ernment Employee Pension Fund

(GEPF), and much of which is ironi-

cally invested in foreign financial

markets.



But this R5.4 billion additional funding is tokenistic compared to the R35 billion a year that even the neoliberal Democratic Alliance has advocated.

All he could say was that “Progress has been made towards a minimum wage framework, and to reduce workplace conflict. The National Health Insurance White Paper has been published, and proposals for comprehensive social security will be released by mid-year”.


6

One of the worst aspects of the budget speech, however, is Gordhan’s frequent references to what he insisted is not “privatisation”, but in reality is.

He reported that Minister Brown is in discussion with Transnet’s lead-ership on measures to accelerate private sector participation in the ports and freight rail sector. The Budget Review also says gov-ernment is looking at “strategic partnerships” to allow SAA “to draw on private sector capital and technical expertise to improve its performance and expand its net-work”. “The recent tremors felt by emerg-ing markets,” he said, “are a warn-ing that we need to take corrective steps urgently or we will be worse off. At the same time, we need to move forward to mobilise the resources and capacity of all our people, large and small enterprises, civil society organisations and public-private partnerships.” As the Daily Maverick correctly concluded minutes after the speech, “Gordhan puts state-owned companies on notice”.

Numsa notes with concern that special economic zones and em-ployment-intensive sectors with export potential have been priori-tised for support by the Industrial Development Corporation (IDC). This is however happening at a time when IDC has refused to fund or to buy Evraz Highveld Steel, a plant that employees about 18 000 workers. If it closes the whole of Emalahleni in Mpumalanga would become a ghost town like many towns which are victims of deindustrialisation. Why will this government throw money to IDC, which has been spending billions on green field projects for years, but won't spend money to save so many jobs? If this capacity is destroyed it will never come back?

This government, in particular the Treasury, must accept that their right-wing conservative policies are directly responsible for the economy being in a junk status, whose results has been mass pov-erty, unemployment, inequalities. This chosen path resembles the old apartheid capitalist colonialism and this can only mean that apart-heid and a system of racism through a new dispensation in our country has continued by other means and both systems have suc-cessfully kept blacks and Africans at the bottom of the food chain. This government must act swiftly and urgently so as to cut interest rates, bring back capital controls to stimulate the economy and to stop capital flights, both legal and illegal.

All capitalist right-wing wing ide-ological priests must accept that for the past 21 years there has been no socialism in SA and they must take full responsibility for the mess, including Tito Mboweni, Trevor Manuel and the Free Mar-ket Foundation led by Herman Mashaba who is anti-worker and a union basher who has now made himself available for an opportun-ist project to be Mayor of Johan-nesburg for the DA. He is challenging in court collec-tively negotiated agreements in order to reverse all workers’ hard-won gains, their improvements, benefits and conditions of work. This very desperate greedy capi-talist and exploiter still wants to win elections through the carcass-es of the slaves he is determined to keep exploiting.



For example he says: “We must broaden the range and scope of our co-funding partnerships with private sector inves-tors. This requires an appropriate frame-work to govern concession agreements and associated debt and equity instru-ments, and appropriate regulation of the market structure”.

Numsa demands the following immediate steps: 1. The Numsa ANC government must nationalise Evraz Highveld Steel or, through the IDC, they must buy it for R150 Million - a drop in the ocean in comparison to splash-ing billions to green fields and to so-called black industrialists. 2. Numsa calls on the black industri-alists who are now swimming in no less than R23 billion to invest their free allocated money in buying this company, as we are completely un-informed as to what they will be investing this huge allocation on. 3. Government must appreciate that our country is facing a national cri-sis of a job loss bloodbath - a nation-al emergency; action is needed now not tomorrow and in the light of this crisis Numsa demand that govern-ment nationalise the steel Industry and the entire value chain in manga-nese, coal, iron ore and vanadium.


7

The measures we propose above are perfectly possible, and doable. They are a fundamentally important step if we are serious about pulling the country out of the triple crisis of poverty, unem-ployment and inequalities rather then responding to the propaganda of rating agencies. Our true measure of the development and growth of our economy and country must be determined on the basis of the demands we make above, and not on the growth of profits in a sea of growing poverty, unemployment and inequalities. South Africa, just like the rest of Africa is too rich to fail to provide for all its peoples. The problem is the current concentration of wealth and politi-cal power in the hands of a dominant but tiny filthy rich parasitic capitalist class and mass pov-erty for the majority - the system called capital-ism. The challenge we face is how to reach and educate every worker and every poor rural dweller, about the real causes of their poverty and suffering, and how to end it. This year we must dedicate our-selves to organising, mobilising and educating ourselves for the overthrow of the God of Profit and its tiny filthy rich followers and parasites in government. The alternative is to starve to death in a rich country. Numsa reiterates its total opposition to privatisa-tion and all policies whose aim it is to placate white monopoly capitalism and their credit rating agencies. We call on all workers, employed and unemployed, to join us in our United Front, in the work we are involved in to create a new federa-tion, in the work of forming and developing a gen-uine revolutionary socialist political party of the working class and in defence of Numsa. This budget, and the ANC government’s commit-ment to the neoliberal National Development Plan, makes it more necessary than ever to form such a party to fight for the nationalisation of the big capitalist monopolies and the building of a democratic socialist society. Working together, we cannot fail! Organise or starve to death! Statement issued by Irvin Jim, Numsa General Secretary, 25 February 2016 MfS



Numsa, unlike the Current ANC of Gwede Mantashe, the SACP of Blade Nzimande and the Cosatu of Sdumo Dlamini, sees itself as an embodiment of what the revolutionary alliances of Chris Hani, Oliver Tambo, Joe Slovo and Harry Gwala were about; that is why we demand an economy and a budget, that must be based on: - Concrete measures to fast-track the redistribution of land - A concrete programme of nationalisation of the com-manding heights of the economy in order to restore the wealth of the country to the people as a whole – thereby ending poverty and unemployment, and freeing the geni-us of all our people to contribute to create wealth for themselves - Full employment for all who need work, which is both a duty and a right - Full social security for all human beings - Full free medical services for all - Housing for all, as a human right - Abolition of all racial, gender and other forms of dis-crimination in wages, the work place, communities and culture - Full state funding for education from birth to death, for all - Proper conditions of work and decent pay for all public sector workers, and the protection of their right to de-mand wage increases - Creation and restoration of the manufacturing capacity of South Africa, under popular working class control and ownership - Abolition of the apartheid geography, economic and cultural landscape that continues to scar our country, 22 years into the so-called democracy.


