A Greek morality tale of great importance to us

05 July 2015 - 02:00 By Peter Bruce

I have been reading the Sunday Times for almost 53 years. Landing on the leader page is a little like being invited into one of those hideously expensive homes hanging onto the cliff above Clifton in Cape Town. You wonder what they look like inside. What the owners might be like. What you're looking at now is easily the most exclusive real estate in South African journalism. Joel Mervis wrote here, so did Ken Owen and Mondli Makhanya.It reminds me of the time, 35 years ago, when the late Robin Reeves, then the Financial Times correspondent in Cardiff, was invited by mistake to a cocktail party for the City of London elite being thrown by Charles Garrett Ponsonby Moore, the 11th Earl of Drogheda and the MD of the newspaper, in the boardroom two floors above us in the newsroom. Reeves appeared, sheepish and dishevelled as ever, on the day and at 5pm went upstairs. As he told it, it was immediately clear there had been an error. After an hour of standing out of everyone's way he found a moment to approach the host.story_article_left1"It's a very nice party, Lord Drogheda," he said to the imposing figure towering above him."Yes it is Reeves," replied the MD, not bothering to hide his disdain, "and you're very lucky to be here."That's enough gratitude. We're in such a tricky situation in South Africa there are never enough voices making the case for caution and common sense. And there's a morality tale of great importance to us being told, today in fact, in Greece.We're not Greece. We owe hardly any money to foreign banks or institutions. We enjoy sovereignty over the way our government spends its money and over how our Reserve Bank regulates the supply and cost of our currency. Greece has neither, by virtue of being a member of the EU and of the eurozone.It has also come to owe the International Monetary Fund and the European Central Bank north of €300-billion (about R4-trillion!). The IMF and ECB took over that debt from European banks that had lent with gay abandon to the Greeks and which, when the global financial crisis struck in 2008, were suddenly faced with a Greek default. Rather than create a European banking crisis, the IMF and ECB saved the banks, but, clearly, not Greece.Today's referendum on whether to accept IMF and ECB conditions for further financial help is not a situation we ever want to be in. Greek banks are closed. When and if they open again, there is about €500-million in the system. It wouldn't last an hour. State salaries may have to be paid in handwritten IOUs. They will eventually become the new currency. The hardship is unimaginable.story_article_right2But while we may not have the same crisis profile as the Greeks, we have a crisis nonetheless. Almost 60% of the national budget pays public sector wages and welfare. Unemployment levels are breathtaking. Government policy to remedy this has almost no effect, yet it keeps trying the same thing over and over. Mostly, economic policy is run by members of the SACP. Some are more pragmatic than others but, ultimately, communist doctrine is to economics what a ballerina might be to underwater welding. Useless.Sadly, the SACP owns President Jacob Zuma and we will just have to wait for him to go. The Reserve Bank, the National Treasury and South African Revenue Service are strong and sensible and should stop him getting us into Greek-level trouble. SARS commissioner Tom Moyane has set a record tax collection target this year of R1.1-trillion.The easiest way to do that, though, has not yet occurred to the president. It is to make sure private businesses are able to make as much money as possible in the shortest time. The tax on those profits, and on the people those growing companies employ, is what is going to pay for schools, hospitals and welfare.Moyane should be chasing R2-trillion a year. It's not going to happen. The state, run by people who have only ever been politicians, simply doesn't understand how a business creates wealth. They think it is just there. That's the advice Zuma gets. The result? Business is gatvol of the rules and costs it is being wrapped up in. It is in maintenance mode, and we are going nowhere fast.Bruce is editor-in-chief of Business Day and the Financial Mail..

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