An independent agricultural economist, Fanie Brink, says that, apart from the problems such as corruption and the destruction of the country’s reserves and wealth by the ANC government and its cronies, it is clear that the government can only destroy economic growth.
Brink responded to the medium-term budget framework presented to the parliament this afternoon by the Minister of Finance, Malusi Gigaba.
Brink says the Minister of Finance and the Treasury clearly have no idea how economic growth can be created, despite the fact that it is widely accepted as a prerequisite for reducing the debt burden and achieving socio-economic goals. Even the former president of the ANC, Oliver Tambo, believed that the country’s wealth should be divided among all the people in the country to increase everyone’s prosperity, but never indicated how it can be recreated. The commissioners of the National Development Plan have also made no significant recommendations on how economic growth can be created, but merely highlighting the benefits that can be gained for the country.
“The government’s mixed socialist and communist economic system cannot create growth, but can only destroy it. Economic growth is globally being driven and created by the profit motive in a capitalist economic system. This means that economic growth is in fact totally dependent on the profitability of the economy,” says Brink.
The profits in all industries in the different sectors of the economy are determined by two very important economic principles. Firstly, by the changes in prices of all inputs used in the economy against changes in prices of all outputs that are produced, manufactured and delivered. The input/output price ratio is decisive for the profitability of all industries in the economy. Secondly, the efficiency with which the inputs can be converted into outputs as determined by the latest and best technology. Therefore, it is very important that new technological developments have to be created by continuing research.
The government’s ignorance of how growth can be achieved and the huge losses that its own state-owned enterprises suffer from unstoppable corruption is in fact the exact opposite process of how economic growth can be achieved.