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26 February 2016 at 07:30am By: Zwelinzima Vavi #Budget2016 / If a visitor from an-other planet was sitting in the South African Parliament on Wednesday, listening to Pravin Gordhan’s Budget speech, he or she would conclude that South Africa is a wealthy, peaceful country, with maybe just a few little problems here and there, caused by world-wide economic stagnation and the drought, neither of which the gov-ernment can be blamed for. The contrast between the finance minister’s bland and complacent picture of the country and the grim reality of desperate poverty, sky-high unemployment, widening ine-quality and epidemic levels of cor-ruption that are facing the majority of its people could not be greater. Read: The full round-up: #Budget2016 His guiding principle appeared to be to tell international credit rating agencies that they have nothing to worry about, certainly nothing to justify downgrading South Africa to “junk” status, because everything is under control and the country is on the brink of an economic revival. The reality is that the crisis is get-ting even worse and this Budget contained nothing to suggest that it would be getting better any time soon. On the contrary, the minister maintained the path he and his pre-decessors have pursued in succes-

sive austerity budgets, based on the neoliberal Gear strategy of the 1990s and its continuation in the National Development Plan.

One of the biggest reasons for South Africa becoming the world’s most unequal society is the illicit flow of capital to tax havens, de-priving Sars of trillions of rands of unpaid taxes, the minister could only promise that “with effect from 2017, international agreements on information sharing will enable tax authorities to act more effectively against them”. No good news for poor But while he is putting off action to tackle millionaire tax dodgers for a year, there is no similar good news for the poor. Social grants are to be increased, but by amounts well be-low the expected levels of inflation for poor families, given a potential 16 percent Eskom tariff hike and the anticipated double-digit food prices as a result of the drought and the fall in the rand. So real in-

flation for the poorest families will be above 10 percent, while the in-crease for the average grant recipi-ent is between 3.5 percent and 7 percent. Nor was there any good news on the long-awaited National Mini-mum Wage, Comprehensive Social Security Plan and National Health Insurance system. The best he could promise was that “Progress has been made towards a minimum wage framework, and to reduce workplace conflict. The National Health Insurance White Paper has been published, and proposals for comprehensive social security will be released by mid-year”. I noted that the minister said he was tabling a draft Revenue Laws Amendment Bill, which was intend-ed to postpone by two years the compulsory annuitisation of provi-dent funds, which all workers were so angry about. But he was too late, as the Taxation Laws Amendment Act was scheduled to be imple-mented on Tuesday. I welcome the additional R16.3 bil-lion for higher education over the next three years, but credit for this must go not to the minister but the students whose #FeesMustFall campaign compelled government to keep fees for the 2016 academic year at 2015 levels.



Gordhan’s complacency paints

over SA’s grim reality

On inequality Comrade Gordhan did not even make the widely expected token gesture of raising taxes on the very rich, only an assurance that “our current taxes on wealth are under review by the Davis Committee”.


http://www.iol.co.za/business/budget/the-full-round-up-budget2016-1989558

http://www.iol.co.za/business/budget/the-full-round-up-budget2016-1989558

9

But it remains a scandal that South Africa’s budget for universities as a percentage of gross domestic prod-uct is lower, at 0.75 percent, than the African average of 0.78 percent, the world-wide proportion of 0.84 percent and the proportion spent by Organisation for Economic Co-operation and Development coun-tries of 1.21 percent. For me the most alarming features of the Budget speech, was what Comrade Gordhan insisted on not calling “privatisation”, but was clearly just that. He says: “We must broaden the range and scope of our co-funding partnerships with pri-vate sector investors. This requires an appropriate framework to gov-ern concession agreements and associated debt and equity instru-ments, and appropriate regulation of the market structure.” Private sector Minister Lynne Brown, he report-ed, was in discussion with Trans-net’s leadership on measures to accelerate private sector participa-tion in the ports and freight rail sector.

The Budget Review also says gov-ernment is looking at “strategic partnerships to allow SAA “to draw on private sector capital and tech-nical expertise to improve its per-formance and expand its network”. “The recent tremors felt by emerg-ing markets,” he said, “are a warn-ing that we need to take corrective steps urgently or we will be worse off. At the same time, we need to move forward to mobilise the re-sources and capacity of all our peo-ple, large and small enterprises, civil society organisations and pub-lic-private partnerships.”

