Vindication for the racists

It’s not funny. It’s actually pretty scary. But all the white racists who voted “no” in the 1992 referendum, which asked white voters whether they’d be OK with “power sharing” with the ANC, are vindicated. Turns out there’s not enough power to share.

All the doomsayers who predicted infrastructure decay and economic collapse, all those who fled South Africa to make a home in Australia or elsewhere, now appear to have been right. They may have been right for the wrong reasons, and may have expressed it in distasteful terms, but right they were.

“There is no power crisis,” said President Thabo Mbeki in May 2006. Yeah right, dear leader. Amandla aWethu (“Power to the people!”), right? Sorry, Mr President, but a belated apology 18 months later doesn’t keep the lights on. (It’s worth noting that, judging by the Google results, this is just about the only significant apology Mbeki has ever offered for anything.)

Eskom, which is going to bear the brunt of the public’s dissatisfaction with the regular — often daily — power outages that will be our lot for at least the next five years, is telling the government not to advertise South Africa as a destination for foreign investment:

Bongani Nqwababa, Eskom’s finance director, said yesterday that the parastatal had advised the government that it wanted South Africa marketed only from 2013 for both local and foreign projects. It was inappropriate to advertise South Africa as an investment destination with low-cost electricity. “You don’t sell what you don’t have.”

He warned that the Rio Tinto Alcan aluminium smelter in the Coega industrial development zone could be delayed. “Eskom needs to review supply to Coega.” Other projects, such as BHP Billiton’s plans to expand, were on the back burner.

When Eskom and Alcan had signed a 25-year power-supply agreement in November 2006, both made commitments that, if reneged on, would incur penalties. Nqwababa said: “There must be penalties [but] I am sure they are cheaper than building a power station.”

Pranill Ramchander, an Anglo American spokesperson, said Eskom’s comments about stalling new developments were still under discussion. There was no agreement. Obviously, if it became government policy, it would affect projects Anglo had planned.

One wonders if Fifa has been informed. After all, it wants to run a Football World Cup here in 2010. Maybe they can play the matches in daylight and use old-fashioned tear-off tickets.

Eskom is still talking up the supposed “independent power producers”, those endangered private-sector creatures that were supposed to start building or buying power stations nearly a decade ago, but declined the government’s proposal that they invest billions in power stations whose output would be priced by the buyer, rather than the seller.

The same happened with the disaster that is telecommunications. Having turned the state incumbent into a semi-private monopoly that raped South Africa for almost a decade, the government puzzled over why South Africa’s fixed-line density was declining and telecoms prices were rising, when exactly the opposite was happening everywhere else in the world. So they cobbled together a duopolist, Neotel, and planned a government-run cable that would sell cheap bandwidth to this new competitor only. This idiocy is officially going ahead.

Yet these moves go to the root of the problem. The doomsayers weren’t right because blacks can’t run a country. Alec Erwin, the Minister of Public Enterprises (who famously said “sabotage is everywhere” before saying “human instrumentality” would be a better term) is white as the driven snow. The doomsayers were right because a motley collection of communists, unionists, socialists and Keynesian statists can’t run a country.

I noted the genesis of the power problems in a post last year. It’s time the government turns away from the notion that key “enterprises” should be run by the state “for the benefit of the people”. The people, whether poor or rich, are not benefiting.

I can’t remember a time when more people were adamant they’re leaving. The debate isn’t about whether, but when. Here’s Wayne, one of the politics students who blog over at Commentary.co.za, making his case for leaving. I can hear the trite responses now: “Let them leave!”, “Traitors!”, “Racists!”, “Good riddance!”. But when everyone who can afford to leave has left, what will happen to South Africa? Where will the economic growth, the jobs, the prosperity come from? These are exactly the sort of people this country can ill afford to lose.

The repercussions of these power cuts will be dramatic. We can forget about achieving those much-vaunted growth targets. We’ll be lucky to stay in positive territory, let alone achieve the double-digit growth that we really need to deal with 25% unemployment and high levels of poverty. And lo and behold, writes one local paper: “SA’s 2014 poverty plan in the dark”:

Fanie Joubert, an economist at Efficient Group, said a three-hour power outage cost the economy about R2-billion in lost production each day, or 22% of daily output. “If sustained, the shortages may cut nominal GDP [gross domestic product] growth by 2,2 percentage points a year,” he said.

Expect inflation too. Lots of it. All these costs will eventually end up at the consumer’s door — the very same consumer that has been playing second fiddle to investors and jobs whenever the government socialists sit down to formulate industrial and economic policy. Think you’re battling to make do buying your half-loaf and milk today? Wait until retailers have been forced to send the contents of their fridges to the rubbish tip a few times. You’ll be paying twice as much.

Expect civil disturbance and crime. I’ll bet crime syndicates are carefully perusing Eskom’s load-shedding schedules, cursing the parastatal for not sticking to the appointed times. Add to that opportunity for looting, and an occasional panic when a packed disco or sport stadium is dumped into darkness, and we’ll have a right social mess on our hands.

Expect fuel shortages and service disruption. How the cellular networks, banks and hospitals keep going is simple: massive generators. But they run out of fuel now and again. We’re already running pretty hard on fuel supply, and shortages are not unheard of. Expect more of them. And expect interruptions on many services you took for granted until now.

Expect traffic chaos. Oh, wait, it’s already here. One column in the Times proposes putting the ineffective crime-fighters that comprise the metro police on duty at traffic lights, before noting yet another calamity that escaped my notice: having to reset digital clocks all the time.

How bad is the crisis, really? I think it’s critical. I reckon we can’t afford any growth in energy demand for the next five years, and even then, if the projects that have been started succeed, without too much government corruption, the ramp-up in supply will be slow. But in reality, it seems we have no idea. Even the Public Protector has felt the need to launch an investigation, and opposition parties are demanding answers from the government.

Yesterday, I spent a fortune buying up the last gas lights at a mega-warehouse-style hardware store. I couldn’t get the proper full-scale ones, so I had to make do with dinky imported Italian camping lights. A roaring trade in generators was going on out front. Of course, the liquid petroleum gas industry is just as vulnerable to the government’s regulatory heavy-handedness and economic incompetence.

The only people crowing (other than battery, gas, generator and flashlight makers) are the environmentalists, who see a golden opportunity to flog a raft of green energy solutions. Some will work. Most will be expensive, inefficient or both. Ironically, all will be welcome in a country that can’t even manage to burn its oversupply of cheap, dirty coal.

This crisis should be a lesson in economics. It should force a re-evaluation of the wisdom of state-led growth and government-run services and infrastructure. It should discredit the “developmental state” nonsense that the communists and socialists in government have been using to justify state-capitalism, cronyism and central-planning utopianism. It should debunk the claim that we’re somehow different and elementary economics does not apply to South Africa. It should prompt the government to cast off the burdens of restrictive licensing and price regulation. It should lead to the recognition that encouraging economic activity doesn’t mean subsidising and protecting and legislating, but getting out of the way, with alacrity.

But I fear the lesson won’t be heeded. On the contrary, the citizens of South Africa, instead of uniting and taking the matter in their own hands by kicking out the fools and scoundrels in the government, will become more polarised. And I fear the deepest cut, the most painful, the most dangerous, will be that the thousands of white racists, here and abroad, can now justifiably say: “We told you so.”

There’s your legacy, comrade Thabo Mbeki. Now the last person to leave South Africa won’t have to switch off the lights any more.

(First published on my own blog.)