Here in deepest Illovo I have been rather distanced from the violence and turmoil that is accompanying the strike by civil servants. Governor Mboweni seems to be similarly immune to the problems. When asked if his 50 bp hike in interest rates had taken into account the possible outcome of the strike, his answer was “No.” It was a good question and a surprising answer. The strike will end when a compromise emerges that will allow both sides to claim victory and save face. However that solution will definitely increase the government wage bill and this usually proves to be inflationary. And that make the governor’s hand reach for the lever.
I am certain that most of us are very sympathetic to the need to raise substantially the pay levels of many of the categories of worker currently trying to draw our attention to their plight. However, there are also many workers who deserve no increase at all and indeed even their jobs should not exist.
The problem for them and us is that the state has imposed itself as broker and regulator for sizable chunks of the nation’s critical, vital and skilled services. Legislators materialise in multiple layers of administration that make token and futile attempts to ensure that the services are delivered evenly and fairly and that the taxpayer gets value for money. The main success of this morass, however, is to soak up as much of the value as possible as it flows from taxpayer to front line worker. It is well known that per capita this nation spends record amounts on education and health and yet we have little to show for it. I suggest that we should fire 85% of the civil “servants” whose day is not spent in direct contact with the customers and reward the remainder of the staff with 100% pay rises.
Some of the money we save from this exercise can be spent on trying to get some real truths about what the 2010 Soccer World Cup really will cost and what benefits it will deliver. Today’s press carries warning stories that we will not have enough food or fuel in the country to cater for the 330 000 expected sports tourists. Note firstly the distressing news that the unfolding calamity in our northern neighbour could see many times that number of refugees cross the Limpopo in the next few months. Is no one wondering about who will feed and transport these sad folk? As for 2010, I can guarantee that as long as the government doesn’t try to organise it, no one will go with out what they can pay for. My one concern is that the official beer sponsor does not, to my knowledge, actually brew anything deserving of the name. But probably someone will run a speakeasy for those of us deluded enough to need a Castle or two to keep our spirits up while watching the starving visitors walking to the stadium.
I have spent a good deal of this week in direct contact with my customers bombarding them with items in which my conviction that the market is looking terribly toppy has reached a squeaky crescendo. The story that an offer of a new share that will be listed next week was around 50 times oversubscribed does not dispel my fears that we are at a frothy peak. Don’t think that today’s weakness which has taken the all share index to just 4% off the all-time peak is “the correction”. The real bear market will be ten times more than that.
But even that will not be as torrid as the events that will be taking place between the front rows in the scrums at Ellis Park tomorrow.
James Greener
8th June 2007
