AMSTERDAM: At the risk of hitting the man when he is down and being sin-binned by the ref for doing so, I told you so. The Dutch disease has now collapsed the South African economic scrum and our coaches — no, not that coach, our economic coaches — seem none the wiser. But like that other coach, they are in denial, insisting this is how we have always played our economic game and this is how we will play it.
A commodity-based economy is fated to yo-yo between the good times of the upcycle and the bad of the down. During the good times, when, figuratively speaking you are winning 12-7, victory might seem tantalisingly close. And then the rain comes and a figurative 40 minutes later, you are down 20-18 and the game is lost.
Economically, SA must learn to play a different game: we do not have a large enough exportable resource endowment to cover the needs of a nation of 50-million, let alone generate sufficient jobs for our burgeoning workforce. This means, at the centre of that different game, we must allow the private sector to create lots more jobs, and specifically jobs involving the making of things for export. Vaclav Smil, Bill Gates’s favourite author, is right when he insists that “making things remains a quintessential human endeavour without which there can be no prosperous large economies and no socially stable populous societies”.
It is something East Asia deeply understands; indeed it is the absolute foundation of their economic success.
The problem with the Dutch disease is precisely when everything seems fine, when you are winning, that is when it is wreaking the most profound structural damage imaginable upon your economy. It is a destructive curse in the disguise of a creative blessing. So from 2001 to 2012, when the commodity supercycle was in overdrive and coal and iron prices were soaring, when the rand was strengthening before staying for a decade within the R6-R8 to the dollar range (with a short-lived deviation after the 2008 global financial crisis), that was when the spreading cancer of the Dutch disease was at its most virulent.
Not that most of us lucky enough to earn a salary realised it; mostly we felt on top of the world, not least because we were spoilt for choice by a cornucopia of imports that were cheaper than domestically produced alternatives.