This is without doubt a policy of creeping privatisation, a green light to capitalist hyenas to start prepar-ing to get their teeth into publically owned enterprises and run them to maximise profits, rather than oper-ate a public service. In conclusion I repeat what I said in my response: “The Budget speech today, like all other before, simply does not represent any new direction. It blatantly refuses to accept the deepening crisis of pov-erty, unemployment and inequali-ties or even the scale of corruption. It is the continuation of the old business as usual ignoring the plight of the black working class and the poor.” * Zwelinzima Vavi is the former Cosatu general secretary. ** This article first appeared on The Independent Media. MfS



10

Mail&Guardian http://mg.co.za/article/2016-02-25-the-poor-face-double-digit-inflation 26 FEB 2016 00:00 PATRICK BOND

COMMENT So much in what Finance Minister Pravin Gordhan announced to Par-liament in his budget speech on Wednesday was pleasing, such as the myriad developmental accom-plishments, and yet so much more is truly -horrifying. Apparently, achieving a balanced assessment is beyond most com-mentators trying to steady our feet on the SA Titanic, what with world financial markets roiling the rand. In spite of bending over backwards to meet financial markets’ de-mands for a lower budget deficit (he promised just 2.4% of gross domestic product by 2018, down from 3.8%), Gordhan was pum-melled by an immediate 3.2% cur-rency collapse in the minutes after he spoke. Frankly, most of us who pore over the budget speech are, in class terms, petit bourgeois or above. That’s revealed in the kinds of budget reviews that dominate me-dia such as the Mail & Guardian. When at theconversation.com a normally humane, democratic po-litical scientist like Ongama Mtim-ka blithely praises Gordhan be-cause “the increase in social grants

continues to provide a social secu-rity net to millions of South Afri-cans, keeping them out of extreme poverty,” he subliminally ignores the substantial after-inflation cuts to poor people’s grants. So does another Conversation con-tributor, Leon Schreiber, when he says: “The fact that government has avoided cuts to social assis-tance grants is a politically shrewd move.”

So Gordhan’s “real” – after-inflation – cuts to welfare grants of several percent hurt us (in the petit-bourgeoisie) the least, yes, but 16.5-million recipients from South Afri-ca’s lumpen-proletariat will strug-gle to find more holes in their frayed belts to tighten up, given that 63% of our compatriots – mostly women – already live below the poverty line. Mtimku endorses South Africa proudly taking our financial place within the Brics (Brazil, Russia, India, China, South Africa) bloc: “The R2 billion allocated to the New Development Bank (NDB) fo-

cused on investments in Africa should be welcomed." .” Reality check: what Tito Mboweni in 2013 termed the “very costly” NDB – for which taxpayers in each of the Brics countries will cough up $10-billion in capital – is run by hard-core neoliberals best known for privatisation and high-interest monetarism. The nonsensical “Africa rising” meme has come to a crashing end thanks to post-2011 commodity price implosions. The continent’s current account deficit is soaring since excess mul-tinational corporate profits are ex-patriated so quickly, not only through illicit financial flows (knocking South Africa for R330-billion a year since 2004) but also through licit outflows, because ex-change controls have been re-moved. And partly as a result, Africa’s for-eign debt has doubled since 2006 to $400-billion – just as South Afri-ca’s has doubled to $145-billion since Gordhan first took over the finance portfolio in 2009. That puts the continent back in the 1980s when fears of a developing coun-tries debt crisis drove finance min-isters into self-destructive fits of austerity and structural adjust-ment. And so, directly as a result, the chaps who really yank Gordhan’s chain are not those of us in the vain intelligentsia overflowing with ad-vice, praise or critique.


Lads, here’s a fact check: Gordhan provides just a 3.5% nominal increase to foster care providers (who play such a vital role, given our catastrophic Aids orphan rate) and a 6.1% rise for mothers who are child support grant recipients. These poor families face double-digit inflation this year thanks to food, electricity and transport hikes.


The poor face double-digit inflation


http://mg.co.za/author/patrick-bond

http://theconversation.com/

11

Let’s worry more about upper-class twits running Standard & Poor’s, Fitch and Moody’s interna-tional credit rating agencies, and financiers such as New York-based Goldman Sachs, which helped raid our currency on January 11, send-ing it to R17.99 to the dollar in a few minutes of flash-crash specula-tion, just after telling its traders that globally, the rand’s decline is the bank’s second most aggressive bet for 2016 (after the dollar’s rise). These men can obviously be charged with malicious economic self-interest to the extent that in coming months it is likely they will hit Gordhan with junk-minister status. To that end, they’re still sell-ing our currency short. But, more complicated than mere ill will, recall that back in 2009, when International Monetary Fund managing director Dominique Strauss-Kahn advocated deficit spending to save world capitalism from implosion, Moody’s actually upgraded Gordhan after his soar-ing 7.3% deficit-to-GDP rise that year by raising our credit rating from BBB+ to A-. With similar wild abandon, Moody’s clowns also rated Lehman Brothers as “investment grade” just days before it crashed.

But now we see the impact of their turn from the whimsical to the wicked. Partly to their credit, these agencies have put pressure on Gordhan to throw cold water on President Jacob Zuma’s $100-billion nuclear follies. And to Gordhan’s credit, he dodged that round of Russian roulette by kick-ing the bullet over to Energy Minis-ter Tina Joemat-Pettersson to do “preparatory work for investment in nuclear power.” But what else might be pleasing to a lefty like me, twice trained by Gordhan in Marxist revolutionary theory alongside Natal Indian Con-gress youth at Mahatma Gandhi’s Phoenix ashram 31 years ago? On the horrifying side, Gordhan announced a whopping R600-million increase in funds for the notorious public order policing unit – the unpunished Marikana hit men who joked about defective muti while planting weapons on their victims – instead of replacing it with skilled peace-broking units. But on the other hand, this remark was uplifting: “Spending on de-fence, public order and safety ser-vices will rise from R172-billion this year to R204-billion in 2018-2019.”

Pleasing? Yes, because without be-ing blatant about it, Gordhan just chopped out R8-billion of securo-crat funds compared with Nene’s medium-term budget allocation last October. But it was when Gordhan bragged of the state’s most active spending that leaders of my residential com-munity grew furious. After living on Durban’s Bluff for the past sev-en years, the highlight of budget day was reviewing the carnage with the South Durban Community Environmental Alliance in a long strategy session two hours after Gordhan finished speaking. In the basement of a Wentworth community hall that Gordhan him-self once frequented, as rusty fans blew Durban’s humid air back at us, two dozen hardened activists of all races, classes, genders and ages mulled over his generosity towards Transnet, and how that will -ultimately be etched on our wretched landscape. Gordhan would not be the first pol-itician accused of pandering to the KwaZulu-Natal construction mafia by turning a blind eye to repeated collusion and overpricing here.



