The Third Economy

Jeremy Rifkin’s works, in particular ‘The End of Work’ and ‘The Zero Marginal Cost Society’ have had the world talking because they are a take on a very real problem, the decline of the (non-specialist) labour market which together with burgeoning population predicts huge proportions of the world’s populations facing unemployment and poverty while an ever diminishing proportion of specialists (the elite) are stunningly successful and affluent, all the time while capitalist productivity rises and demand falls. In short they are arguing that Capitalism will become the victim of its own success and end up producing large volumes of goods for which there are few markets and (presumably) capitalism will eventually implode.

Rifkin imagines that the employment slack will be taken up by the rise of a third economy (the first and second being the public sector and the private sector economies). This third being largely a social economy or a ‘social commons’, servicing diverse community needs through non-profit non government organisations powered largely by a low-paid, oft-times voluntary and probably relatively unskilled workforce. Rifkin imagines that the third economy will service the social needs of society which are not being met by a shrinking public sector economy, which is under constant budget constraints, nor being met by a disinterested private sector economy for which there is little profit in public service. Rifkin also envisages much shorter working weeks with more workers earning lower weekly wages, to try and help take up the employment slack.

Writing here in 1995, Lance A Compa, then of Cornell University, notes that in addition to the reduced working hours, Rifkin proposes a social wage funded by a value added tax (VAT) (in the USA) but excluding vat on basic necessities, along with defence spending budget cuts. Aronowitz and DiFazio in their book ‘The Jobless Future’ also propose reduced working hours but with more progressive income taxes instead of a VAT, along with a host of other measures, many of them in support of social welfare type expenditure along with infrastructure spends to help take up labour slack.

According to Compa, both books imply “a willing turn toward a shared genteel poverty”. However, Compa does not seem to share Rifkin’s nor Aronowitz and DiFazio’s sense of gloom regarding employment, and instead argues that history and the current experience suggests “that there is still plenty of work to be done and plenty of people wanting to work”. In short he is suggesting that while the mix of supply and demand for work is changing, it is not evaporating.

The Direct Democracy Forum (see DDF) have a slightly different take on these problems, agreeing in part with Rifkin et al’s perceptions, on the one hand, and in part with Compa’s contrary view, on the other.

We agree that three separate economies are emerging, the already existing public sector and formal private sector economies and a third economy that we would categorise as an informal private sector economy, an alternative to the formal sector economy of the Fortune 500 corporates and their ilk. We imagine this economy as being a merging of the formal and the commons economies of Rifkin’s imagining, but definitely not a second class economy of genteel poverty as Compa interpreted Rifkin et al to imply.

We do not believe a social wage will work as an adequate motivation for employment (as demonstrated by the failed Finnish so-called Basic Income Grant experiment), rather we see the need for a UBI or BIG (Universal Basic Income or Basic Income Grant) which, being universal and unconditional, goes to every adult citizen in an economy. We believe that an adequate UBI/BIG will to a large extent pay for the basic needs of most recipients. Those needs which cannot be met by a UBI/BIG we believe will motivate folk to trade with others in their communities and in this ‘third economy’, for mutual profit. Some may be content to seek low income service positions in NGOs and other service organisations but nothing will stop the more ambitious from exercising their entrepreneurial skills to rise above a mere survival level.

The DDF anticipate there could be significant movement between the formal and informal economies, of skills and labour and finance, as members of all three economies interact and move between the economies, as and when circumstances allow or dictate. So the DDF don’t see a rigid stratification where the ‘have-nots’ cannot or may not enter into the domains of the ‘haves’. Nor do we envisage the opposite.

Rather we see a more fluid society with movement between the different economies occurring more or less on a voluntary basis. Because whichever economy one occupies, the basic needs of everyone could be met from the UBI/BIG, there would be less importance attached to which economy one occupies at any point in time, and less stigma attached to not being a part of a formal economy if one is part of the informal third economy. That is not to say that one should lack ambition, just that it would not be a question of life or death, or survival or poverty, so much as to how one can move up (or down) in society, either within the economy one occupies or between economies, so as to improve one’s circumstances.

