Thursday, March 4, 2010

Just a jump to the left (again)

Yesterday's feature article at Politicsweb by Dr Pierre Rabie (DA MP) provides an excellent response to Minister of Economic Development Ebrahim Patel's anticipated policies of import tariffs and company bail-outs (albeit with strict conditions).

Central to the argument is that:
  • Protectionism (like company bail-outs and import tariffs) protect jobs for certain interest groups only
  • But they force South African consumers to pay higher prices for the goods so produced.

This represents a direct wealth transfer from South African consumers to the workers who would otherwise lose their jobs. It's all well and good to say we should protect workers from losing their jobs, but at what cost? Should all South Africans have to pay higher prices because organised lobbying interest groups like Cosatu demand import tariffs?

In the South African context of extreme poverty, my opinion is no. Workers, however vulnerable, are nevertheless less vulnerable than the unemployed and poorest South Africans. Such workers should not be entitled to protect their interests at the expense of the poor and unemployed.

I thought this piece of the article was balanced:

"...the broader costs to society far outweigh the short term sliver of benefits to a narrow interest group. The ANC government needs to accept that the figureheads of its so-called developmental state, the parastatals, requires urgent attention by way of privatisation, and that labour market rigidities needs to be solved in order to make it easier to employ job-seekers. Until this is done, efforts to step up protectionism are at best attempts at distraction, and at worst interventions that would achieve the direct opposite of the sustainable, job-creating economic growth we need."


  1. Just checking - are you referring to Mike Schüssler's 11 August 2008 article on

    I suppose I don't know enough of the details to comment, but my instincts tell me Mr Patel's long reign at SACTWU probably had something to do with the SA clothing industry's collapse.

    Anyway, what really concerns me is his interest in pension funds.

  2. Hey Julian

    Apart from the article quoted in the first line, this article is entirely expressing my own opinion on this issue. I should probably read Mike Schussler's article.