12

The current outrage is Transnet’s racist rerouting of the often explod-ing pipeline that doubles petrol-pumping capacity to Johannesburg from the Engen and Shell/BP plants here at Africa’s largest refining complex, sandwiching the Indian suburb of Merebank, whose Settlers Primary School has an asthma rate that was not long ago measured at 52%, the world’s highest. Last month’s cost estimate on what Transnet originally priced at R6-billion is now R29-billion. When Mtimku celebrates that Gordhan’s “investment in infra-structure aimed at stimulating the economy is continuing, with over R870 billion planned,” he should first dissect how much of that vast sum goes to Zuma’s KwaZulu-Natal white elephant breeding project. In south Durban, we look at the Bal-tic Dry Index that measures ship-ping capacity: it’s now at its lowest in history (about 300 after a 2008 peak of 12 000). And fossil fuel prices have hit the floor, casting a dark spell over Gordhan’s bragging that “work has begun on a new gas terminal and oil and ship repair facilities at Dur-ban”. Ironically perhaps, this sentence

came just after Gordhan praised the Paris Cop21 summit’s (highly dubi-ous) commitment to fighting cli-mate change. He continued: “We need to acceler-ate infrastructure investment in the period ahead. So we must broaden the range and scope of our co-funding partnerships with private-sector investors. In taking this for-ward, we are able to draw on our experience in road funding conces-sions.” Oops, he hasn’t been briefed by Premier David Makhura about the impact of those concessions on the ANC’s Gauteng voter base. Worst of all, violating both climate and economic common sense, Gordhan bragged about Transnet’s financing of the lead presidential infrastructure co-ordinating com-mission project, with its planet-threatening goal of rail-to-ship transfer of 18-billion tonnes of coal. That Waterberg-Richards Bay line – also costing in the hundreds of bil-lions of rands – may have looked profitable in 2008 with coal at $170 a tonne, but now the price is $50 a tonne. Yet the project trundles on. Further south, describing frustrat-ing delays in getting Durban’s dig-out port up and running in 2012, Toyota boss Johan van Zyl (whose plant is adjacent to the old airport

site) complained: “If return on in-vestment is the line of thinking, we may never see the infrastructure.” Amid rumours of a two-year dig-out port delay, in December Durban Chamber of Commerce and Indus-try president Zeph Ndlovu insisted on adding this large white elephant to the herd: “We have to press ahead and if we are to unseat our competitors up north, we can’t win this battle if we pull back every now and then and look at account-ing principles.” Whether Gordhan goes ahead with reducing the state payroll by tens of thousands of public servants or continues his nudge-nudge-wink-wink towards corporations’ illicit financial flows, it’s in the coddling of accounting-challenged KwaZulu-Natal cronies and the crackdown on welfare grant recipients that Gordhan has most decisively inter-vened in South Africa’s world-leading class struggle. Pleasing to some, yes, and hopefully horrifying to most. Patrick Bond is director of the University of KwaZulu-Natal’s Centre for Civil Society and a pro-fessor of political economy at the University of the Witwatersrand.



13

http://www.groundup.org.za/article/budget-pensioners-and-grant-recipients-will-be-poorer/

Budget: Pensioners and children will be poorer Social grant increases are below inflation By Elroy Paulus 25 February 2016 ANALYSIS | SOUTH AFRICA Grant recipients will have less money to spend following the Minister of Finance's budget an-nouncement yesterday. Photo: Government website With more than one third of South Africa’s population dependent on social grants, Finance Minister Pravin Gordhan’s announcement that grants are not even going to keep pace with inflation is disap-pointing.

In his speech, the Minister described the context as a "combination of multiple demands and con-strained resources". He asked how the state should deal with such complexity and what should be prioritised. One of the key state instruments to reduce extreme inequality and poverty remains the significant rollout of social grants and the strengthening of social security reform initiatives. We commend his stated intention to extend the social safety net. State allocations by government to those who rely on social grants in our nation, especially at this time, are utterly crucial. We are disappointed that the increases made to these grants do not even keep pace with inflation. This was acknowledged by senior Treasury officials yesterday and we cannot endorse this decision. Whilst we appreciate that the 2016 Budget was a fine balancing act in difficult times, we think that this decision will again affect persons in the lower income categories disproportionately.

Social Grant Grant amount in rands 2016/17

Grant amount in rands 2015/16

% increase

(inflation is 6.2%)

Child Support Grant 350 330 6.1

Grant-in-Aid 350 330 6.1

Foster Child Grant 890 860 3.5

War Veteran's Grant 1,520 1,440 5.6

Care Dependency Grant

1,500

(1,510 from October) 1,420

5.6

(6.3 from October)

Disability Grant 1,500


5.6

(6.3 from October)

Older Person's Grant 1,500


5.6

(6.3 from October)



http://www.groundup.org.za/article/budget-pensioners-and-grant-recipients-will-be-poorer/

http://www.groundup.org.za/author/53/

http://www.groundup.org.za/category/Analysis/

http://www.groundup.org.za/region/south-africa

14

As the table in the previous page shows, for instance, the older person’s grant goes up on-ly 4.2% this year while inflation is running at 6.2% a year. Food inflation is even higher. This means recipients of the grant are actually getting poorer in terms of what they can buy with their money. The behaviour of some financial service providers that are re-sponsible for predatory practic-es against social grant beneficiar-ies in particular, needs to be challenged more urgently. These predatory institutions are wreaking great harm, especially on grant beneficiaries. We should reject with contempt the practices of these financial service companies – including some insurance, credit, and fu-neral companies. The judgement in the Flemix case against those seeking un-lawful emolument attachment orders against farmworkers, sadly revealed that even some in the legal fraternity (involved in debt collection agencies and loan companies), are guilty of these predatory practices. Now working class families in-creasingly have to assist their aged parents, our disabled sis-ters and brothers affected by these disputed or fraudulent social grant deductions. This is over and above those fearing extortion by loan sharks. They have to stretch their al-ready stretched own income.