The question of how to pay for this UBI/BIG leads us to the topic of tax reform. A UBI/BIG in most economies would exceed the GDP. So, if one were to tax the GDP to pay for a UBI/BIG, that would be the same as having a higher tax than one earns, say a 120% tax on income. Clearly that would not work.

Before we look at an alternative to income tax, think of how iniquitous income tax is. What the tax authorities say, is, if you succeed, if you earn a wage or salary (you are one of the employed and therefore a success when compared to the unemployed), or if you trade at a profit (you are a success compared to those who trade at a loss), we will take from you, a part of that wage, salary or profit. Generally, the goal is to collect 30% or more of one’s income (or the GDP) in taxes. However, if you fail (do not earn an income or declare a real or concocted taxable loss,) you get off scot free, or tax free.

So what is the alternative? Both Rifkin and Aronowitz and DiFazio suggest that we add more and more complex taxes, when we should at least be trying to simplify taxes and make the collection process less complex and less expensive, even if we cannot actually reduce the taxes themselves. The DDF believe that is too complex and too costly and also believe they have a more effective and more economical alternative solution.

The DDF has a core policy to replace income tax and all other taxes, direct or indirect, with a Total Economic Activity Levy or TEAL. TEAL levies all the funds flowing through an economy’s banking system. In South Africa, where we have a good idea of what that amounts to, a ½% levy on all the transactions debited or credited to one’s bank account in all the bank accounts in the land, would collect about 30% of the GDP. This in effect reduces one’s tax payments from 30% or so of one’s income and profits, to 1% of one’s income or 1% of all of one’s trading activities (½% on all debits and ½% on all credits in your bank accounts). This presumes that you spend all that you earn. By comparison, banks in South Africa can charge more than ½% on all transactions for bank fees.

The DDF think TEAL is a far more equitable system than income and profits tax. Some of the advantages of TEAL are:

  • 1) All will pay the same low ½% TEAL.
  • 2) TEAL effectively works like a progressive tax, thus the more active you are in the economy the more TEAL you pay in absolute terms.
  • 3) TEAL is uncompromising and unconditional – all persons active in the economy’s banking system pay TEAL, so there are none who get away scot free (or tax free).
  • 4) TEAL broadens the tax base from the narrow GDP tax base to a much broader tax base, encompassing all economic activity in the economy. In South Africa this broader tax base is, on average, some 30 times the value of the GDP.
  • 5) TEAL can be thought of more as a rent that everyone pays rather than a tax that only some pay.
  • 6) The cost of collecting and administering TEAL is estimated to be some 10% of the costs of administering the conventional tax systems.
  • 7) The savings from implementing TEAL would more than pay for the costs of implementing and running a Senate, drawn from the streets rather than from a political party base, thus broadening and strengthening the reach of democracy at little or no extra cost.
  • 8) TEAL makes a UBI/BIG fiscally possible.

So how does TEAL make a UBI/BIG possible?

In South Africa’s economy, a 2.165% TEAL on all the economic activity, as measured by the flow of funds through the banking system, will pay for;

  • 1) the fiscus
  • 2) a moderately significant UBI/BIG
    • including funding for a National Health Insurance scheme,
  • 3) an Advancement Grant
    • to pay for Tertiary Education or any other advancement initiatives,
  • 4) help seed a Sovereign Wealth Fund.
  • 5) A UBI would effectively be an investment in the demand side of the economy, stimulating both the demand side and the supply side of the economy and both the formal and informal economies.

We believe the above makes TEAL an eminently more desirable alternative to income and profits taxes and makes a UBI/BIG and an informal third economy a viable and preferable alternative to genteel poverty in a social commons.

The Power of Direct Democracy.

On 17th March 1992, “White South Africa” voted overwhelmingly in a Referendum, to scrap apartheid and to negotiate a new inclusive constitution. In a turnout of 85 % of the registered voters, 69% voted for the proposed negotiations (ie to scrap apartheid) and 31% voted against the proposal.

We believe that this reflected the overwhelming sentiment of the majority of the white population which had prevailed for decades, probably ever since the introduction of apartheid following the 1948 general elections, which delivered a parliamentary majority to white South African nationalists.

