The reaction to the budget from the financial media and analysts has largely been positive, with opposition political parties, DA especially, unions and civil society being critical of the increase in VAT.
But economist Dawie Roodt called the budget “terrible” and decried that many analysts were supportive of and positive about it. He wondered why the “whitewash” and why they were not “honest”. He asks why the financial community got it so wrong. Well, they've always been enthralled by finance ministers from Manuel, who initially, had little understanding of finance, to Gorhan; Gigaba not so much (if it wasn't for Gigaba's Zupta connection, he'd have been feted too).
The second reason is many financial journalists and wannabees don't really understand economics. If they did they would've castigated Gordhan when under him debt went from about 32% of GDP to 52%. But yet Gordhan, according to them, was "hero at the bridge". Roodt, being diplomatic, contradicts himself - he says they're "good", but if they are they wouldn't have gotten it wrong or unafraid to provide a correct analysis.
Economists, most of whom work for financial institutions, are reluctant to be critical of the ANC government. Their employers don't like it - remember Chris Hart and the personal attack on him; he was forced to resign. Another well-known economist was kicked out and his career was destroyed when he criticised ANC government fiscal policy. These companies, members of the cowardly business council that hid rather than criticised the Zuma administration's corruption, still want to rock the boat and endanger BEE and business deals; they'd rather have the status quo.
Atonal, numbers orientated fence-sitting assessments like this one by Muneer Hassan are like chief executives recommending jobs cuts to save their companies’ bottom line without acknowledging the impact it will have on workers or that it was management incompetence that made it necessary in the first place. This is exactly South Africa’s situation.
The public and especially poor and unemployed - the middle-class and employed will absorb the increases as they always do - after suffering for a decade are again paying for the Zuma administration’s profligacy, waste, incompetence and corruption. It’s not merely a 1% VAT increase - R1 for every R100 - but the compounded and long-lasting effect on all spending.
Hassan’s comparing SA to other counties where VAT is higher is irrelevant - the socio-economic milieus are different and often vastly different. It supports my argument he’s unsympathetic to and out of touch of SA’s exigent circumstances, if not disingenuous. Unless he dramatically misread the budget. Sub-Sahara’s and OECD’s GDP growth is higher than SA’s miserable 0.6% with no improvement in the near future, and their unemployment levels lower. Arguably, consumers there can easily absorb their VAT rates.
Also, he glosses over the fact expenditure cuts are to capital, ie infrastructure spending esp municipalities rather than current and consumption spending, which is the main driver for SA’s of 55% GDP, already an unsustainable level, which will only get higher.
So we have a continuation of often poor, specious analyses, not only in finance but other policy areas too. Left-leaning analysts incl many/most academics are incapable of being realistic, eg those (I'm thinking of a UCT academic among others) who supported free fees saying it could be paid for without a tax increase.
The financial community including journalists have been part of the emperor without clothes syndrome, and it's despicable. Most of them lack credibility. If I can see some of the things Roodt can, why can't they? The ratings agencies are not fooled, although I suspect they've been giving SA too much rope, perhaps hoping the country will come to its senses.
It’s past time we move away from magical unrealism of the La La Land left and academia and their socialist pot-of-gold-at-the-end-of-the-rainbow wishes like minimum wage, free fees, income grants, sugar tax, etc, the cowardly don’t-rock-the-boat position of big business lest it upsets the ANC government and spoils those business deals to the hands off, out of touch approach of main stream business media to an honest appraisal of society and economics.
This first Ramaphosa budget, although prepared when Zuma was the incumbent, shows the TitANiC is on course for collision.
But economist Dawie Roodt called the budget “terrible” and decried that many analysts were supportive of and positive about it. He wondered why the “whitewash” and why they were not “honest”. He asks why the financial community got it so wrong. Well, they've always been enthralled by finance ministers from Manuel, who initially, had little understanding of finance, to Gorhan; Gigaba not so much (if it wasn't for Gigaba's Zupta connection, he'd have been feted too).
The second reason is many financial journalists and wannabees don't really understand economics. If they did they would've castigated Gordhan when under him debt went from about 32% of GDP to 52%. But yet Gordhan, according to them, was "hero at the bridge". Roodt, being diplomatic, contradicts himself - he says they're "good", but if they are they wouldn't have gotten it wrong or unafraid to provide a correct analysis.
Economists, most of whom work for financial institutions, are reluctant to be critical of the ANC government. Their employers don't like it - remember Chris Hart and the personal attack on him; he was forced to resign. Another well-known economist was kicked out and his career was destroyed when he criticised ANC government fiscal policy. These companies, members of the cowardly business council that hid rather than criticised the Zuma administration's corruption, still want to rock the boat and endanger BEE and business deals; they'd rather have the status quo.
Atonal, numbers orientated fence-sitting assessments like this one by Muneer Hassan are like chief executives recommending jobs cuts to save their companies’ bottom line without acknowledging the impact it will have on workers or that it was management incompetence that made it necessary in the first place. This is exactly South Africa’s situation.
The public and especially poor and unemployed - the middle-class and employed will absorb the increases as they always do - after suffering for a decade are again paying for the Zuma administration’s profligacy, waste, incompetence and corruption. It’s not merely a 1% VAT increase - R1 for every R100 - but the compounded and long-lasting effect on all spending.
Hassan’s comparing SA to other counties where VAT is higher is irrelevant - the socio-economic milieus are different and often vastly different. It supports my argument he’s unsympathetic to and out of touch of SA’s exigent circumstances, if not disingenuous. Unless he dramatically misread the budget. Sub-Sahara’s and OECD’s GDP growth is higher than SA’s miserable 0.6% with no improvement in the near future, and their unemployment levels lower. Arguably, consumers there can easily absorb their VAT rates.
Also, he glosses over the fact expenditure cuts are to capital, ie infrastructure spending esp municipalities rather than current and consumption spending, which is the main driver for SA’s of 55% GDP, already an unsustainable level, which will only get higher.
So we have a continuation of often poor, specious analyses, not only in finance but other policy areas too. Left-leaning analysts incl many/most academics are incapable of being realistic, eg those (I'm thinking of a UCT academic among others) who supported free fees saying it could be paid for without a tax increase.
The financial community including journalists have been part of the emperor without clothes syndrome, and it's despicable. Most of them lack credibility. If I can see some of the things Roodt can, why can't they? The ratings agencies are not fooled, although I suspect they've been giving SA too much rope, perhaps hoping the country will come to its senses.
It’s past time we move away from magical unrealism of the La La Land left and academia and their socialist pot-of-gold-at-the-end-of-the-rainbow wishes like minimum wage, free fees, income grants, sugar tax, etc, the cowardly don’t-rock-the-boat position of big business lest it upsets the ANC government and spoils those business deals to the hands off, out of touch approach of main stream business media to an honest appraisal of society and economics.
This first Ramaphosa budget, although prepared when Zuma was the incumbent, shows the TitANiC is on course for collision.
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