Whilst this happens to one co-hort of South Africans, another cohort, the wealthy owners of businesses, enrich themselves on these deductions. This practice not only erodes the gains made by the State, but also contributes to so much so-cial tension and fuels inequality. We hope that the raft of legisla-tion and regulations addressing these immoral practices by some companies and individu-als will finally stop these deduc-tions and unacceptable practic-es from social grants. On the revenue generation side, we welcome the decision not to raise VAT, which is an easy way to increase revenue collections. An increase in VAT would have had a seriously adverse effect on the already strained con-sumption patterns of lower in-come earners and the working class.

Much more could have been done to cut public spending. Ap-pointed and elected officials paid from public money could lead by example when calling for austerity measures themselves. A lot of public respect would have been gained if Ministers and the highest earning public servants took even a small cut in their salaries, as has hap-pened in countries such as Bra-zil, Bolivia and Tanzania. Paulus is National Advocacy Manager and spokesperson for Black Sash.



15

The 2016/17 budget will hurt, but the real pain is still to come. The Minister of Finance has cleverly deferred the real pain to non-electoral years. As for now, the budget is a prisoner of the de-mands from the credit ratings agencies and the need to stop the further alienation of the ANC’s electoral base before the forthcom-ing local government elections. It is however doubtful that the measures announced by Finance Minister Gordhan will satisfy the credit ratings agencies and prevent a down grade to junk level. Should a down grading occur, it will throw out most of the calculations that this budget is based on. The Treasury promises that such an event will be met by “aggressive austerity measures” (Budget Re-view p.30), obviously believing that this is politically and socially possible. In the current climate of increased social tensions, this is delusional. But the government is trapped in the neo-liberal cage and the longer it stays the same, the worse it will get. The Fees Must Fall movement will be deeply disappointed with this budget. It fails to put free higher education on the radar, never mind suggesting a free education and insourcing plan. R16bn is reallocat-ed to post school education and training, but the allocation in real terms per student over the coming three years will fall! The budget perpetuates a develop-ment path that has failed and which has brought us to this crisis point. It contains no perspective of dealing with South Africa’s night-marish unemployment and ine-

quality levels. What is the govern-ment’s strategy to deal with the current wave of retrenchments affecting the heart land of the country’s industrial base (mining and mineral processing)? The budget has nothing to say. The in-decisiveness of the government is evident. The poor will get poorer as a result of this budget. While the social grants are increased by 6.1-6.4% (the foster care grant by a mere 3.4%), the cost of living will rise much more among the poorest households. Already in Statistics SA’s inflation report for January, the inflation that hits the poor is measured at 6.6% year on year. Food inflation alone is expected to rise to well above 10% this year, further eroding the grant increas-es. The insufficient increases of the social grants are especially appal-ling since there was a political space before the budget for in-creased taxation of high income earners. Surprisingly, the govern-ment did not use the space. Instead it balances a slight increase of personal taxation (through the effect of inflation on tax brackets) by increasing the tax credit for medical insurance. Given the gov-ernment’s commitment to a nation-al health insurance scheme, one must wonder why this tax credit is not instead gradually withdrawn. On the individual level, the net ef-fect of the adjustments in fact be-comes a tax cut across the board, even for income millionaires (p. 143 in the Budget Review)! The major tax increases hit consump-tion and are regressive. The in-

crease of the fuel levy by 30 cents per litre adds R6.8bn to the reve-nue, but this will hit the working class and the poor harder, as they spend a larger share of their in-come on transports, just as is the case with food inflation. In this budget the Treasury is fur-ther cutting the size of the public sector, by reducing the budget defi-cit more aggressively than was in-dicated in the Midterm Budget pol-icy statement. This is what the credit ratings agencies wanted and demanded. A smaller public sector will in-crease the social crisis for the ma-jority. Minister Gordhan has also strongly signalled that privatisa-tion is back on the government’s agenda. This will be pursued through the sale of “non-performing assets”, but it has greater significance in the form of private public partnerships in the delivery of mega infrastructure projects in transport, energy e t c. The renewable energy industry has already been handed over to big multinational corporations. Now the government intends to do the same with coal fire power stations and even nuclear. This will acceler-ate the increase in tariffs for basic services, such as electricity, transport and possibly water and sanitation. In the coming year, South Africa will require new alliances of stu-dents, workers and poor communi-ties to bury austerity, privatisation and the neo liberal trajectory that this government is wedded to un-der the tutelage of the creditors and predatory financiers.

Caught between the credit ratings agen-cies and the local government elections Alternative Information and Development Centre, AIDC on the 2016/17 Budget:



16

Minister Gordhan budget seeks to

build stronger foundations for our

future society and economy. Hu-

man capital is core to building a stronger foundation. At the most

basic level, greater public invest-

ment is needed so that house-

holds can access sufficient and

nutritious food.

The increase of R90 on an old-age

pension and R20 on a child sup-

port grant will not allow that. The

implications of not ensuring the

core foundational aspect of socie-ty is met by ensuring the house-

hold base is strong and able to

absorb increasingly unpredictable

and massive price fluctuations

undermines our social and eco-nomic outcomes.

Underspending on food will fur-

ther impact on the public health

sector; result in low work place

productivity; and underutilization of investments in education and

public health.