On 25th May 2018 the Irish people voted overwhelmingly in a Referendum, to scrap the eighth amendment to the Irish constitution, which in a referendum in 1983, driven largely by the Catholic Church in the guise of a visit to Ireland by the Pope, largely banned abortion in Ireland under most circumstances. This time around, some 35 years later, in a 64% turnout, 66% voted in favour of scrapping the eighth amendment and 34% voted against the proposal.

As part of the Irish ballot, the question was asked for how long had the sentiment expressed in the vote cast existed. Many answered, for decades.

And then, of course, there was Brexit! Yet another example of the will of the people expressed in an act of direct democracy in 2016 which went counter to the wishes, expectations and hopes of the establishment.

The point of this is to illustrate the power of voters exerted in the direct expression of their democratic will by means of a referendum, by the application of direct democracy. Few parliamentary elections generate such high voter turnout and fewer still deliver parliamentary results which express the will of the people so directly and so accurately and very few parliamentary elections deliver such landslide results, except in totalitarian stares where opposition opinion is excluded from the process.

Without the application of the will of the people expressed in acts of direct democracy, apartheid in South Africa and the almost blanket ban on abortion in Ireland and Britain’s membership of the EU, could well have continued ad nauseum.

What these three examples ably demonstrate is that the world’s parliamentary systems are not always aligned with the wishes of their voters so much as being aligned with the will of the prevailing establishment.  This does need to change, here in South Africa, and elsewhere.

It can and will be argued that direct democracy also demonstrates the fickleness of the voter population.  But we would argue that it is perfectly legitimate for a voter population to try out a particular political strategy or process and when finding the strategy or process to be wanting, to ditch it.  That is not being fickle, that is being responsible. 

The establishment are largely in fear of direct democracy because they fear populist government and they are less able to control the outcomes of political sentiment expressed by direct democracy, than by influencing the party political system, by various means, including but not limited to the buying of political favour in political parties.

The Direct Democracy Forum’s sentiment is illustrated by the proposed application of direct democracy in the DDF’s proposed SENATE and MUNICIPAL FORUMS and in the use of referendums to resolve political deadlocks, much like occurred in South Africa in the apartheid years and in Ireland since 1983 and in Britain since the 1970s.

Finland’s Basic Income experiment fails

Finland’s Basic Income failure is something that every advocate for a Basic Income Grant (BIG) or Universal Basic Income (UBI) needs to contextualise.

https://www.usatoday.com/story/news/nation-now/2018/04/25/finland-basic-income-685-fails/549087002/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=usatodaycomworld-topstories

There are elements of the Finnish exercise that indicate that Finland’s experiment was more about the dole or unemployment benefits than about a BIG or UBI. In fact, Finland did not give everyone a basic income of $685, they randomly selected 2000 unemployed (and probably unemployable) Fins, and paid them $685 per month and then concluded that a basic income was unaffordable and did not achieve any social goals. Being paid because you are not working is a dole. A BIG or UBI system is where a population is universally and unconditionally paid whether working or not. The Finnish experiment was apparently motivated by the expectation that the 2000 unemployed would then go out and find low paid employment thus filling a gap in the labour market, an expectation that was never fulfilled. None the less, even if that had worked, even if the benefit was extended to all unemployed Fins or to the Finnish population as a whole, it could probably be argued that their tax system could not to bear it.

These conclusions are not unexpected for that sort of exercise:

First, when a BIG / UBI is applied universally to an entire community, there are long term benefits to the community members and the community as a whole, which can justify the high cost of a BIG / UBI. These benefits will never be apparent from a randomly selected and widely dispersed small population assessed in the short term, as with the Finnish experiment. The selected Finnish population was not representative of any universal and unconditionally selected population receiving a BIG or UBI.

Second, a BIG/UBI is costly and beyond the scope of any conventional tax system to fund. The exercises done by the Direct Democracy Forum (DDF) (see Teal, The Big Picture), presumed a Gross Domestic Product (GDP) of R2.8Trillion. The DDF hypothesized a BIG of R2.1 Trillion for a BIG of R5000 per month for 35 million adult South Africans. In that exercise the BIG was almost the size of the GDP.

Most economies target tax levels at about 30% of the GDP. The BIG in that context is 2.5 times the tax burden for that size of economy. The tax (R0.84T) + BIG (R2.1T) would total R2.94T, a sum bigger than the entire GDP of R2.8T. You clearly cannot extract more tax from a GDP than the GDP permits.

