POLITICS INTERSECTS ECONOMICS
So much to say really.
Many years ago I was on a train in Singapore speaking to a well-known local. Discussing the phenomenal success of that tiny island, I asked him what caused it. His answer: Political Leadership. For all my studies in economics, I nearly laughed at the idea. But he was right – in fact, spot on. The famous Lee Kuan Yew, the first Prime Minister from after independence in 1959 up to 1990 created the vision into which Singapore grew. The motto of Singapore is: Onward, Singapore, and anyone who has been there will know it has been “onward” for decades now. In Singapore, the best high school students are chosen in their final year for studies abroad. Sent to Yale, Oxford and the like, they are funded by government and then return to be employed in government, for the sake of the nation. Probably best known for its Changi Airport which wins “Best Airport” year after year, on any day you can see 800 ships in the Singapore harbour [not a typing error – 800!]. Measuring 50 by 27kms [I guess, from Joburg to Benoni and as wide], it boasts the 3rd richest GDP per capita in the world – >US$87762 [R1235400 per annum – also not a typing error at R14.20 to the $ today – and nearly the most productive Peoples on the earth!]. Clem Suntner pointed out in his High Road Low Road scenarios years ago that Singapore has no natural resources. In fact, they don’t even have fresh water on the island and import water from Malaysia and then export purified water back to them. So, to end this little section, Politicians drive economies WITH all the other players. Government’s role is to set the scene for successful, equitous business.
Enter Hilary and Donald. It amazes me that the great continent of North America could not deliver better opponents than these two. I will make no judgement other than that, in case I offend a strong proponent of either, but statistically I am accurate in what I say as all the polls indicate clearly that they are not liked and choosing between them at the polls is going to be solely “an act of duty to vote” for about half of everyone that votes. How scary is that? Never in history, two such un-liked candidates! But, they have a massive influence on what happens in our economy. What the winner does to our Rand is speculative at this stage. Some commentators indicate that Donald will collapse the US$ at least until America becomes “great” again. Hilary represents the status quo so probably little will change. So, I guess, if she wins we will be more “business as usual” and I sense she will be less likely to press The Big Red Button so that is comforting. However, I do sense that Donald would do some deals that put America in control of certain things again. Politicians do certainly drive the economy.
So how do politicians influence the economy? They drive the economic imperatives of a country. Heard of the National Development Plan [NDP]? For better or worse, it was the gift of Trevor Manual to SA Inc when he decided to spectate, I think, for a while. The NDP is a serious plan agreed to by all parties on- and off-shore for the manner in which we rally business, government, labour and even, societies in order to bring about Growth and alleviate Inequity in our country. Unfortunately, it is only referred to at the odd time when the international Press and role-players may be listening as the ANC is fighting battles completely introspectively. In all the “shenanigans”, [not my word], unfortunately, the Poor come off second-best and the rich go to Court. The tragedy in SA Inc is that we have a backlog of Inequity and every quarter we fail to make an economic difference, we pile the troubles on the heap. So now we have overtaken the Lost Generation of the 80/90’s with the Missing Middle of the 2000’s. Many willing people, side-lined by economic history, by the politicians, to the heaps of financial despair. Not your problem, you may say, but you are wrong. Your taxes are supposed to be raising the per-capita GDP [read Singapore above] by educating, keeping healthy and employing the peoples of this fair Land. When politicians are corrupted, populous and immoral, the Poor become poorer and the Rich, well, they just try to keep up with the declining Rand by investing offshore or not at all. I am a blue-dyed capitalist in case you wondered but in a fairy tale world, benevolent politicians and businessmen could make a huge difference. Singapore was a fishing village with a Centre of Trade mentality in the minds of its leaders – as a result, everybody won and many leaders became revered in their lifetimes.
For those of us confused by Economics, I often refer to it as E-comics or the Study of Graphs. Then, all you have to do is decide if the direction of the line on the graph is good or bad. Cost line rising = Bad; Profit line rising = Good, and so on. As I have said in a previous blog, I am not fazed by the current Real decline in housing prices. Affordability improvement will result if the Banks agree to keep lending on their current criteria. Some of the messaging coming from leading economists about the Rand after Pravin was charged by the NPA, I found very encouraging. It would seem that even a downgrade, would not radically affect the Rand. As much as S&P has warned that the “noise” of South African politics is very concerning, it would seem that if we can retain Treasury and the SARB as definitely independent, we could even ride that storm for the Rand. Heaven knows, that set of decisions rests squarely in the hands of Jacob Zuma. A reshuffle that affects those two men will be shocking; but, on the other hand, if he keeps things the way they are, we may be spared a downgrade [from 25 November 2016 onwards], just because we are seen to be a stable democracy. Knife edge stuff so just keep watching the graphs.
You may think I’m rambling, but I’m not. Facts are what they are but what you do with them is your world. There is a simple assertion called Locus of Control [LOC, for short]. An External LOC simply means that you see the world from outside in. An Internal LOC means that you see the world from inside out. Neither is right in the sense of personal morals or strengths but they have a fundamental effect on how you see and create your world. An external LOC deems that your circumstances influence your success. Bad circumstances – the economy, politicians, graphs going in the wrong directions, interest rates, relationships – influence you negatively. You are a product of your circumstances and you can do little about it. “Hou Moed” [Stay Strong”] is your mantra until things blow over and you are free to be successful again. And internal LOC takes the view that your circumstances need to be challenged. “I Can and Do” is your mantra as you keep your feet on the ground and reach for the stars. I mean, let’s face it in any given economic or political environment, there are those who prosper and those who fall. When the property market rises, estate agent numbers swell in pursuit of the “easy buck” and then, when things quieten, the numbers decline and the stalwarts remain. Not as strong financially as before but strong nonetheless. Hard work, positive self-expectancy and enthusiasm are energies. They define who we are in every circumstance and give meaning to:
- The fact that my hard work is habitual and necessary for success in anything, at any time.
- I expect that from what I sow, I will reap and that any Cause I pursue will have an Effect; the law is universal.
- The saying, “If you’re happy tell your face” drives enthusiasm.
To the last point, the Nobel Peace Laureates, Desmond Tutu and Dalai Lama, per Carte Blanche last night, have written a book called Joy. It simply speaks to how, despite the circumstances, you can remain Joyful. I can’t wait to read it as a supplement to the other Great Book from which I draw inspiration daily.
HLJ stands by to work with you, encourage you, assist you and build your business. It is not easy but for more than 13 years we have been doing it in every possible economy and under every kind of political leadership you can think of. We have survived and prospered in many circumstances and stand by to share our experiences with you.
Yours in Property.