IMF OFFERS NO SOLUTIONS- South Africa

: Press Release; 11 December 2021; Hits: 3331; Rating:

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Fanie Brink

"The International Monetary Fund (IMF) has not offered any solutions to South Africa's devastating economic decline and very serious fiscal and social problems for which the socialist ideology of the ANC government is directly responsible," said Fanie Brink, an independent economist.

He referred to an article, “IMF waarsku SA: Likwideer, privatiseer en hou op leen!” ¹⁾ about the IMF's annual review of the country which was posted on the website of “Netwerk24” yesterday and said that it is very clear that the IMF does not understand which “changes in the economic and fiscal policy” of the country are “urgently needed”!

According to the report, "structural rigidities” is pushing down private investment and hampering inclusive growth and job creation". The IMF believes that these "rigidities” must be addressed immediately to increase the economy's productivity and competitiveness and reduce poverty and inequality."

Addressing the socialist "structural "rigidities” cannot already for quite some time make any difference at all and must therefore be totally rejected because it will only hasten the final destruction of the economy as it did in the past.

The most important aspect of the government's "economic structural reforms" made after 1994 was the rejection of South Africa's capitalist economic system which created great economic growth, development and prosperity for the country, and the acceptance of a purely socialist economic system .

The excessive socialist regulation of the economy, such as black economic empowerment and the reservation of jobs only for black people have only led to unstoppable corruption, theft and great inefficiency. This has created an ever-growing gap between government revenue and expenditure, budget deficits and government debt, as well as greater poverty, famine, unemployment and inequality that will wreak further economic havoc and finally destroy the economy within the next 3 to 4 years.

If the IMF does not understand what economic destruction is taking place in the country, it will have to talk very urgently and necessarily to economically informed, literate and competent people and not just to unobjective government officials who only proclaim their government's destructive socialist policies.

However, the IMF can be assured that the government's political slogan of “inclusive economic growth” will never be the answer to solving the already destructive economy or the fiscal and social problems in the country and it is, therefore, a totally unrealistic and unachievable economic recommendation that must be rejected.

The only thing that the government understands about "inclusive economic growth" is how to make more people dependent on totally unaffordable social grants to try to stay in power. Such as its destructive policy of land expropriation without compensation which will be the ANC's last straw that it will try to implement before the next general election in 2024 to survive politically, but which will further destroy the economy, agriculture and food security.

The IMF's recommendation that economic growth should be stimulated by the auction of broadband spectrum that has been dragging on for 15 years has already become irrelevant due to the total inability of the government to make meaningful improvements to the country's electronic networks.

The IMF's further recommendation on the government's policy of localisation, like the master plans, will in no way be successfully implemented and managed by the government because it is also based on its racist socialism like all the other plans of the government.

The IMF's recommendation that "where a good cause can no longer be made for the survival of state-owned enterprises, it should be liquidated or privatised" is a common problem that the country has been struggling with for many years, that has been kept going with government loans which is also the biggest source of government’s corruption that will contribute to the final economic destruction. The question is why would anybody in the private sector want to invest capital in the almost totally demolished and bankrupt state-owned enterprises that will not yield an acceptable return on its investment?

The fact that the IMF is impressed with the medium-term budget of the Minister of Finance, Enoch Godongwana, and its "commitment to limits government spending and to consolidate of government debt" is only a disguise of the very serious fiscal problems that the government is experiencing that will only emerge in the main budget during February 2022 and the IMF should not be misled by it.

The pressure on the government for greater government spending on basic socialist income grants has already hit KwaZulu-Natal and Gauteng in July this year with unprecedented riots and looting of the economy and this will dramatically increase the budget deficit and debt burden that will make any debt consolidation completely impossible. The government has no choice but to rely on greater social spending to politically survive until 2024.

The single biggest problem encountered with the latest IMF report is the fact that the IMF is not prepared to very urgently recommend that the government abandon its destructive socialist ideology which will cause ever greater fiscal and social destruction that will without economic growth eventually destroy the economy and the country.

The IMF's recommendation that the Reserve Bank "should soon consider not only raising interest rates, but also lowering its inflation target that will require further interest rate hikes", is the single biggest delusion in economic science for which absolutely no evidence in the world exists and must be totally rejected! I challenge the IMF to prove its claim that higher interest rates can contain the inflation rate as it is purely determined by the marketing forces of supply and demand!

It is totally incomprehensible that the IMF and most central banks in the world, including the US Federal Reserve, European Central Bank and the Reserve Bank, will apparently never understand that the inflation rate is determined by all the local and international political and economic factors that have an influence on the supply and demand of goods and services and the value of the currency, respectively, and nothing else. There is also, for the same reason, absolutely no evidence for the claims that the interest policy of central banks can stabilise prices, generated full employment or protect the value of currencies.

Economic growth cannot be stimulated or created by lower interest rates as the influence on private consumption expenditure on the demand side of the economy is negligibly small and do not even future on the list of consumers items that are used to compile the Consumers Price Index!

Economic growth is created by the equal contributions of the supply and demand sides of the economy which is proven very clearly when the Gross Domestic Product of a country is calculated that is driven by the profit motive in a capitalist economic system.

"The latest IMF report on South Africa's economy with a general overview of possible solutions to the destructive problems of the government's socialist policy with which most local economically informed people are familiar, will therefore not make any difference without actual recommendations on workable solutions and will not mean anything to South Africa.”