The social grant increases an-

nounced by the Minister will nei-ther stop people from falling into

poverty nor help them escape pov-

erty. The increases on social

grants would not absorb the high

levels of food price inflation pro-

jected at beyond 15% in 2016. The February 2016 PACSA food

price data shows:

baskets which low-income house-holds try and buy each month

has increased by +R231.14 (14%)

over the last 3 months from R1

648.10 in November 2015 to

R1879.24 in February 2016.

creased by +R82.20 (4.6%) in the

last month from R1 797.04 in January 2016 to R1 879.24 in

February 2016.

(3-9 years) a nutritional but basic

diet for a month; cost R546.80

per child in February 2016.

Month-on-month, the cost of feed-

ing a small child has in

creased by R18.55 (3.5%) from

R528.25 in January 2015 to

R546.80 in February 2016.

10kg pocket of potatoes is

R70.63; a loaf of brown bread is

R9.92; 2 cabbages cost R27.95; a 5kg bag of sugar beans is R86.49;

4 litres of cooking oil is R90.48;

and 2 litres of milk is R24.66.

Minister Gordhan has increased the state pension by R90 (6.3%)

from R1 420 to R1510 (R10 is

staggered till October); and the

child support grant by R20 (6.1%)

from R330 to R350. These in-

creases do not take into account the projected CPI peak of 7.8% by

the end of 2016.

The CSG’s rand value of R350 is

not enough to meet the nutrition-al requirements of a small child in

February 2016: R350 vs R546.80.

This is an underspend of 36% on

the plates of children. The R20

increase on the grant has almost

already been eroded since the month-on-month increased by

R18.55 between January 2016

and February 2016.

The state pension supports entire families. The total pension, with

the R90 increase – if every cent

was used on food - is not enough

to afford a basket of food for

households in February 2016: R1

510 vs. R1 879.24. Between Jan-uary 2016 and February 2016,

the food basket increased by

R82.20, already eroding the first

tranche of R80.

The increase in the fuel levy by 30

cents as well as the possible elec-

tricity increases will also contrib-

ute to rising food inflation and

will make public transport more

expensive – these directly impact on low-income households.

In the light of rising food pric-es, projected to increase beyond

15% in 2016, with STATS SA pro-jecting an 11% increase towards the end of the year, and the severe household indebt-edness and financial stress at household level; we expected that the Minister would have taken bold steps to relieve some of these pressures on low-income house-holds, who make up the majority of households in South Africa.

Low-income households are the majority of households in South Africa. South Africa’s low labour absorption rates, low baseline wages earned by the majority of workers, and low social grant lev-els do not allow households to support themselves whilst ensur-ing a buffer to absorb price fluctua-tions. Annual increases in wages and grants are not keeping up with high levels of inflation (well beyond headline CPI) on goods and services for low-income house-holds. This situation, over the last several years has become more severe. Households, unable to absorb

shocks by spending more money have been viciously cutting back on expenditures and taking on higher levels of and more expen-sive unsecured credit. This strate-gy is now being found wanting, with deprivations acting to under-mine health, education and productivity. These 3 aspects are the foundational elements of an economy – with its core in house-

holds having access to affordable, good quality nutritious and suffi-cient food and municipal and pub-lic services.

PACSA media contact:

MERVYN ABRAHAMS

Tel +27 33 342 0052 | Fax +27

33 342 0303

m e r v y n a @ p a c s a . o r g . z a |

w w w . p a c s a . o r g . z a |

www.facebook.com/PACSAPMB

PACSA MEDIA STATEMENT

A strong society and economy is built on its people: social grant allocations inadequate



17

By Patrick Craven, member of the Movement for Socialism

“IT’S WAR” declared the Sunday Times of 28 February 2016, just two of the thousands of works flooding the media in the extraordinary aftermath to Pravin Gordhan’s Budget speech four days earlier.

Yet the more words that appeared the harder it became to make any sense of the story. The attempt to personalise the issue led to its reduction to almost a Goodies v Baddies narrative. On the one side was Minister of Finance Gordhan: the brave, honest, clean, effi-cient defender of constitutional democ-racy, financial integrity and the free market economy. On the other Presi-dent Zuma: the corrupt, deceitful, in-competent, devious defender of crony capitalism and underminer of the con-stitution.

None of the commentators and analysts could make the obvious point: that such a dramatic political fall-out, must point to something much deeper than a spat between senior politicians, but a dispute rooted in the broader quadru-ple economic crisis of mass unemploy-ment, poverty, inequality and, especial-ly, corruption.

In an article on 1 March 2016 in News24 by Max du Preez - The SARS dossier that could spell trouble for Zuma and friends – came closer to explaining that the Zuma v Gordhan is really about corruption, based on “a dossier in the safe at SARS headquarters con-taining dynamite allegations of corrup-tion, fraud, front companies and for-eign bank accounts against prominent benefactors of President Jacob Zuma”.

The allegations implicate not only Zu-ma but private business people: “Among the Zuma friends investigated by the SARS controversial investiga-tions unit were super-wealthy busi-nessmen Thoshan Panday of KwaZulu-Natal and Jen Chih "Robert" Huang, a

Taiwanese citizen operating in South Africa… a close business associate of Khulubuse Zuma, the president’s nephew, and a key middleman be-tween South African and Chinese busi-ness interests.”

“A PriceWaterhouseCoopers forensics investigation alleged that Panday had paid vast amounts of money to senior police officers and manipulated tenders the police then awarded to his compa-nies. Charges of corruption and bribery against him and Colonel Navin Madhoe were controversially dropped in 2013.”

Du Preez’s allegations are echoed in an article by Marianne Thamm in the Dai-ly Maverick, also on 1 March 2016, which refers to an “intelligence dossi-er” [the same one as Du Preez refers to?] complied by a discredited former SARS employee, Michael Peega, who was a special investigator with the NRG until he was caught rhino poach-ing while on leave in 2008.”

