Top economist spells out tough road ahead for South Africa
Dawie Roodt pointed out in summary of the country's economic outlook that we still sit with leaders who are more interested in the survival of their party than the interest of the people.
Dawie Roodt, chief economist at the Efficient Group, spoke on the current state of affairs in South Africa and the international political landscape during a recent Ekurhuleni Captains of Industry Forum meeting.
Roodt mentioned South Africa is so deep in trouble that the country is past the point where minor tweaks can still save it from further economic ruin.
He used the opportunity to highlight his list of economic policies he would consider implementing if he was in charge of South Africa’s policy-making.
Roodt emphasised the importance of voting in the upcoming elections, and how one needs to look at a party’s track record, quality of leadership and policies before making one’s X.
“In South Africa, our politics is a mess and our ruling party is a disgrace, judging by the enormous damage to our economy over the last 10 years,” said Roodt.
“One such example is Eskom, which sits with a R450-billion debt tag as a result of incompetence, bad management and corruption. More than ever we need to see people put behind bars.
Roodt also addressed Helen Zille’s call for a tax revolt.
He said the justification for such a revolt can be loosely based on the agreement that if the people pay those who have been appointed in power to serve and protect them, then they should have the right to withdraw such payment if such an agreement is broken.
In regard to a tax revolt, Roodt said one also has to remember in South Africa still only a few people contribute the majority of taxes, comprising largely out of personal income tax, VAT and company tax.
He warned such a minority cannot be overburdened, while also pointing out that those who are not paying e-toll fees are already busy with a tax revolt to a lesser degree.
Roodt warned that taxes is the glue that has held South Africa together and such a revolt could lead to the end of the current political life.
“It will be very difficult to drive a tax revolt as companies are the real agents of Sars. Consider also the 17 million people who rely on grants, paid by taxes.”
Regarding his list of policies, even though he did mention they may be ‘unrealistic’ and ‘hopelessly idealistic’, he calls for a strengthening of private property rights and dramatically altering the tax system by among others, abolishing all taxes on capital.
Roodt said he would also abolish myriad of small and irritating taxes while increasing the tax on fuel and reducing the number of personal income tax categories to only three.
He said a state of emergency for education needs to be declared while increasing the length of school days.
Roodt said he would place Eskom, South African Airways and the other state-owned parastatals under business rescue, and then take over their debt and privatise, sell or close them down, depending on the circumstances.
“I would launch a programme to dramatically reduce the number of civil servants and pay the rest what they are worth. Many thousands will lose their jobs.
“I would also reduce the cabinet to a maximum of 10 ministers. There are just too many people who learned they can benefit from the system by voting for those politicians who will transfer wealth from the productive to the unproductive,” he said.
Touching on the international scene, he said the world is seeing a shift to the right in terms of politics.
“You have the case of Brexit, which is just a terrible idea, and it can spell bad things for the European Union and possibly the end of Britain as we know it. It could also cause a deep recession to hit Britain.
“The world economy is also slowing down, with Germany, which has a large open economy, also experiencing very slow growth due to the international economy.
“In America, we have witnessed the Trump phenomena, driven by anti-establishment support. While there are things he has not done well, he has managed to successfully open China’s market. I foresee the superpowers reaching an agreement regarding the trade war.
“In Japan, the population is getting smaller but the people richer, while in China I believe their golden years are behind them as they face a slowing down in economic growth.
“The economy to take note of is India, which is at the moment bigger than the UK and might soon drive the world economy,” said Roodt.
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