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South Africa: Alec Has a Dream
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Business Day (Johannesburg)
EDITORIAL
16 May 2008
Posted to the web 16 May 2008
Johannesburg
IF IT wasn't so misguided there'd be something almost touching about Public Enterprises Minister Alec Erwin's vision for a vastly expanded state-owned industrial empire. It will, he says, thrive on massive infrastructure spending by the state in the next two decades.
In government, Erwin is the architect of the developmental state. More than any other minister, he persuaded President Thabo Mbeki to abandon privatisation. It is he who stands up to the treasury to fight for funds for SAA or Denel or, indeed, Eskom.
It's been Erwin's dream that has kept Coega ticking over. Backed always by Mbeki, his big idea is that if the state puts in place big industrial projects then private enterprise will inevitably sprout up around them, supplying services and goods.
It's not an unrecognisable model. The Afrikaner nationalists did it and they copied it from the German Nazis, who got the original notion from Karl Marx. For many years , Erwin was a member of the South African Communist Party. He doesn't believe the market can develop a developing country.
He is right and wrong. The state clearly has a role to play in the development of our infrastructure. That's why it collects taxes from us. It has a duty to maintain (in which it is chronically delinquent) and grow the economic infrastructure.
But Erwin has not learnt from his mistakes. Neither has the African National Congress he represents. It also commits the regular error of trying to give people what it thinks they need, rather than asking them what they want and giving them that. Erwin does the same thing on an industrial scale and if his new "vision" is any guide, that scale is about to grow exponentially. Coega is a case. It languishes, dusty and still largely empty, because it is an industrial imposition on an area that can't support it. Eskom, whose generating monopoly Er-win rescued, has just proven to the nation that he made a poor call.
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Part of the problem is that Erwin looks to developmental success stories to make his case and they tend to be the Asian tigers. But they had something to start with that we don't have even now -- great education systems and virtually unlimited supplies of skills. But who will run his new industrial kingdom? Even now, with just a limited number of companies, the state struggles to find solid leadership for them.
Erwin, as always, has an answer. First, he has argued louder than any other minister that affirmative action cannot continue indefinitely. And on Wednesday in Parliament he began to argue for state enterprises to be more liberally regulated insofar as their finances were concerned. In other words, his state enterprises would not always have to seek out black managers and they would not have to go cap in hand to the treasury when they ran out of money. They would be as dynamic as private sector companies!
We wish the minister well but it is frightening that this new vision could become the legacy the Mbeki administration leaves to a Zuma government. The thinking would certainly suit it. But a hugely ambitious developmental economic model without the skills to run it and in the hands of a left of centre government is just about the worst thing we can imagine for this economy. With any luck, Erwin will run out of time in office.
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