“There is a cast of hundreds,” she writes, “who have been drawn into the tawdry mess in their haste to defend and protect various powerful politi-cians and ‘businessmen’ who have flown and still fly close to the seat of power.”

Another example of big business’s role in corruption are the alleged activities of British American Tobacco (BAT) ex-posed by Barry Bateman on EWN on 15 February 2016 and Marianne Thamm in

the Daily Maverick on 24 February.

Bateman reveals evidence from a whis-tle-blower that BAT has been “involved in large-scale industrial espionage and the corruption of government officials” and that “the company allegedly hired a network of spies across the country and paid off law enforcement officials to disrupt competitors’ business opera-tions.”

Thamm writes: “There have been countless in-depth investigations of the tobacco industry in South Africa and elsewhere in Africa. Many… have re-vealed how the Hawks, the State Secu-rity Agency, and SARS had all been drawn into and compromised to some extent by this industry… This month several US politicians wrote to US De-partment of Justice demanding that BAT… be investigated following claims that it engaged in widespread bribery ‘of politicians and policymakers’ in Africa.”

She then makes a significant link be-tween BAT and the current story: “It was a war that spilled over onto the pages of the Sunday Times which pub-lished a series of stories about an ap-parent ‘rogue unit’ in SARS that led ultimately to the dismissal of several key SARS officials, including [Ivan] Pillay and Van Loggerenberg.”

Corruption and capitalism



http://mg.co.za/article/2014-03-20-big-tobacco-in-bed-with-sa-law-enforcement-agencies

http://mg.co.za/article/2014-03-20-big-tobacco-in-bed-with-sa-law-enforcement-agencies

https://www.stopcorporateabuse.org/sites/default/files/resources/doj_batletter_2.3.2016.pdf

18

The allegations about the dossier, the counter-allegations about a ‘rogue unit’ in SARS and the charges against BAT, Panday and Huang bring us back to the heart of the current story, and powerful-ly strengthen the view that behind the exchanges of insults we have a deep-rooted structural problem, and not just personal spats.

But they also demolish the media’s at-tempt to portray Gordhan as the knight in shining armour, fighting to save us from corruption – because, if these alle-gations are true, he was in a better posi-tion than anyone - first as head of SARS, and then as Minister of Finance - to ex-pose what was going on.

He has claimed that the ‘rogue unit’ was quite legitimate, but has not revealed whom it was investigating, what they discovered and what action is being tak-en against those involved in any tax eva-sion. Nor has he commented publically on the alleged ‘dossier’.

Even if he is personally clean and inno-cent, if he is turning a blind eye to cor-ruption, tax evasion and fraud by others he shares in their guilt. The central prob-lem is that Gordhan has become the most ardent champion of the neoliberal capi-talist system, as we see in successive budget speeches. Exposing the rot at the core of that very system would strike at its heart. Is that why he prefers to remain silent?

He is not alone. Most capitalists and their commentators hide behind the false argument that corruption is a problem confined to the ANC, government, state-owned enterprises and their leaders and officials, and overlook the fact that every time a contract is awarded on the basis of a bribe, the company which wins the contract is every bit as guilty as the pub-lic servant who accepts the bribe or col-ludes in the fraud.

An example was an article by former Business Day editor, Songezi Zibi,

(Unembargoed, 22 February 2016). “The Minister of Finance,” he wrote, “must deal with the elephant in the room that even supposedly powerful politicians have only begun to talk about. This is the reality of trying to grow an economy in what is effectively a gangster state. I call it such because it is captured by criminal

el-

ements who do not care for Gordhan’s growth narrative”.

He tells two shocking stories:

1. “Last year a former CEO of a state-owned enterprise (SOE) told me he had quit after receiving death threats so seri-ous that they were delivered to his office. These came after he had turned down the forceful advances of powerful busi-ness people who have been in the news lately.

“They wanted him, among others, to award them contracts for raw material supplies worth billions. When he ex-plained that he did not get involved with deciding contracts, they wouldn’t have it. They wanted him to break the rules. He still refused… A senior manager, no-tably junior to the executive, waved the document in the technocrat’s face and said, ‘This time they must f***ing sign this, or else’!”

2. “About two years ago, people who had been promised patronage posts by a politician, but didn’t get them when she was appointed, brazenly confronted a highly regarded administrator at an Eastern Cape metro. A columnist in the Herald newspaper received telephonic threats when he wrote about the poi-soned environment. Needless to say, the official also didn’t last. She was paid to leave after her life was made very diffi-cult.”

“These are issues,” he writes, “that speak to the African National Congress’s de-cay… Until the party deals with its own inability to run itself effectively, elect leaders with depth and rid itself of the

gangsters who make up a significant part of its body politic, there is little hope for growth.”

But why, despite the fact that it is clear that the guilty parties in both stories were from the world of business, does Zibi then put the blame for all this criminality solely on the ANC? The culprits may have been ANC members, though Zibi never confirms or even alleges this, and if so they must be held to account. But Zibi is silent on the role of capi-tal in the ‘gangster state’, still quieter on the endemic corruption and criminality of the whole capitalist system.

The allegations by Bateman, Thamm and Du Preez also reinforce the argument against the #ZumaMustFall and #GuptasMustFall cam-paigns for trying to place the blame for our crisis on individuals, families or companies, rather than the whole inherently corrupt sys-tem of capitalism.

It is obvious why the Guptas have evoked such anger – using their economic muscle to buy political influence, win contracts and make themselves even richer at the expense of their workers and local communities, with no democratic mandate from anyone.

But singling them out implies that they are uniquely bad, and that crime, corruption and tax evasion are problems confined to this or that capitalist family of company, rather than ingrained, structural corruption, in which all capitalists strive by whatever means possible to influence elected governments, mould public opinion and manipulate contracts. Others may be more subtle and secretive - but no less effective.

