Wednesday, January 27, 2016

Seizing the moment

And finding the Phoenix in the ashes of scorched sentiment.

It was raining when I went to bed on August the 31-st, 1968. We lived in a flat in Cotswold, within walking distance of the SABC’s Port Elizabeth news office. It was a good sleep, as one has with the hypnotic sound of falling rain. The shrill call of the phone ended it, with the caller asking me to stand in for his reporting shift because his car was “flooded”.

It was the first inkling of a torrent that saw 600 mm fall in 12 hours – an event permanently etched in my memory. Those hours have gone down in history as still the worst natural disaster ever to hit a South African city. My own contribution to those annals, captured on a Super-8 Cine camera, can be seen at this link.

And so another of my life’s experience provides a fitting analogy for our times – being distracted by the immediate, the petty and personal while the world around trembles in tectonic shifts. We sleep while floods rage around us. We get caught in our own discord and squabbles, without feeling the earth shake beneath our feet. When we do feel it, we blame someone close; someone visible and identifiable.

Journalists, including wizened old hacks like myself, have a penchant for hyperbole; ever in search of mesmerising headlines. I have the conflicting personality traits of the paranoid idealist, trying to find the Phoenix before there are ashes. But there is a growing sense that seldom, if ever before, and certainly not in my time, has the world experienced an economic transformation of the magnitude and significance as that of this era. Reflecting, as columnists do, much of the more knowledgeable, insightful and leading thoughts in the field, I have written about it on several occasions. Yet I have come to doubt whether I have even scratched the surface.

We have had many glimpses from many angles, including repeated market turmoil, global recession, and geo-political upheaval.  Recent contributions to awareness of the greater economic tapestry have come from Joseph Stiglitz, a Nobel laureate in economics (see here) and two of South Africa’s most experienced and thought leading economists. Writing in Moneyweb, Mike Schüssler speaks of the “depressive commodity super cycle” and Cees Bruggemans in his Economic Insights, puts emphasis on a country perspective. I urge you to read them. They give much depth to this subject, but cannot be fully covered here.

I would add or at least emphasise four in the mix: the explosion of global monetised debt; the declining role of labour in value creation, technology and climate change. (For views from top world economists see this link).

South Africa is clearly at a fork in its economic road – one that we might miss as we face off against each other. Our obsession with domestic economic transformation, as valid as it may be, pales into insignificance compared with the urgent need for transforming our economy to fit into the vastly changing global context. (See Schüssler comment here.) In short we have to change from a commodity producing to a more diverse international trading nation. At the same time we must boost import replacement, especially through SME’s. It is not a new theme, but it has taken on a completely new and dire urgency.

The way to get there has also been well documented, including repairing the many potholes in the road such as the need for streamlined, prudent, incorruptible, business-friendly and efficient government and SOE’s; education and training, and addressing the weaknesses and building on the strengths of those factors routinely listed in the WEF’s Global competitiveness report. To these I would add the absolute need for inclusion and participation of labour. The ultimate point is a fresh re-engagement on all of the issues that divide us; reinventing ourselves to find a common cause in meeting the global challenge and building on a well and tested formula of national success based on an external focus and people development.

Any trader knows that there are two things that earn market share and create competitiveness: quality and price. We have been given some window of price opportunity in a cheaper Rand. Quality demands more: innovation, consistency, reliability, concerned service, and a genuine desire to make a difference to others. Already I can hear the defensible howls of derision from many. To be sure, this is not a quick and easy path – perhaps even impossible in these times of shrinking markets. But the journey itself will be a magnificent and noble detraction from the pet peeves we have become so addicted to.

Our so-called “A-Team” at the WEF at Davos will have enjoyed a fruitlessly opulent time if they do not return with this one overriding conviction:

The greatest force of all in economics is something which economic laws cannot explain; which cannot be captured by economists’ spreadsheets; by any economic theory or analytical research. It is attitude. It is a lot more than simply having confidence. You cannot build confidence on old paradigms. Having national pride projects as suggested in Moneyweb here is one way, but it may need an overall inspiring cause.

Attitude gives wings to the Phoenix: as it did for countries like post war Germany and Japan, and beleaguered nations such as Korea, Taiwan, Singapore and others. We have seen some of this spirit galvanise around the devastating drought gripping the country. I saw it in Port Elizabeth nearly 50 years ago.

I have lived long enough to be acutely aware of the things that divide us. But we simply have to develop a national attitude that will forge a common cause in meeting the enormous challenge that we face. Or we can continue to obsess about “things that must fall”.

Until everything does.

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