“The new year poses very specific and important economic threats that will have extremely important implications for the future of the country, of which the following will be the most important and crucial in 2021,” says Fanie Brink, an independent agricultural economist.
The ANC government will continue in 2021 with its destructive ideology of socialism which is imposed by the doctrines of communism on the economy and the country that are fully supported by its social partners with its latest useless "economic recovery plan" that cannot create economic growth, more jobs and less poverty. Its social partners include Business Unity South Africa (BUSA), Business Leadership SA (BLSA) and Business for South Africa (B4SA), as well as the organised agriculture (Agri SA) and organised agribusiness (Agbiz).
The ANC government already has since 1994 had, in addition to its initial accepted ideology of the National Democratic Revolution (NDR) based on the Freedom Charter of the ANC , the following seven "economic growth, reconstruction and development plans" which were all based on pure socialism and communism that could not create any economic growth and development:
The plans include the "Reconstruction and Development Program (RDP) 1994; Growth, Employment and Redistribution (GEAR) 1996; Accelerated and Shared Growth Initiative - South Africa (ASGISA) 2005; New Growth Path (NGP) 2010; National Development Plan (NDP) 2012; Economic transformation, inclusive growth and competitiveness: A contribution towards a growth agenda for the South African economy 2019; and the latest Economic Reconstruction and Recovery Plan (ERRP) 2020. There is also no chance that this latest plan of the government will create any economic growth and development.
“The biggest threats which will continue this year that will have very negative consequences for the economy and the country over the next 3 to 4 years are very weak or even no economic growth, bigger budget deficits, government debt and bankruptcy, more corruption and the social mismanagement of tax revenues.
The continued collapse of the economy will be accompanied by the realisation of a failed state with much greater poverty, unemployment, theft, corruption as well as severe famine and human suffering. Also, a significant weakening in the value of the Rand which will make imports much more expensive.
The same destructive ideology, financial and economic illiteracy and incompetence of the government and its accomplices as in the past will be further destructive.”
The country will then, like most other countries in Africa, lose its status as a developing country and degenerate into an underdeveloped country with the final collapse of most economic industries on the supply side, as well as private consumption expenditure, capital formation and exports on the demand side of the economy.
Brink says that the government's delusion about "inclusive economic growth" will remain nothing more than an insignificant slogan because socialism and communism cannot create economic growth which has clearly proven by the history worldwide.
This will place the basic factors of production in the economy such as:
- land, through the expropriation without compensation and the establishment of black subsistence farmers which will become totally dependent on the government for their financial survival, instead of more black commercial farmers;
- capital, which will not realise returns on foreign investments and loans, investment prescriptions to pension funds, as well as the impending nationalisation of the country's gold and foreign exchange reserves;
- labour, through higher unemployment and labour legislation; and
- management, through black economic empowerment, preferential employment without merit and corruption, with which the entrepreneurs must create economic growth and development under increasingly pressure and still further threatening.
The government's further destructive interference in the economy will intensify, making it increasingly difficult for the private sector to make greater contributions to economic growth.
I agree with several economic commentators who have repeatedly pointed out that the “government remains determined to interfere more and more in the economy rather to allow the private sector, literally the only part of the economy that knows what it is doing, to find effective ways to earn profits on their investments to create economic growth, pay taxes and create jobs. Unfortunately, the government still thinks it knows how to do it.” (Peter Bruce, former editor of the Business Day and Financial Mail).
“Or to assume that this almost broken state can design and bring about large, state-driven infrastructure projects that involve complex negotiations and arrangements with the private sector are credible. They are also very clear that the government with its new “Economic Reconstruction and Recovery Plan” does not realise that the only real capacity for economic growth in South Africa today lies overwhelmingly in the private sector. In entrepreneurs, businesses, large corporate enterprises and markets that have inventive and determined entrepreneurs who, in the midst of uncertainty and adversity, see opportunity and start and build new businesses.” (Ann Bernstein, founder and executive director of the Centre for Development and Enterprise).
South Africa has also never had a Covid-19-led recession, but it is still used by the government as a screen behind which it hides from the economic destruction it has inflicted on the economy that has collapsed into a recession long before the outbreak of the pandemic.
History has clearly shown that the inherent economic illiteracy and its permanent unsatisfactory urge for political power of virtually all political parties in the world were the main causes of the destruction of the economies of many countries. Not one opposing political party in South Africa will survive that does not have an alternative economic policy to the destructive policy of the ANC which can create economic growth.
The only way that will save the country from a fiscal abyss is much higher economic growth that can be created from the supply and demand side of the economy, as proven by Statistics SA every quarter, which is driven by the profit motive. Nothing else can increase the government's revenue to pay its debts! The probability of a debt default within the next 3 to 4 years is extremely good because the government has no plan that can be implemented over this period that will make a difference.
“The economy will simply not survive the ANC government's destructive ideology much longer!”
The International Monetary Fund (IMF) and the World Bank will in fact cause the country and its descendants to be sold out if they were to grant any more loans to the government. The further downgrading of the country even deeper into junk status has already become irrelevant and will also help no one as long as the credit rating agents do not understand at all that the destruction of the economy is purely the result of the government's ideology of socialism and communism. While their own country, the USA, has been the bastion of capitalism for decades which is the only economic system that can create economic growth worldwide today! Their advice to the government how to solve its fiscal problems is in any case common knowledge and useless.
While the ANC and the most political and economic commentators who fully support its policies believe the whole world is wrong!
The Reserve Bank will continue to boredom with its nonsensical statements about monetary policy that its interest policy can control the inflation rate, protect the exchange rate and stimulate economic growth for which no evidence exists and is in fact the biggest single delusion in the total economic science because all these economic variables are only determined by the operation of the market forces of supply and demand.
China, which adopted capitalism several years ago grew economically by more than 10% a year through its dramatic industrial development, even had to cool its economy down by banning further infrastructure development. And China will, according to most international commentators, become the largest economic power in the world within the next few years.
The ANC government totally rejected South Africa's capitalist economic system after 1994 and embraced the destructive ideology of socialism and communism! A capitalist economic system which has three extremely important characteristics firstly, that recognise and protect the ownership of land and other personal assets, secondly, that can create economic growth from the supply and demand side of the economy, which is driven by the profit motive and, thirdly, that allows prices to perform its important function in the economy to always bring the supply and demand in the economy back to a market equilibrium.
The ANC government has undoubtedly created a much more destructive political and economic dispensation than the previous one, which is irreversible. The big problems of the previous dispensation cannot be fixed with other big problems.
The final countdown to the total destruction of the economy and the country has already begun and history will still prove that 2020 was a much better year than 2021!
This is all also the reason why Trevor Noah said during one of his performances "that if the whole world has decided the right direction is straight forward, then South Africa usually makes a U-turn backwards!"
