FreeThinker

[Sizwe SikaMusi @SizweLo]

Dr Pali Lehohla says South Africa’s economy should be 3x what it is, but the government is too stupid, corrupt and greedy.

Dr Lehohla’s assessment resonate with many people because because it presents a straightforward diagnosis that if you simply root out corruption and adopt better ideas, the potential of the economy will be unlocked.

By saying that it’s just stupidity, corruption and lack of “imagination”, Dr Lehohla appears to disregard how South Africa’s economy is structured.

For starters, South Africa’s policy strategy, particularly since 1996 and especially in 2000 with the introduction of inflation-targeting, has relied heavily on attracting foreign portfolio flows to cover its chronic current account deficit.

This is what has largely kept South Africa as Africa’s leading economy. The steady flow of hundreds of billions of dollars helps South Africa cover its foreign currency shortages which it desperately needs to trade in international markets.

Now, to keep these financial inflows coming, National Treasury and the South African Reserve Bank must prioritise high real interest rates and financial market stability to reassure foreign bondholders that SA is a safe space for their dollars, pounds and euros.

Although these high interest rates attract foreign bond buyers, they also make borrowing expensive for local businesses, which stifles job creation, hence SA’s high unemployment rate.
To National Treasury and the Reserve Bank, these are just the costs of doing business.

The point is that contrary to popular belief, the Treasury isn’t acting out of ignorance or lack of vision. They are aware that if they were to deviate too sharply to pursue aggressive growth policies, they would risk a currency collapse, soaring inflation and other quite serious economic problems they would rather not deal with.

Someone may argue that adopting these policies all those years ago in the first place *is* the stupidity Dr Lehohla is lamenting. This may very well be the case, but still, there were reasons beyond just a lack of imagination.

For one, when the original GNU took office in 1994, it inherited an economy that had been isolated by sanctions, burdened by high public debt and severely capital-starved. The South African Reserve Bank had virtually no foreign exchange reserves to defend the currency or finance international trade.

The SARB had no reserves because its senior officials had pilfered and looted the money when it started looking apparent that the White minority government would collapse.

Because of this, South Africa had gone from an economy designed to comfortably serve 10% of the population, to one that had to service tens of millions more overnight. But the internal savings were far too low to finance the massive infrastructure and industrial development needed for this.

To grow the economy and meet these new social goals, South Africa needed to import capital equipment and consumer goods. However, the country needed to importing far more than it was exporting which created a persistent current account deficit and without domestic savings to bridge the gap, the government had to desperately attract foreign capital. That’s how the foreign investors came swooping in.

But there was also something that happened in the early 1990s that spooked the ANC and convinced leadership at National Treasury and the Reserve Bank that the country was hyper-vulnerable to foreign currency shortages.

In early 1996, South Africa experienced a sudden capital outflow when rumours and market uncertainty caused foreign investors to pull short-term capital out of the country. As a result, the Rand depreciated by over 20% in a few months and because official foreign exchange reserves were so low, the Reserve Bank was powerless to defend the currency.

So, to prevent currency collapses that would spark runaway inflation and destroy purchasing power, the government concluded it had to prioritise foreign investor confidence above everything else.

So, in response to the 1996 crisis, the ANC shifted away from the state-led Redistribution and Development Programme and introduced GEAR which committed the country to the public budget and removing foreign exchange controls to reassure foreign investors that they could move their money in and out freely.

In short, South Africa adopted the current way of doing things as a deliberate strategy to solve the fundamental dilemma of how to finance a growing, open economy with insufficient domestic savings and low foreign exchange reserves.

Now, to be fair to Dr Lehohla, he could be saying they were stupid and spineless for caving to foreign pressure when they could have stood their ground and doubled down on state-led industrial development. In which case, I tend to agree.

I would go a bit further and say what Treasury is doing may have been a necessity in 1996, but was already unnecessary by 2006, let alone in 2026.

South Africa now has $75 to 80 billion in gross reserves vs. almost zero in 1996. So, the original scarcity rationale is diminished. Yet Treasury has continuously been running an austerity programme, even during commodity booms like in the 2000s when it could have built fiscal buffers and invested in infrastructure.

So Dr Lehohla’s lack of imagination accusation appears to land when you ask *why* the ANC government never adapted its strategy throughout the decades as conditions changed.

The answer to this question is disheartening. The reality is that if the government, through Treasury, were to attempt to change its economic trajectory, what happened in 1996 would repeat.
Vested interests would pull capital, short the rand, spread negative news and systematically suffocate the economy until the government falls back in line.

