MEL MELZER: Neglect of second industrial revolution’s inventions means regression

The second industrial revolution, a period of innovation and advancement in technology, brought about transformative changes in the way people lived, worked and communicated. It was a time of remarkable progress, with inventions such as the telephone, the motor car and the aeroplane revolutionising the way we interact and travel.

The advent of electricity, in particular, transformed people’s lives, powering modern conveniences and innovations unimaginable just a century ago. Railroads became a big industry, stimulating other heavy industries such as iron and steel production. These advances in travel and transport helped drive settlement in the western regions of North America and were integral to the nation’s industrialisation.

Today, 130 years later, electricity is still transforming people’s lives, bringing colourless, smokeless, weightless energy into the home. Enormous as that difference is, in labour terms the change is even more dramatic, and the improvement even more recent.

How much artificial light do you think we earn with an hour of work at the average wage? Today it costs you less than half a second of your working time if you are on the average wage: half a second of work for an hour of light. To get that much light from a sesame oil lamp in Babylon in 1750 BCE would have cost you more than 50 hours of work. We are far better off now!

The benefits of electricity go far beyond lighting. It powers refrigeration, washing machines, computers and countless other modern conveniences that make our lives easier and more comfortable. It also enables innovations in fields such as medicine, transportation and communication that would have been unimaginable a century ago.

The second industrial revolution ended, and the modern world began on May 29 1919 when photographs of a solar eclipse, taken on the island of Principe off West Africa and at Sobral in Brazil, underwrote a new theory of the universe. The observations confirmed Einstein’s predictions of relativity and catapulted him to international fame, ushering in an era of physics and cosmology.

The theory of relativity had far-reaching implications for our understanding of the universe, from the behaviour of subatomic particles to the structure and evolution of galaxies, and to nuclear fusion — meaning clean and cheaper energy.

However, despite these advancements not everyone in the world has access to electricity. In SA progress has even gone backwards, with access to this essential resource no longer reliable. This lack of access not only limits quality of life but also hinders economic and social development.

SA’s 21, 000km rail network used to be a matter of national pride, accounting for about 80% of Africa’s total network. However, decades of poor management, underinvestment and theft have transformed this once great national asset into a national crisis, chopping 2% off annual GDP and another 4% in missed opportunities, according to Stellenbosch University logistics professor Jan Havenga.

About 87% of freight in the country is now moved by road, when much of this — particularly commodities and palletised goods — should by shipped by rail. Speaking at a recent Aria media presentation, Havenga estimated that 28% of domestic mining produce, 20% of manufactured goods and 28% of palletised goods travelling on roads could and should be moved to rail.

Aria chair James Holley outlined the deteriorating performance of Transnet: in 2018 it moved 226-million tonnes, falling to 173-million tonnes in 2022. This is likely to fall to between 155-million tonnes and 160-million tonnes for the financial year to March 2023, representing a 29% decline in five years.

In the past 20 years, while India’s freight volumes increased 370%, SA’s actually declined. In 2022 the coal line hit its lowest volumes since 1993, and iron ore exports are at their lowest since 2010.

The railways and energy that were once an engine of growth in SA have become dysfunctional, and now impede growth. This neglect has a knock-on effect on the investment universe in SA, causing investors such as Platinum Portfolios to increase their margin of safety when buying SA companies.

It is crucial that SA takes steps to address the neglect of these inventions and ensure that all its citizens have access to essential resources such as electricity. Doing so will not only improve their quality of life but also contribute to the country’s economic and social development and make the economy attractive to investors.

• Melzer is co-founder of fund management company Platinum Portfolios.