Wednesday Night #1154

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We hope the Easter Bunny was kinder to you than to many politicians – on the first anniversary of Jean Charest’s government, the basket seems loaded with rotten eggs; Paul Martin’s government still struggling with sponsorship scandals, Air Canada crises, poor poll results, and now surely the decision to welcome the Khadr – family back from Afghanistan is going to have major repercussions.
Poor George Bush (did we say that?) – last night’s speech was hardly an oratorical triumph and the message is not welcome… at least two of the members of the coalition are reconsidering as the wave of kidnappings continues. The demerger battle heats up with the war of the reports. With all the bad news, let’s watch today’s South African elections with hope and review them tonight in the company of wise observer and commentator, Dr. John Shingler.
Amidst the uncertainties of the market and concerns about the jobless recovery, it is worth considering the statement from Stephen Poloz, Senior Vice-President and Chief Economist, Export Development Canada in his weekly report of March 10: “Disposable personal income is 3.7% higher than last year, personal consumption spending is up about the same amount, and household wealth has risen by 12% in the past 12 months. These are not boom-like numbers, but they are solid and will continue to support growth.”
So, will the market continue to rise?
Jacques Clément and our faithful economists, reinforced by “Uncle Hughie” Anderson, will supply the charts to navigate the way through the evening’s topics.

The Report

Introductory Note: Father David Oliver returns after a six-month absence, three months of which were spent in Bangalore. He has just completed his MBA at McGill and plans to devote some time to applying his newly-acquired talents to the needs of NGOs and other parishes

SOUTH AFRICA
Ten years after apartheid, it is interesting to look back at the successes and failures of the ANC (African National Congress) in ruling South Africa . There is no doubt that the ANC will win the upcoming elections, the question is what kind of governance is the ANC providing? President Thabo Mbeki‘s government has suffered from errors that have prevented that country from enjoying the same success as such countries as South Korea and Taiwan that have moved successfully to an open market society. But these problems go back to the period 1948-1994 when the SA government established a kind of national socialism for the elite – two generations were lost during that period and there is no evident niche for South Africa in the global economy. It will likely have to rely on minerals; competition from countries like Chile and Australia in agricultural products is too strong. Unions have effectively stopped South African from competing in the clothing sector. Poor infrastructure, education and economy have held the country back, but more especially, the lack of an emerging middle class. While there cannot be any doubt about the gigantic strides made by South Africa in the past decade, escaping the devastation of tribalism seen in other African countries, the failure of education to prepare the population with needed skills means that it will be a long road to prosperity.
Mbeki came to power as the supporter and lifelong friend of Nelson Mandela. An effective politician, he lacked the skills of other Africans who had, in exile, acquired an international approach to South Africa, resulting in an inward, protectionist approach leading to powerful unions preventing the country from really profiting from an open world economy. He never really succeeded in the transformation from opposition to government. Despite these problems South Africa remains a stable, democratic country with a free press, good electoral process and an independent judiciary. These factors as well as the terrible nature of the leadership between 1961 and 1969, still fresh in the minds of South Africans, make the probability of instability or insurrection virtually nil.

Some problems to be solved include:

• Failure to identify and recognize the source of HIV/AIDS
• Failure to address the problems of Mugabe in Zimbabwe
• Failure to address the problem of crime which may have reached a plateau
• An infrastructure too undeveloped to promote growth
• The absence of a middle class of significant size
• Powerful unions that resist competing in the world market
• Weak and inadequate police force
• Too narrow land ownership
• Inadequate disease reporting and control, although over-reporting is probable.
• Poor distribution of inadequate wealth. Even if the wealth of the middle and upper classes were to be redistributed to the poor, average income would remain inadequate.

The latest official figures put unemployment at 28% in March; a broader measure has it over 40%. The painful but necessary reforms of the past decade—including cuts in subsidies and tariffs—and an economy shifting from mining to services have caused a hemorrhaging of formal jobs. Though informal ones have appeared (a net rise of perhaps 2m between 1996 and 2002, says the government), the workforce has also grown rapidly, swelled by migrants from Zimbabwe.
It is open to doubt as to whether the soon-to-be reelected ANC will be able to cope successfully with many of these problems. The following elections in 2009 will probably prove to be the watershed. Will 2010 see a government of inward-looking “real home boys” or one of “cosmopolitan exiles” that can lead this great nation to the rewards it needs?

QUÉBEC
Prime Minister Charest has correctly pinpointed shortcomings in the government of Québec, but has not enjoyed popular support in correcting them. We spend much more on education than other provinces, but with over five thousand employees at the Ministry of Education compared with eighteen hundred (being further reduced) in Ontario and our Ministry of Health twice as bloated as that of Ontario, but the government gains no brownie points for trying to downsize. Perhaps Mr. Charest has to clearly define the problem and explain his plan of action and timetable to the public, repeating them to the electorate on a daily basis and in terms that people can understand in their daily life, – or perhaps the population of Québec is just not yet ready to listen.
A propos Jean Charest’s image, this month’s l’Actualité has a telling two-page piece comparing him to a comic strip about a shepherd whose sheep will not follow him.
The university sector is particularly vocal about its problems. The freeze on tuition fees cannot last, but nor can we expect the financial woes of the universities to be solved on the backs of the students.

PREDICTIONS
June 14, 2004 – Federal election
June 21, 2004 – Demerger referendum