Still, Dr Lehohla is correct that the ANC has been stupid for a while. In the last twenty years they could have built countervailing power like through a sovereign wealth fund, a regional payment system outside dollar dominance, strategic reserves of essentials or diversified trading partners to reduce USD dependency.

Instead, they accepted dependence on short-term foreign dollars, which is why they now have to keep going back to the IMF and World Bank to borrow more of those dollars.

Similarly, the National Treasury has internalised the market’s preferences so completely that they now believe austerity is good policy instead of coercion. As Antonio Gramsci warned, the dominant ideology has now become common sense.

[Redpill Drifter @RedpillDrifter]

30 years ago, Dr. Robert Willner accused Dr. Fauci and others of genocide for their roll in the HIV crisis

But nobody listened...

[Peché Africa 🇿🇦 @pmcafrica]

Wth 😨

[The Sigma Mindset @thesigmamindset]

This exercise will reveal what you really want ‼️‼️

[Mastery Mindset @_masterymindset]

"What's something you'll get a lot of hate for if you say it out loud ?"

[Jack Straw @JackStr42679640]

The most dangerous 77 seconds ever recorded by a psychiatrist just broke containment again.

Thomas Szasz, the man the entire profession tried to erase, looked straight into the camera and said:

“We do not have an epidemic of mental illness.
We have an epidemic of psychiatry.”

Too fat → illness
Too thin → illness
Too happy, too sad, too much sex, too little sex → all illnesses

No free will, no responsibility left — only “chemical imbalances” fixed by products you can advertise on TV while alcohol cannot.

This forgotten 1:17 clip is now exploding across every timeline for a reason.

Jacob

[The Sigma Mindset @thesigmamindset]

He literally explains the cheat code to success ‼️

[Sowetan @Sowetan1981]

WATCH | Thandeka Jwara, who has a master’s degree in chemical engineering and an MBA, quit her established career and now at age 35 is following her passion of being a doctor. She is a first-year medical student at Stellenbosch University.

An expert from University of Pretoria says many adults are increasingly seeking careers that better align with their personal values, passions and long-term aspirations.

[Manly Mentor @manly_mentor]

This is the reason why people are lonely ‼️‼️

[Lord Bebo @MyLordBebo]

🇺🇸🇺🇦🇷🇺 So Russia was right about the bio labs!?

“The US Has Relocated Ukrainian Bio-Labs to Africa and Are Planning to Release Avian Flu a bioweapon To Start Another Pandemic, and Blame It On Putin.

The U.S. bioweapon operations was relocated due to Russia’s liberation of the labs in Ukraine.

Biden-owned Metabiota and other intermediary NGOs are running cover for the U.S. State Department and DoD, posing as humanitarian organizations to conceal their true objective of pathogen production for Big Pharma.“

[Bridgett Fertig @LightOnLiberty]

Bill Gates testified before the House Oversight Committee today on the nature of his relationship with Jeffrey Epstein.

Remember what she said last time?

"Well he's DEAD, so, in general you have to be careful!" as he proceeds to stutter.

This demon is responsible for so much evil and horrors on this planet! 😡

[Men of Purpose @Men_Of_Purpose]

She literally explained how to be less reactive.‼️

[JOKAMRREDPILLZ @JOKAQARMY1]

Bill Gates planned pandemic simulation with Epstein.

[Prophet of Masculinity 👑 @athletescoachjb]

OPTIONS - REAL TALK 💯💯 ⚠️ ⚠️⚠️Do Not Be Fooled🚫🙅🏻‍♂️🚫KNOW YOUR WORTH & REMEMBER WHO YOU ARE KING👑🏅👑 #selflove❤️ #ResurrectingKings #ProphetOfMasculinity #DivineMasculinity MasculineLeadership

[Men of Purpose @Men_Of_Purpose]

This Man actually explained your to do list to say goodbye to Anxiety–forever‼️

[SABC News @SABCNews]

WATCH | A surprise multi-agency raid in Pretoria West has placed a company under scrutiny after more than 40 undocumented migrant workers were discovered at a warehouse during a compliance operation.

[JOKAMRREDPILLZ @JOKAQARMY1]

NASA admitted that the Earth is Flat.

[Judaeda Blanco @Judaeda3]

True, my Ambassador 🙏🏻🙏🏻

[NORTH WEST TIMES @NorthWesTimes]

WATCH 🎥

Credo Mutwa's prophecy about South Africa.

-Recorded in 1993