If Finland’s situation is anything like South Africa’s, the Fins are correct. Using a conventional tax system (taxing the GDP) cannot pay for a Basic Income of $685 per month. Nor can South Africa afford a R5000 per month BIG if reliant on a conventional tax system. What is missing here is a tax system that can accommodate the needs of a BIG. Here TEAL (Total Economic Activity Levy) comes into its own.

Instead of taxing income and profit, Teal levies the economic activity represented by the flow of money through the banking system. This is typically, in SA, about thirty times the GDP, so a R3T GDP represents a cash flow of 30 times and more through the banking system.  The arithmetic is GDP x 30 x 2 x 1.37 where every Rand is both deposited and withdrawn (the x 2) and an additional 37% is drawn on and paid into the same bank and therefore is not included in interbank settlements (the 1.37) which amounts to R246.6T on a GDP of R3T.  

What this levy amounts to is paying a rent for the privilege of playing in the country’s economy. If you are a large player the rent is large, if a small player, the rent is small, but everyone pays the rent, irrespective of who you are or what your game is or how much your profits or losses are. This broadens the tax base. In an example set in South Africa, instead of a tax base of a R2.8T GDP, the tax base is R230T of the broader economy. So the rate of tax or levy can be slashed from about 30% of the GDP to ½% of the broader economy, and achieve the same result.

Applying the same principle (levying the entire broader economy instead of taxing the GDP) one is able to collect the R2.1T needed for a BIG with a 1.25% levy on the broader economy (see Teal, The Big Picture). Suddenly a BIG or UBI becomes attainable.

Then there is the political context of the Finish experiment. The NY Time’s analysis (see the link below) suggests that when the Fins started the experiment the government was somewhat liberal. Then Finland was hit by recession, and a more conservative government came to power whose main platform was cutting expenditure. Bye bye Basic Income experiment!

According to the NY Times, the reasons why the Finnish Basic Income experiment failed are are set out here (see https://nyti.ms/2tiI1bA)

Fortunately the Finnish experiment, however inadequate it is for a BIG / UBI, is not the only BIG / UBI experiment and discussion under way in the world, and far from being definitive, it will merely be a footnote to the art of misdirection on the topic.

Our conclusion from this is that to take the failure of the so-called Finnish Basic Income experiment as an indication of the impossibility of a BIG or UBI, is to be misled by an experiment which was not about a BIG or UBI at all, but about a dole, The two (a dole or a BIG / UBI) are not comparable and the Finnish failure, far from discouraging the DDF from its BIG / UBI objective, merely strengthens the DDF resolve to see the introduction of TEAL and an affordable Basic Income Grant or Universal Basic Income in South Africa. Further, the collective benefits arising from investing R1.75 Billion in the demand side of the South African economy every month, will more than justify collecting that money with a 1.25% levy (TEAL) on the broader economy.

DDF SENATE PROPOSALS VINDICATED

There is a saying that all will come to those who wait. Being proactive I am not sure I agree with the sentiment. But recently something happened illustrating it’s relevance.

Some 60 years back in the 1960s, when I was about 15, I was pondering how a political process whereby a political fringe had managed to capture a perfectly adequate dual house parliamentary system and impose a largely unwelcome and undesirable system (the apartheid system) on the masses of the population of a country (SA), could have come about. From that came a proposal for an upper house of parliament (I called it a house of censure) which was drawn from the streets rather than the political establishment, and through which all legislation and regulation must be passed for approval. Of course I was 15 or so, and nothing came of it beyond it being a proposal.

Over the years, the proposal became more sophisticated and concrete and I stopped calling the house one of censure, and identified it as a Senate.

In the 1990s, when the CODESA was in process I submitted my Senate proposal to CODESA l and ll, as many did. The proposal was ignored. I happened at the time to be living across the road from Mac Maharaj, then the ANC’s spin doctor. I challenged him on the fact that my proposal had not even been acknowledged. He stood on the other side of his gate and held his hand about chest high above the ground and said, what did I expect them to do with a pile of proposals that high. The inference being that CODESA was a farce and was merely a vehicle to impose the opinions of the few on the many and is merely a sop to consultation. I learned this form of consultation is typical of the ANC.

