Major world
equity markets have bears everywhere. Losses of 10 to 15% are commonplace and
inevitably the talk of buying opportunity is starting to be heard. Remember
however that at the bottom of the 2008 bear market the non-mining shares on the
JSE were on PE ratios lower than 10. Today they are just under 20!
Yet again an
ANC cadre stumbled at the hurdle where he ought to have told the nation that
the gravy train was not only to be discontinued but also that the rolling stock
will be sold for scrap and that any shortfall still outstanding thereafter will
be billed to every one of the passengers who have been aboard in the last
decade. Finance Minister Tito Mboweni (Yes, a previous Governor of the Reserve
Bank) did make a tentative reference to a need to do something about the
expenditure side of the equation instead of just squeezing ever harder on the
income side, but then he totally ruined the mood by doling out more bail-out
cash to the likes of SAA and other hopelessly insolvent and atrociously managed
State-Owned Enterprises. Unsurprisingly the government’s debt spirals ever
higher. It is frustrating to note that simple economics can still suggest the stringent
remedies that are probably capable of fixing this mess. However, history shows
that politicians ahead of an election have a blind spot in this area.
Deep in the
hallowed halls of the Wits University campus one can presumably find a door, behind which lurks Professor Loren Landau who
occupies a Research Chair on mobility and the politics of diversity, migration,
urban transformation and inclusion. Aside from fretting about the amount of
paint consumed in the signage necessary to guide humble students to find this
learned sage, one does wonder if this research is helping to make SA great (to
borrow a phrase). Do the graduates of such departments actually find gainful employment
working for and with the nation’s policy makers? And if so, is their advice
working? And if not, shouldn’t they be doing something else?
The economic freedom
of a nation is an actual thing which can be formally measured. SA is now ranked
110 out of 162 in the world. The official ranking depends on scores in 5 areas:
size of government (big is bad), legal structure and security of property
rights (Expropriation without Compensation is very very bad), access to sound
money (the rand is one of the world’s weaker currencies), freedom to trade
internationally (possibly OK) and regulation of credit, labour and business
(far too much regulation, especially the last two). In this country there is a political
party named the Economic Freedom Front (EFF) that seems to have deliberate policies
that aim to weaken our score ranking in each of those five areas. But perhaps it’s
a different economic freedom they are after?
One could
almost feel sorry for the SABC. It is required to broadcast (TV and radio)
coverage of 22 different sporting codes or else face a half million-rand
penalty per missed sport. Apparently SABC lose massive amounts of money trying
to meet these regulations and want them changed. That seems fair. But for many sports, selling the broadcast
rights is a major source of income. And for some of those, meeting the salary bill
demanded by the overpriced “stars” can’t rely on ticket sales alone. Hence the ever-rising
cost of broadcast rights. In the mind of this free marketeer there is no doubt
that public money has no place in funding sport which is primarily an activity
freely entered into by individuals who must either do something else to make a
living or find a sponsor. It awful when hugely talented stars of minority
sports cant afford to attend competitions in the next town let alone the
Olympics. And there is undoubtedly value to the country when a team or person excels
on the broader stage. So, a sensible official response should be for individual
and commercial sponsors to be allowed meaningful and effective tax rebates
equal at least to what the socialists believe should be the state’s support for
sports (and cultural activities). Or even better, equal to what the sponsor
believes is their benefit from such largesse. The multiplier effect of private
sector efficiency will far outweigh the cost of individual government
ministries to allocate state funds.
James Greener
Friday 26th
October 2018
