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Economy cries for good leadership

BLEAK FUTURE: About 14,000 Anglo Platinum workers will lose jobs if the company and the government fail to craft a response to the mining crisis. PHOTO: ALON SKUY
BLEAK FUTURE: About 14,000 Anglo Platinum workers will lose jobs if the company and the government fail to craft a response to the mining crisis. PHOTO: ALON SKUY

THE crisis of job losses in the mining sector has inadvertently laid bare a bigger problem in the country. It has exposed how incapable political leaders are of mounting a sound response to an explosive economic crisis.

This became evident after platinum producer Amplats announced that it would restructure its operations and cut down production.

This would lead to the retrenchment of up to 14,000 mineworkers. The main reason cited is weak demand for platinum globally.

Car makers, the buyers of the metal in Europe and other countries, for example, are making fewer orders. In addition, the market is over-supplied so the price of platinum is relatively low.

The initial response of the South African government and the ruling party to the company's plans was to tacitly declare war, threatening to seize its mothballed shafts.

Eventually discussions on ways to save jobs - which should have been done in the first place - commenced. But appealing to the aggrieved in a populist threat to take over assets does not solve the problem. If anything, such threats have scared investors away. Analysts are already classifying South Africa as an "investment risk". It should not be this way.

Political leaders can only craft a constructive response to an economic crisis if they understand that most mining companies have global operations and pursue global strategies. South Africa is part of the bigger jigsaw puzzle of an interconnected world.

That is why the mining companies, like others in other sectors, have always found it easy to play one country off against another in a bid to secure favourable investment terms.

Hungry for investments and competing to get a share of the world's investment cake, many countries are prepared to do anything to attract investments.

Some downgrade labour standards and others provide companies with a highly skilled workforce. Creative governments find a balance between dangling a carrot to investors and wielding a stick. Whatever the response, a shrewd government takes into account the global environment in which companies operate before crafting a wise response to threats of job losses.

A response that suggests that an investor who down-scales operations is doing so to spite a government, or that there is an investment strike of sorts, is unhelpful because it worsens the problem.

Our political leaders should spend time studying how companies operate all over the world. Those who have the future of South Africa at heart will follow this route. They will ignore the anti-intellectual rhetoric we often hear from those who believe that books don't offer solutions to problems and that people should not aspire to be "clever".

We need politicians who are clued up about the operations of the world economy. This is as important in a developing country like South Africa as it is in developed countries.

In his acclaimed book, The World is Flat: The Globalised World in the 21st Century, Thomas Friedman is very critical of American politicians and their response to economic crises.

He quotes venture capitalist John Doerr who once said: "You talk to the leadership in China and they are all engineers and they get what is going on immediately. The Americans don't, they're all lawyers."

Billionaire Bill Gates has added: "You can have a numeric discussion with Chinese politicians - you are never discussing 'give me a one-liner to embarrass my political rival with'. You are meeting with an intellectual bureaucracy."

Friedman explains that "the job of the politician in America, whether at local level, state, or national level, should be, in good part, to help educate and explain to people what world they are living in and what they need to do if they want to thrive within it."

He could have been writing about South Africa .

But he is not too demanding.

"I am not saying we should require all politicians to hold engineering degrees, but it would be helpful if they had a basic understanding of the forces that are flattening the world, were able to educate constituents about them and galvanise a response.

"We have way too many politicians in America who seem to do the opposite. They seem to go out of their way to make their constituents stupid - encouraging them to believe that certain jobs are American jobs and can be protected from foreign competition or that because America has always dominated economically in our lifetimes it always will."

If America is run by lawyers who are perceived as inadequate to tackle global economic issues, then we might have a greater problem in South Africa.

Are our politicians up to the task of tackling the economic problems which are global, but have a local manifestation? Do they have the competency to explain to voters what the problems are and what the likely solutions will be?

ANC secretary-general Gwede Mantashe demands in-depth and well informed analysis from the media about political developments. He has a point.

But much more pressing than this is an informed political leadership with the required skill to understand the operations of a global economy and, as Friedman put it, "to help educate and explain to people what world they are living in and what they need to do if they want to thrive within it".

Unfortunately, this is sorely lacking.

This article was first published in print on 23 January 2013

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