Time moved on. In 2012 the Direct Democracy Forum was formed using TEAL and the Senate proposals as the foundation of DDF policies. These policies have since been added to by a Basic Income Grant and a Sovereign Wealth Fund (amongst other policies).

Now in 2018, I read an article published June 2016 in the Guardian’s long read series, by David Van Reybrouck titled “Why elections are bad for democracy” arguing very persuasively that representative democracy and elected politicians are failing us, their constituents, where “common interest lose out to short term and party interests”, and where “winning the next election has become more important than fulfilling the promises made in the last”, and that in it’s place was needed something like “the central principle of Athenian democracy, drafting by lot, or sortition”, where those drafted were immersed in the details of every legislative and regulatory proposal and so could vote from an informed position on the issues. Thus ” a cross-section of society that is informed can act more coherently than an entire society that is uninformed”.

How does that vindicate the DDF Senate policies? It does so because sortition describes exactly what the DDF Senate policy is about.

It is significant that sortition is being used more and more to resolve issues that party-political electioneering and periodic visits to voting stations have been unable to resolve. This has occurred “in the US, Australia and the Netherlands” and most innovatively in Ireland. In December 2012, a constitutional convention began, drawing on “33 elected politicians and 66 citizens, drafted by lot, from both Ireland and Northern Ireland” .. who .. “met one weekend per month for more than a year”.

In this, the Irish approach, the convention drew up proposals to go before parliament. In the DDF approach, the Senate would be required to approve or reject legislation or regulation emanating from Parliament or Cabinet. So one is doing it one way, the other is doing it the other way. But the same essential principle is being applied. Get the approval of ordinary opinion, first or last in the process, but getting that approval is essential, which ever way you do it.

I believe all of this vindicates the DDF’s Senate policy and proposals and although it is a 60 year old story for me, the story still has some chapters to be written. Those chapters cover implementing a sortition Senate and the many more chapters thereafter where sortition builds a better South Africa for all.

Criminalising Hate Speech:

There is a bill going before South Africa’s parliament which criminalises “Hate Crimes” and “Hate Speech”.

The DDF’s opinion of the bill is that it is window dressing intended to promote the notion that the ANC government is doing something significant about hate crimes and hate speech when South Africa already has an abundance of laws which deal with crimes of assault with or without the intent to murder, which are simply not being adequately enforced.

If I were to batter a person of a particular race or gender to death because I hate members of that race or gender, the fact of my hatred does not make the crime any more heinous than if I did not harbour a hatred of the victim’s race or gender but assaulted the victim simply because I wanted the victim’s cellphone. Whatever the motive, the crime is murder and the punishment should be death. So a hate crime bill is simply superfluous and nonsensical and a waste of parliamentary and state resources.

Rather parliament should be forcing government to enforce the already perfectly adequate laws regarding crimes against the person, which, if they cannot currently enforce them, presumes an unwillingness or inability to uphold any law, whether new or old, necessary or unnecessary, good or bad. So what is the use of another piece of irrelevant legislation?

More serious is the tagging on of “Hate Speech” to the bill in order to criminalise the words you, I or anyone else wishes to, or, even unthinkingly, utters, to or about another person or group or indeed a community, which can, however nebulously or even blatantly, be construed to be “Hate Speech”.

The next logical step will be a bill criminalising “Hate Thought” and the State will be able to charge people who have exhibited in the eyes of a plaintiff, evidence of thinking hatefully about blonds or brunets or even bald people. Collective narcissists will have a ball, hounding people out of their homes for making public comments about inconsiderate people who display their naked bald pates in public spaces, which comment irritates a plaintiff who is probably bald.

At which point it will become illegal to have a personal opinion, let alone express it, about anybody or anything.

And everyone should be concerned about this for everyone can be accused of hating someone, or something about some other, and whether you are Christian, Jewish, Muslim, Hindi or atheist, black, white, pink or cerise, you can be accused by someone full of hate, of being guilty of hateful thoughts or hateful speech.

Does any of this make a difference and am I being unreasonable? There are countries where there is so much government overreach that this sort of crime actually exists, and those convicted can be and are executed, judicially or extra-judicially, for their “crimes”, and this in the 21st century! Do we want to go there?