Especially if the IMF, just like the World Bank, continues to support and promote the destructive socialist economic policy of the ANC government!. The IMF can, in fact, do South Africa a huge favour if it does not grant any further loans to the ANC government without the condition that it must renounces its socialist ideology and bring an end to its unstoppable corruption!

If the IMF is really interested in helping South Africa to solve its economic problems, it will have to make a recommendation that the government should adopt a mixed capitalist/socialist economic system which can create economic growth that has been proven over and over worldwide, and also generate higher revenue for the government to solve the very serious fiscal and social problems in the country.

In fact, several countries in the world have already adopted a mixed capitalist/socialist economic system with great success, including the United States of America, United Kingdom, Sweden, Iceland, France, Canada, Germany and China. ^{2) 3) 4) 5)}

This means a combination of the good qualities and the elimination of the bad qualities of both systems as well as the understanding by the government that it must develop a political and economic environment that will be conducive to the private sector to create profits and economic growth! ⁶⁾

The question, however, is whether the ANC government and its social partners who are now clinging to the eighth socialist economy plan, the Economic Reconstruction and Recovery Plan" since 1994, will ever understand that it will also just like the previous plans never create economic growth, as also proven since 1994.

"The most serious question is, in fact, why would the international economic community, such as the IMF and the World Bank, want South Africa to continue with its destructive and purely socialist ideology of the ANC government which has already failed dramatically everywhere in the world where it has been tried before? ⁷⁾

¹⁾“IMF waarsku SA: Likwideer, privatiseer en hou op leen!”(IMF warns SA: Liquidate, privatise and stop lending!)

https://www.netwerk24.com/netwerk24/sake/ekonomie/imf-waarsku-sa-likwideer-privatiseret-en-hou-op leen-20211208

²⁾ Countries with mixed economies

https://www.google.com/search?q=countries+with+mixed+economies&rlz=1C1EXJR_enZA875ZA875&oq=coutires+with+mixed+economies&aqs=chrome.1.69i57j0i13j0i22i30.122ourcej0j&

³⁾ Mixed Economy With Pros, Cons and Examples

https://www.thebalance.com/mixed-economy-definition-pros-cons-examples-3305594

⁴⁾China to become world’s major economic power! Why and how?

https://www.farmingportal.co.za/index.php/all-agri-news/news-of-the-day/524-china-to-become-world-s-major-economic-power-why-and-how-fanie-brink-2

⁵⁾Most Powerful Economics in the World

https://www.youtube.com/watch?v=CtSerf17F0E&list=PL8-YFlmMQUfip3yp3yb5DpRk7VipzV3h0

⁶⁾Creating Economic Growth Plan

https://www.farmingportal.co.za/index.php/all-agri-news/press-release/6247-creating-economic-growth-plan-south-africa

⁷⁾Failures of Socialism in the World

https://www.google.com/search?rlz=1C1EXJR_enZA875ZA875&lei=NigcYJanK9ODhbIPgK2XuAI&q=failure%20of%20socialism&ved=2ahUKEwiWmvOk2tDuAhXTQUEAHYDWBScQsKwBKAR6BAgiEAU&biw=1366&bih=625

Fanie Brink, Independent Agricultural Economist

COMMENTS BY POLITICIANS AND ECONOMISTS ON SOCIALISM

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”

Winston Churchill, former Prime Minister of Britain

“If socialists understood economics, they wouldn’t be socialists”

Friedrich Von Hayek, Austrian-British economist

“Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.”

Walter E Williams, American economist

“The free market is the greatest producer of wealth in history - it has lifted billions of people out of poverty.”

Barack Obama, former President of the USA

"There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Milton Friedman, former American economist

"In every single country where capitalism has been tried, free markets have been expanded, we have seen a mash growth in wealth and an elevation in the quality and standard of human life. It is not perfect as there will always be winners and losers in the world, it is a fact, but the progression that we have seen is vast. Capitalism gives you the chance to change your circumstances, you have the personal autonomy that is such a difference maker in our mental and holistic wellbeing when you have the ability to control your own fate and circumstances. It is empowering and something that is very important as a central need that we all have. Capitalism gives you that, you can work really hard and get ahead. We do not see it in other systems. On the reverse side we have seen every single time that where socialism was attempted it has led to destitution, devaluation and even death. It is a system that has failed every time it has been tried."

Hannah Cox, Foundation for Economic Education, USA

“It is in the interest of everybody who is part of a business enterprise to recognised that the goal of the entire team is to progressively and vigorously be involved in the pursuit of profits.”

“Without profit there can be no business; no employees; no incomes earned; thus, no economy.’”

Temba A Nolutshungu, Director, Free Market Foundation

Socialism and corruption can even destroy a democracy!

“The great historian Alexander Tytler said the following as early as 1787: “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to lose fiscal policy, which is always followed by a dictatorship. Invariably, the majority (having become complacent and pathetic), choose those who promise to take from one group and share the spoils amongst those who are less productive. An apathetic population is not one that will suddenly decide to roll up its sleeves and get the country, once again, on a productive footing, but will rather jump on the wagon of empty promises and rides it downhill until it reaches the bottom of the economic.”

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LIST OF THE TITLES OF ARTICLES THAT VARIOUS AUTHORS HAVE WRITTEN OVER THE PAST COUPLE OF MONTHS ABOUT THE DESTRUCTIVE SOCIALIST IDEOLOGY OF THE ANC GOVERNMENT