So we must not only call for the Guptas to fall but the entire capitalist system. Only then shall we put an end to the growing misery that workers and the poor face every day from the criminal system that exploits and robs them.



19

Mphumzi Maqungo

If you were sitting on the edge of your seat completely stunned in 2008 when Barack Obama, a barely known senator from Illinois, compet-ed against and beat Hillary Clinton in the Democratic Party’s presiden-tial candidacy contest, 2016 is turn-ing out to be even more of an incred-ible battle for the world-famous for-mer first lady of America.

In the American electoral system, primaries are state-level contests, which determine political parties’ presidential candidates in the run up to the country’s general election.

They take place in all American states and territories between Febru-ary and June of an election year.

America goes to the polls in Novem-ber 2016 and this time Clinton is up against another relatively unknown senator who many believed she would walk over in the primaries. But Bernie Sanders, a Democratic Party senator from Vermont and self-proclaimed “democratic socialist”, is giving Clinton a run for her mon-ey.

Early primaries are considered very important because they set the tone for later primaries and party caucus-es, influencing their outcomes strongly.

With Sanders’ strong showing in the earliest primaries, in Iowa and New Hampshire, the Clinton camp looks visibly rattled.

Sanders lost by a hair’s breadth in Iowa with 49.6% of the vote against Clinton’s 49.9% on 1 February. Tech-nically it was a tie, but the Demo-cratic Party gave the vote to Clinton.

In some Iowan precincts, the winner actually had to be decided by a coin toss. Nevertheless, Sanders com-pletely crushed Clinton in the sec-ond primary on 9 February, with 60% of the vote in New Hampshire. Clinton came in with a less than im-pressive 38,4%.

In Nevada, it was another close run – with 52.6% for Clinton against 47.3% for Sanders.

What’s this? Americans voting for a socialist, and not just any American - Iowans. Iowa is Middle America. It’s not known for revolutionary fervour or left-wing politics.

The Iowa result has surprised many. Upon further scrutiny analysts found that young voters were almost undivided in their support for Sand-ers. A significant 85% of voters be-tween the ages of 17-29 voted for Sanders, compared to the 14% that voted for Clinton.

The significance of this vote is that a new generation has seen the writing on the wall. This generation sees that capitalism is a ‘winner takes all’ sys-tem. This generation knows that they will be worse off than their parents no matter how hard they work.

It is unprecedented in American pol-itics that a presidential hopeful could describe himself as a socialist and even fathom winning support from an electorate whose views of social-ism have been tainted by a ruling group of dyed-in-the-wool ideo-logues driving a capitalist agenda. With their shameful history of McCarthyism, so tarnished was the American view of socialism that the “S-word” became unspeakable, let alone being brandished by a politi-cian running for president.

But now young Americans whose rite of passage has been shaped by the financial crisis, growing inequali-ty and student debt, have found res-onance in Sanders’ “anti-billionaire class” campaign message.

A Socialist Shakes up American Politics

The Movement for Socialism International


20

His economic proposals include rais-ing the minimum wage and shifting income from the rich to the middle and working classes.

At least one independent economist featured by CNN has crunched the numbers and found that Sanders’ economic programme will increase both jobs and incomes.

Young Americans are spurred fur-ther by Sanders’ social programmes. He plans to make college education free at public institutions and prom-ises a strong universal healthcare programme as well as increased fam-ily leave. Raising taxes on the rich will finance all this.

What’s not to vote for? In a world where just 62 people own as much wealth as the bottom half of the en-tire planet’s population, as Oxfam revealed last month, Sanders’ attack on the billionaire class couldn’t be better timed.

His ascendance shows a shift in pub-lic opinion, notably amongst young-er Americans who have given up on centrists in the Democratic

Party. It’s what some analysts are referring to as the demise of the “extreme centre”, a phrase made fa-mous by left-wing British activist Tariq Ali in his book of the same ti-tle. The extreme centre is bipartisan and can be found in many western democracies.

It synchronises on the privatisation of public services, dutifully appeases ratings agencies, pursues technocrat-ic solutions, supports a more milita-rised state and rejects increasing the minimum wage.

Clinton, with political backing from the financial elite of Wall Street and Obama, who bailed out the banks early in his presidency as well as surprised many with his expanded war in the Middle East and murder-ous drones, are prime examples of centrist candidates that the youth demographic now reject whilst they pursue more radical options and leaders.

In fact, an Atlantic Magazine report quotes research from the City Uni-versity of New York that investigat-ed inhabitants of Zucotti Park at the

height of the anti-billionaire banker “Occupy Movement” and found a “striking” occurrence. A significant 40% of occupiers were organisers in Obama’s 2008 campaign.

Disappointed by Obama’s bail out of the banks, they decided to take mat-ters into their own hands and sought to challenge the banks directly through “Occupy!”.

According to the Atlantic report, while Occupy fizzled out, what it achieved was to introduce a debate about inequality into the mainstream of American public discourse. Its former activists are now the biggest group leading support for Sanders.

Young Americans are voting for a different America, a more socialist America. While Sanders may be more of a social democrat than a so-cialist in the traditional sense of the word, his campaign within the Dem-ocratic Party and leftward tilt of the base of the party gives hope to so-cialists and other leftists all over the world.

Just as the youth of Europe have en-ergised the left-wing politics of Spain and Greece, so too are the youth of America igniting the left in America. They fight austerity and question capitalism. Today’s youth are tomor-row’s leaders. This is more than a chink in capitalism’s armour. This is the beginning of its demise.

Mphumzi Maqungo, National Treas-urer of the National Union of Metal-workers of South Africa .



10: the poor face double-digit inflation · move our productive economy away from reliance on the...

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