Instead, can’t Parliament find something useful to do, like helping to solve Cape Town’s water crises?

A Basic Income Grants discussion.

I recently listened to a podcast (Upstream podcasts) in 2 parts on a UBI (Universal Basic Income) which I found really interesting. The podcasts are available here (1) and here (2). If you have difficulty listening to podcasts, you can download the transcripts in pdf format for both podcasts from here,.

What interested me most was the almost universal consensus that 1) UBI or BIGs (Basic Income Grants) were desirable and productive, and 2) where implemented (in pilot schemes & etc) the beneficiaries, their progeny and the communities they were a part of all benefited, and few if any recipients abused the system. So there is a multiplier effect.

I contacted the producers of the podcasts with a view to setting up a dialogue from which I hoped we all could benefit, but was disappointed to find that my contribution showing how capitalism can pay for a UBI was not well received. The producers seemed to feel that using a system which they clearly wished to see the back of, would compromise their ideals for a post-capitalist society. I don’t think this is a very constructive position but instead regard using capitalism to fund a UBI as a step in the right direction, thus tackling the disparity of wealth between the haves and have nots and more importantly, tackling the lack of economic opportunity for the have nots, and who knows where that can lead. But the producers felt that a dialogue on that basis, as they put it, (we) would be talking to cross-purposes. So, instead of having a dialogue from which, perhaps, we all could benefit, we have nothing much at all beyond our separate but ironically similar goals.

Be that as it may, the podcasts are awesome.

Much more disappointing for me was the response of two South African institutions to my approaches. One is the Studies in Poverty and Inequality Institute (SPII), and South Africa’s main opposition party, the Democratic Alliance (DA).

The SPII were said to be promoting a Basic Income Grant. When I approached them I found they had a project devoted to a BIG with a dedicated manager and BIG committee, this according to their web site and correspondence and conversations I had with their staff. In the end it seemed that their interest in a BIG was limited to a SADC context rather than a South African context. In any event, when I approached them I was met by an unwillingness to engage on the topic of a BIG.

It may be significant that their present web-site (which may still be under development) has no mention that I could find of a Basic Income Grant. Perhaps they have given it up as a bad idea and perhaps that was why they were unwilling to address the topic of a BIG with me. But the SPII are not saying anything to me on that topic.

I also approached the Democratic Alliance suggesting I had policies that would almost certainly guarantee the DA a substantial win in the upcoming 2019 general elections. I was referred to a member of the DA specialising in policy matters. He indicated two things to me. One was a scepticism of the claim that the throughput of money in the South African banking system was anything like an average of 30 times the GDP and that it could bear a ½% levy in place of the 30% or so taxation of the GDP, although he did admit it would be a game-changer if this was so. He also stated that in the run-up to the 2014 general elections, the DA had approached residents of SOWETO who indicated that they did not think a BIG was a good idea. That then, was my time to be sceptical.

The DA’s policy specialist also suggested that I should obtain (for the DA?) written proof from the SA Reserve Bank that such a relationship exists between the GDP and the money flowing through SA’s banking system. My unspoken response to that was that the DA should do their own homework as the DDF and the TEAL Foundation had already done theirs. See here for some information on DDF and TEAL findings.

Never the less, I did and will continue to approach the SARB even though they are reluctant to release any information on the topic beyond what they publish, which is not very much. They claim proprietary rights to information of national importance, which I dispute absolutely. Perhaps I have to brandish the freedom of information act (I think we have such an act) under their noses to get any real satisfaction. Perhaps not.

From time to time I encounter detractors from the idea of a UBI/BIG (the “you can’t give away something for nothing” brigade and the “everyone will stop working” brigade and the “how do we pay for it in our corrupt society” brigade) but they usually walk away from an encounter with me a lot more thoughtful about the prospect of a UBI/BIG. Once you get past those knee-jerk reactions, folk generally seem more amenable to the idea.

So, far from finding possible allies willing to share knowledge and experiences on the topic of a UBI or BIG, I found folk and institutions who, whether for ideological reasons (in the case of the podcast producers) or perhaps for political reasons (was I encroaching on SPII’s and the DA’s turf and in the DA’s view was I not also being a political upstart?), viewed my assertions that I knew how to pay for a UBI or BIG pretty much with indifference.

