SA Economy Quick Fix

[Philip Copeman]

These are my suggestions. None of these will be popular with the incumbents.

1) Race.

Cut the nonsense discussion on race. It makes whites unpatriotic and it creates an unrealistic expectation in blacks. The problem is not race, it is Small vs Big business. Because of history that comes down to (small-black) vs (big -white). but viewing in terms of the  race issue distracts. The big industries will fight with everything to hold their privilege. We have to focus pressure on them and keep it up. They use the race to confuse the issue. Big black business is as bad, if not worse, than big white business (See ravages of the PIC and SOEs)

2) VAT

Lift the rate and the threshold. A VAT at say 25% for over R 5 Million Turnover, would open massive margin for SMEs. It encourages value add instantly. This way we tax consumption rather than taxing income. Vat on ALL products. Rather subsidise the poor in grants than allow few to control distribution. This will also fix the current account.

3) Retail

Restrict corporate retail This is the one they will really hate. Make it a law that the owner must be present in a retail outlet. (like a doctor or pharmacist)  Japan does this.

4) Glass-Steagal for Banks

Banks may ONLY borrow and lend. They may not participate in business ownership. Currently bansk end up competing with start ups using depositors money. This will quickly break monopolies. Will take back control monetary policy

5) Free telecoms

Stop using Telecomms as a tax. Free telecoms is the fastest way to accumulate SME capital. By free, I mean free as in libre not gratis.

6) Tariffs

100% tariff on imports and remittances

This is a long argument in development economics and takes a detailed discussion. Without the analysis it can look crazy. The idea is to stimulate local value add, with all the sector multipliers that come with it. See Eric Reinert - How rich countries got rich and why poor countries stay poor.

Take the 100% tariff and subsidize exporters 100%. This will enable us to build a few focused global industries.

7) Universal income grant

It creates a base demand and flattens inequality. See Post Capitalism by Paul Mason

8) Cut the deficit immediately

Each rand we go further into debt is a rand we have to dig ourselves out of later. Under the current regime we are simply transferring assets to a narrow band and leaving the broad population to pick up the tab later.

9) Investment is debt

Leave the obsession with FDI.  Terms have turned against developing markets. Cost of Capital is prohibitive and restricts us in the long run. We need broad local ownership or nothing. There are no examples in the 21st century of countries benefiting from external investment, the terms are always in favor of the creditors. Foreign tech expansions are not investments!

10) Force the adoption of Open Source

Proprietary software is a one way trail of revenue from us to them. Open source builds the local knowledge economy.

[Philip Copeman]

Maimane said, adding that decisive action needs to be taken. He listed seven actions that needed to be taken to get the situation back under control:

1. Scrap reckless economic policies like the proposed nationalisation of the Reserve Bank and the undermining of property rights through expropriation without compensation.
2. Announce the privatisation, or part privatisation of SAA, and split Eskom into separate power production and distribution businesses.
3. End Eskom’s monopoly and allow cities to purchase directly from independent power producers, increasing competition and lowering costs.
4. Introduce a fiscal austerity package to contain current spending and stabilise national debt at 50% of GDP. Commit to funding any further revenue shortfalls by cutting wasteful expenditure, not through new taxes.
5. Cut the size of the cabinet to around 15 ministries – from 35.
6. Exempt small businesses employing fewer than 250 employees from complying with restrictive labour legislation, other than the basic conditions of employment.
7. Immediately pay all outstanding invoices owed to small businesses from National and Provincial Governments, amounting to a fiscal stimulus for small businesses of R20.7 billion and R7.1 billion respectively.