TEMBA NOLUTSHUNGU: An idiot’s guide to wrecking the economy

It is common cause that the economy is in dire straits: year-on-year growth has fallen to 1.6%. The unemployment rate, including those who have given up looking for work, is officially acknowledged to be 42.6%. Some economists argue forcefully that the actual figure, shorn of technicalities, could be even higher: perhaps 60% of the population of working age. There are certainly more unemployed people in SA than there are those with jobs. 

From this we have learnt that there are a number of ways to deliberately wreck an economy. For a start, the incumbent administration must prioritise the interests of its own political party over those of the country. This means  putting its own cadres first. No meritocratic appointments are to be entertained, as that would interfere with the wrecking ball agenda.

Attempt to nationalise whatever you can whenever you can, especially mining, banking, agricultural land and the steel industry (and keep the already nationalised energy sector in state hands as long as you can). The direct consequence will be growing shortages of goods and services with a concomitant rise in prices. Policies such as this are guaranteed to lead to economic implosion eventually, though it can spark popular uprising, as in Eastern Europe in the late 1980s that led the collapse of the Soviet Union.   

You should definitely nationalise the central bank or reinforce government’s regulatory grip on it. Government can be encouraged by the fact that the late Hugo Chavez pursued a policy of nationalisation that primarily targeted the Venezuelan oil industry. The government of his successor, Nicolas Maduro, doggedly continuing this policy, took over Banesco, Venezuela’s biggest bank. The cumulative effect was that in 2018 that country achieved an inflation rate of 65,374%. 

Nationalising key industries caused runaway inflation in Zimbabwe too: in 2008 hyperinflation made the annual rate at which prices were rising almost impossible to measure; at one stage they were almost doubling from one day to the next. The socioeconomic ills this precipitated are obvious to anyone who gives the situation that prevails in that sad country even a cursory glance.

Enact economically irrational, ill-conceived and disastrous confiscatory laws such as bills on expropriation and National Health Insurance, and watch as capital and human flight wreak havoc in the economy. Never mind the overall socioeconomic effects; forget the glaring failures of public hospitals. Forget about the tragedies of Life Esidimeni and so many others that illustrate the folly of the state trying to control everything. That is what you want if you as government are bent on destroying the economy. 

Government should stick to its ideological agenda and disregard any empirical evidence that contradicts it. Insight such as that provided by the Economic Freedom of the World survey, the Index of Economic Freedom and the Property Rights Index can be easily dismissed as a capitalist conspiracy or right-wing propaganda.  

Let the government introduce punitive “progressive” taxation, even if the number of wealthy people and profitable companies steadily declines as a result. Penalise the accumulation of capital in private hands. If capitalists decide to relocate to more business-friendly markets and middle-class families emigrate in droves, do not be deterred. They can be denigrated as greedy and selfish and told the country can do without them. After all, this result is consistent with your agenda of destroying the economy.

Strengthen regulation

Governing officials should not concern themselves with the direct consequences of this state of affairs, such as worsening the prevailing unemployment cataclysm. Envy and covetousness as populist rhetoric will help retain popular support. A useful tip would be to consistently regurgitate the hypocritical mantra of “caring for the poorest of the poor” even if it is obvious that your policies act against interests of the poor. You can count on many people being naively moved by the claimed good intentions behind policy, rather than focusing on the actual effects, intended or unintended.    

Strengthen and amplify regulation of the labour market. Enact new regulations at every opportunity to add to those that already exist. Raise the minimum wage and make it even harder to fire people. Pass a racially preferential employment equity law and enforce it rigidly. Employers have far too much latitude to choose who and how many they wish to employ and must simply find other ways to maintain productivity and profitability. If that means increasing mechanisation and replacing employees with robots and AI software, never mind!  You can always blame growing unemployment on the greed of capital.  

Another sure-fire way to wreck an economy is to enact policies that are hostile to private enterprise, small and large, formal and informal. Such policies will bring about the flight of capital, which is to be welcomed because capitalists are the enemy. Should this ultimately lead to social unrest and even famine and pestilence, you can apologise and leave, blaming apartheid, colonialism, imperialism, your predecessors or the political opposition.

There is no shortage of scapegoats, so you can ride off into the sunset in Dubai with saddlebags full of money and the guaranteed comprehensive benefits of office for life.  

• Nolutshungu is a director of the Free Market Foundation. He writes in his personal capacity.