I find all of that quite astonishing.

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The President’s Keepers

The President’s Keepers by Jacques Pauw, investigative journalist extraordinaire, could be sub titled Wading Through Sewerage. South Africa owes Mr Pauw and extraordinary debt of gratitude for placing his knowledge of the president’s keepers at our disposal. His assertion that if you cannot afford or cannot obtain a hard copy or an e-book copy of The President’s Keepers, you should read a pdf copy, many of which abound on the internet, until you can buy a legitimate copy, is just about the best advice any South African can give to any other South African. Needless to say the book’s publishers and distributors do not share that sentiment but our sentiment is with Mr Pauw’s. If you are a South African, this is essential reading.

Mr Pauw observes in his introduction “Zuma and his small band have managed not only to capture our law enforcement agencies – put their pals in charge, make cases disappear, dismantle structures that worked effectively – but also use these institutions to eliminate their opponents through trumped up charges and harassment.

The whistleblowers came to me (Pauw) because they felt that things had gone horribly wrong and that maybe, just maybe, a book like this (The Presidents Keepers) would make a difference.”

I am sure Mr Pauw has received many higher accolades from much more exalted sources than the Direct Democracy F, but our accolade is simply to say that, yes, your book has made a difference, a huge difference, and we owe you an everlasting debt of gratitude for your contribution and for the risks taken in order make that difference.

In eighteen chapters, each one leaving the reader with a greater sense of disgust and revulsion, we are led through the machinations of an absolutely corrupt administration that has made a mockery of every element of good governance observed throughout the rest of the civilised world, and in the process spent, wasted and probably stolen billions of Rands of taxpayers’ money.

Here are some of the bad guys: Of course there is Jacob Gedleyihlekisa (the one who laughs while grinding his enemies) Zuma, M Mpshe, N Jiba, L Mrwebi, S Abrahams, R Mdluli, B Ntlemeza, A Fraser, T Moyane, the Guptas, Molefe, D v Rooyen, M Gigaba, J Radebe, D Mahlobo, M Hulley (J.Z’s attorney), P Mokotedi, to name a few.

Here are some of the Heroes who stood against the Zumerites: A Dramat, J van Loggerenberg, I Pillayt, Glynnis Breytenbach, Johan Booysen, Nhlanhla Nene, Pravin Gordhan, Thuli Madonsela, Judges F Legodi and W Hughes, M Nxasana, R McBride, Paul O’Sullivan, S Sibiya. With the exception of the judges, these persons for the most part were hounded and persecuted by the bad guys for challenging their corrupt practices.

The lists go on. Names well known in South Africa through media reporting of their conflicts and expanded on in The President’s Keepers.

There are many more bad guys and many more heroes (many anonymous whistleblowers, for instance) because the corruption is endless and mind blowing. If you want to know more about it, get a copy of The President’s Keepers and read it. My own experience was that I had to step back at the end of each chapter and take a break from wading through sewerage, and by the time I had finished the book, I had to again step back, for at least a week, before I even attempted to assimilate properly what was related, let alone comment on it.

If, as we were, you were aghast at the revelations of The State Capture report by the then Public Protector Thuli Madonsela, you will be shocked and revolted by the revelations of The President’s Keepers, and the sooner you and all others in South Africa read it, the better it will be for South Africa, because this has to end.

And how will it all end? Many ANC stalwarts are trying to avoid the fallout and the blame, and to cleanse the ANC of guilt, and while we do not wish to tar all in the ANC with the same brush, the ANC enabled it’s leadership and thus are complicit in the most disgusting series of acts of treason (there is no better word to describe their crimes) that only the total annihilation of the ANC in the 2019 general elections and the bringing to account of all those implicated in these crimes, will appease South Africa’s need for justice.

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How to pay for an annual Advancement Grant

An Advancement Grant is a once in a lifetime grant intended for every South African citizen to advance their lives through whatever means the grant can purchase. For example, education, training, travel, investment, opening a business, helping to purchase a home. There are no restrictions on how it can be used. It is intended to be the equivalent of paying for a professional tertiary degree (four years of university). In the post There is no such thing as a free lunch Part ll, we postulated an Advancement Grant to satisfy the Fees must fall demands. We indicated that we would sharpen our pencils to determine costs and the means of payment. This is it.

