Stop speculating our jobs away

by Aug 1, 2011All Articles

AMANDLA ISSUE 15 | EDITORIAL : Stop speculating our jobs away

As the last of the vuvuzelas proclaim the end of the 2010 Fifa World Cup and while many of our readers are breathing a sigh of relief, and life can return to some semblance of reality, Amandla brings you its 15th issue. Is there any greater irony of the soccer games, than to have developed stadia at the expense of housing, health, water, and other basic services? While President Zuma insists on the development benefits of the World Cup, employment declined and more than one million jobs have been lost since the global economic recession hit South Africa.
With the World Cup coming, and then going, the 66 000 construction jobs (a figure quoted by the President) will also surely be history. While we celebrate
the genuine joy and pride that many South African, African and international supporters felt while attending the games, we must not forget that as Greece won
its opening matches, that country is on the brink of bankruptcy. Spain and Portugal too are flirting with economic disaster. So as we fold up our nearly
paid for soccer-t-shirts and hope we find another use for the vuvuzela (Polish union Solidarity has said it would include the vuvuzela in its protest marches), there are tough economic times ahead, not only for South Africa, but for a world in recession. Our centre-spread (page 20-21) gives an idea of the cost of the stadia in relation to demands of social justice protests surrounding it.

A coup for us in this issue is an exclusive essay by world-renowned philosopher, Slavo Zizek (page 14-15), on the idea of communism. In this two part essay (look out for the final part in issue 16) Zizek says that, “the limitation of our freedom, that becomes palpable with ecological disturbances, is the paradoxical outcome of the exponential growth of our freedom and power”. How will the power of the US manifest, and the political legacy of the Obama government be played out when the pristine US Gulf coast is destroyed for years to come.

The fact that the US is drilling over a mile below the surface in one of its most important marine ecosystems is directly related to US consumption of oil;
the highest in the world. Vinod Raina’s piece on the Bhopal Gas Tragedy (page 36-37), 25 years on, may well provide lessons, if not learnt, then observed, of
what happens when powerful multinationals refuse to own up to their social, ecological and generational debt. More importantly, if we are to observe the US
and Indian environmental disasters, then to organise and agitate is the only way to impose the political and economic transformation needed against the forces of greed – oil greed, mineral greed, land greed and plain old greed for money.

Amandla! Editorial Team

The G20, a forum constructed by the powerfully rich G8 countries, by drawing in the so-called emerging economies of China, India, Brazil and which also
includes South Africa, met at the end of June to tackle the on-going global financial crisis and the threat of a further slide into recession. They failed.
There was no agreement to regulate the banks and the financial markets that have gambled citizens’ investments away. In the context of over-supplied markets (cars, computers, electronics, telecoms, furniture, food, etc.) investors have been making huge profits from speculation in bewildering financial instruments, essentially betting on bets, betting on the ability of debts to be repaid or not, profiting from the sale of loans to third parties and many other mystifying financial schemes unrelated to the production of goods and services, i.e. real economic activity where jobs are created and needs fulfilled.

Falling profits in the real economy has absorbed huge flows of capital into the financial markets to the extent they have begun to overtake real economic
activity. Almost half the US economy is constituted by financial speculation. As a percentage of total US corporate profits, financial sector profits rose
from 14 percent in 1981 to 39 percent in 2001. In 2006, no less than 40 percent of American corporate profits accrued to the financial sector. The growth of finance has, in part, been driven by traditional corporations based in the “real” economy.

For instance, by 2003, 42 percent of General Electric’s profits were generated by its financial wing, GE Capital. However, as the crash of 2008/9 and the many before indicate, financial speculation creates great turbulence and instability. Volatility of currencies, stocks, bonds and other financial markets
have created new financial instruments such as credit swaps, collateralised debt obligations and other deriviatives that stand beyond any regulation of the banking system, international financial institutions or of the state.

Great private wealth was accumulated in these markets, but more importantly for the present situation, great losses were made to the point at which the
entire banking system was threatened with collapse in the USA, Europe, Japan and many other parts of the world.

Hitherto unimaginably vast amounts of money were suddenly found to save the banks in contrast to the standard government cries around the world of ‘No Money’ when confronted by urgent social needs like jobs, housing health, etc.. The result has been that state budgets that were miserly governed for surpluses or at least balanced, suddenly swung to record budget deficits. Attacks by speculators (often the same financial institutions that had been bailed out) betting against governments being able to honour the claims of their creditors has led to a new wave of bail outs – this time of governments not banks. In turn, government after government, especially in Europe have made a 180 degree turn away from stimulating the economy to avoid recession to brutal budget cuts in the form of public sector jobs, slashing wages and pensions, increasing the retirement age of public sector workers, reducing social and welfare services as well as increasing regressive taxes like VAT.

The likely result will be constrained economic activity and recession in the industrialised countries. As Europe is one of SA’s main trading partners the situation in the industrialised world may have very severe consequences for the South African economy and for workers in particular. During the still current
recession, over a million jobs were lost. This has severely aggravated the mass unemployment crisis facing the country. Whereas most of SA’s trading partners have what for them is politically unsustainable high unemployment levels of between 8 – 12 percent, SA is dealing with unemployment that is running at 25,2 percent – if you can believe Stats SA. But can we believe Stats SA? Their figures exclude nearly 4 million people that have stopped looking for work because they are so discouraged at the prospect of finding a job. Moreover, Stats SA includes as employed many thousands of unemployed people who involve themselves in all manner of survivalist activities such as begging, growing their own food, etc. When discouraged workers are counted as unemployed then SA’s unemployment rate is over 36 percent.

Of all G20 countries SA has the highest unemployment rate by some distance. Yet the South African government refused to support efforts for financial regulation and for a tax on financial speculation during the G20 meetings of finance ministers and heads of state.

This is further evidence of the continuity between the Zuma and Mbeki regimes. Without such measures it will be impossible to tackle the unemployment crisis. The efforts of Ministers Patel and Davies, who are struggling for a more appropriate economic development path that can create jobs, will be thwarted even
before their proposals see the light of day.

Adding even greater urgency for a new economic direction for SA has been the latest report that while the economy grew at a rate of 4,6 percent of GDP during
the first quarter of 2010, a further 79,000 jobs were lost, or 171 000 if we include the agricultural and informal sectors.

In the struggle against job losses and unemployment, it is becoming clearer that there needs to be a break with the ‘market’, especially policies that facilitate hyper-speculative financialisation of the economy. The lesson of the last G20 meeting, as with previous ones, is that this will not emerge from the institutions that have been developed to manage the system. Bringing this lesson home to the political situation in our country is critical. This will require a new alliance, principally of the labour and social movements to drive, through mass action, a programme for a new economy based on the redistribution of wealth and decent work.

Brian Ashley Editor-in-Chief

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