Tue Oct 25 14:01:17 SAST 2016

The Big Read: Capitalist crusader leaps into the ring

Tony Leon | 21 January, 2016 00:29
Tony Leon. File photo

Who benefited from Jacob Zuma's extraordinary, still unexplained, decision to go through three finance ministers in five days in mid-December?

Apart from the market mavens and/or financial gamblers who shorted the rand, we received at least one answer on the upside in past days.

Pioneering black entrepreneur Herman Mashaba told an interviewer that Zuma's decision to fire respected finance minister Nhlanhla Nene made him "really angry". So angry that Mashaba phoned the DA and told the party: "Guys, I'm available to stand for mayor of Johannesburg."

The party affirmed his candidacy on Saturday. Perhaps now we can have a full-throated conversation, absent the wearying race signals and thought blockers, about real economic liberation.

I first met Mashaba back in 1984 when I was an articled clerk in a Johannesburg law firm and he was a client. In the teeth of every obstacle the apartheid state placed in the path of black economic - and most other - activity he was determined to succeed. Other than his indomitable will and business savvy and the smart lawyering of one of my colleagues, he had no assets or advantages. And he succeeded despite, not because, of the system.

Now Mashaba wants to give something back. What makes the looming Johannesburg contest so interesting is the uncertainty of the result and also the way the conversation will be framed.

Mashaba, in two respects only, brings to mind surging US Republican candidate Donald Trump. L ike the New York property tycoon, Mashaba has enough independent wealth to be able to call out the corruption of the political system they have entered as outsiders.

The second Trump-Mashaba similarity is their full-throated endorsement of capitalism as the best means of personal and community upliftment. Indeed, Mashaba scores a double hit on the political incorrectness scale with the title of his book: Capitalist Crusader.

He doesn't believe in BEE, race quotas and the full paraphernalia of current government policies for economic transformation. Mashaba practises the old-fashioned method of "pull yourself up by your own bootstraps".

Mashaba's anger at Zuma's firing of Nene was echoed in his denunciation of the president's economic understanding, or lack of it. When Zuma tried to defend his move by claiming the market had over-exaggerated its meaning, Mashaba savaged him.

"Does he understand what markets are? Zuma thinks the markets are weird people in dark rooms with computers."

Actually while I have no quibble with, and much support for, Mashaba's view on this, two sorts of defence can be offered for Zuma's myopia.

He is hardly alone on the left in his views. Zuma might see himself as a victim, as he moaned on the weekend about people who disparage his lack of education.

But even impeccably economically well-educated politicians elsewhere get blinded by the light of their own ideology.

When Harold Wilson's Labour government held power in the Swinging Sixties in Britain, its cabinet consisted of hugely gifted economic thinkers.

Most were either academics or trade unionists by background and deeply distrusted the market and its forces.

So when the pound crashed in 1968, instead of manning up and taking the blame for it, Wilson and his colleagues complained about "the gnomes of Zurich". This was a not-so-coded attack on Swiss banks and bankers who were fingered as operating in conditions of high secrecy to wallop the pound.

The second defence or item of attack on what Trevor Manuel once called the "amorphous markets" is the morality tale contained in the marvellous new movie The Big Short.

Quite aside from brilliant acting and a script that seems to be entirely fanciful but is exactly true on the origins of the 2007-2008 global financial crisis, this movie is a must-see if you want to understand how the markets are often outrageously rigged.

In essence, the sub-prime housing crisis, which triggered the last world economic crisis, saw the big banks betting on both sides of the table. At the one end, they parcelled often worthless housing loans into AAA-collateralised debt obligations and sold them to investors. And the same banks were betting against their own product by selling and buying credit default swaps that bet on the same products and markets' collapse.

Mashaba does not believe in this form of casino capitalism and there's a huge difference between good market forces and corrupt economic practice.

And maybe in Johannesburg, still the financial heart of our clogged and sick economy, the local government election will provide the commencement of a cure.


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