April 2011 - Centre for Civil Society - University of KwaZulu-Natal

their funding flows and even their primary share listings to overseas stock
markets mainly in 2000-01. The outflow of profits and dividends due these
firms is one of two crucial reasons SA’s current account deficit has soared
to amongst the highest in the world and is hence a major danger in the
event of currency instability.
To pay for the outflow, Manuel’s and Pravin Gordhan’s Treasury increased
SA’s foreign indebtedness from the $25 billion inherited at the end of
apartheid to a dangerous $100 billion today. First National Bank warned
that we’re nearing levels PW Botha encountered when he gave the Rubicon
Speech in 1985, followed by a foreign debt default.
The other cause of the current account deficit is the negative trade
balance during most of the recent period, which can be blamed upon a
vast inflow of imports after trade liberalisation, which export growth could
not keep up with.
A genuine industrial policy would forthrightly address all these
macroeconomic constraints, and lift them via exchange controls and
surgical protection of those industries that can reliably commit to
affordably meeting basic needs, providing decent (and labor-intensive)
employment opportunities, and linking backwards and forwards to local
suppliers and buyers without reliance upon whimsical international
economic relations.
To this end, consider a critical insight that Davies and other IPAP authors
missed: the era we have now entered is much closer to the stagnationist
1930s, in which austerity will prevail, than the go-go early 2000s. The
winding down of vast debt overhangs and the long-term recessionary
environment in the West, not to mention worsening East and South Asian
competition, make SA’s international standing nearly as vulnerable today
as two years ago, when The Economist rated us the most risky emerging
market.
There is, however, a precedent worth discussing: the 1930s era of
selective ‘deglobalisation’, during which SA’s growth per capita was the
highest in its modern history. At that time, ‘import-substitution
industrialisation’ occurred here (as well as Latin America) along its most
balanced trajectory, with much of our manufacturing industry established
during the 1930s, as well as national assets such as Eskom and Iscor. The
years of high growth were not reserved for whites, and indeed the rate of
increase of black wages to white wages occurred at their fastest ever
during this period.
Insights into global markets provided by the recent crash and the challenge
of a post-carbon economy should give rise to a rethink, but this will only
happen when the macroeconomic-austerity advocates, financiers and MEC
lose power to those interested in a more balanced society.
http://links.org.au/node/2271
counterpunch.org/bond04182011.html
IMF’s Rhetoric Still Far from Its Policies
Mark Weisbrot 19 April 2011
As the International Monetary Fund (IMF) and World Bank gathered in
Washington for their annual Spring Meetings, there was more talk about