If one assumes an Adult Population of 35 million and a working life of say 47 years (18 to 65) and for the sake of simplicity assume that each year there would be 1/47th of 35 million school leavers qualifying for an advancement grant, that would be 745 000 (say 750 000) school leavers each year. Assuming an advancement grant of R200 000 each that would be R149 Billion a year.

TEAL can fund this as follows.

If we assume a R2.8 Trillion GDP for 2017 that would equal a Total Economic Activity of 2.8 X 30 or R84 Trillion flowing through the banking system. Each Rand of that flow represents both a deposit and a withdrawal from the banking system so the actual Tealable amount would be R168 Trillion. R149 Billion as a percentage of R168 Trillion = 0.089% or about 0.09% (=151.2 Billion)

So, an annual TEAL of about 0.09% on R168 Trillion will pay for a R149 Billion Advancement Grant granted to 750000 school leavers (each school leaver receiving R200 000) each and every successive year.

What of the 34 250 000 who will not receive the Advancement Grant in year one of the scheme (The Left Behinds)?

If each of these ‘Left Behinds’ received R200 000 that would cost R6.825 Trillion. If that were paid out to them evenly over 20 years at an interest rate of say 6% pa, that would be about R10.920 Trillion or R546 Billion per year. Paid out to 34.25 Million each month over 240 months would be 10.92T/240months/ 34.25 Million// per month, or R1328.47 per month per person left behind. R546 Billion as a percentage of R168 Trillion is 0.325% .

So the annual Advancement Grant of R149 Billion and the annual Left Behind Grant of R546 Billion (in total R695 Billion) could be paid annually by a TEAL of 0.09% + 0.325% or 0.415%.

0.415% of R168 Trillion is R697.2 Billion

In Table Form:

Grant

R168 Trillion TEALable amount

TEAL

Total Grant Amount pa

Advancement

‘0.090 % of R168T

R151.2 Billion

R149.00 Billion

Left Behind

‘0.325 % of R168T

R546.0 Billion

R546.00 Billion

Annual Total

‘0.415 % of R168T

R697.2 Billion

R695.00 Billion

NB: This is an exercise. The GDP and the Tealable amount will vary from year to year as will the number of persons qualifying as may the payouts as also will the population, so these numbers are not to be taken as absolutes, merely an indication of what is possible.

Have a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

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Endangered Capitalism

In the aftermath of Brexit, but perhaps not so much so for the election of Donald Trump as president of the USA, because he is more probably the archetypical capitalist than not, there is talk of the demise of unfettered capitalism. In an article How Britain fell out of love with the free market, sentiments such as what follows prevail:

The UK Conservative manifesto attacked aggressive asset-stripping” “perverse pricing” ,“exploitative” markets in energy, property, insurance and telecommunications and “the remuneration of some corporate leaders” while the Labour Party offered policies to include – nationalisation, restored trade union rights, restrictions on the City of London – which would undo much of British neo-liberalism. While John McDonnell, a possible contender for Britain’s Chancellor of the Exchequer, lists “generally fermenting the overthrow of capitalism” as an ambition of his, so it seems the possibility that politicians will be interfering in Britain’s and other economies is becoming ever stronger.

Nigel Vinson, who has been a leading player in Britain’s free-market think tanks lists “Wage stagnation, poor GDP growth, crony capitalism in the contracting-out of public services, endless gaming of the system by corporations, a general ennui about the prevailing economic system … ” as criticisms of capitalist practices, culminating in the 2008 crash, resulting from the “deregulation and hubris of the financial markets”.

If you have any doubts about the way capitalists rip value from ordinary people, for their, the capitalist’s own benefit, this article The Real Cost of Regeneration will soon dispel those doubts

The tale from the United States is much the same. In an article How Power Profits from Disaster, Naomi Klein, an outspoken critic of the capitalist excesses, draws a grim picture of these practices in the USA, from which many of the present political leaders of the US profited hugely, which says a lot of the relationship between government and capital in the USA.

In contrast there is the argument that capitalism and the free market system have immeasurably improved the general well-being of the world’s population, particularly during the past century or so, and in particular globalisation has led to the improved life conditions of millions of previously poverty stricken “peasants” in the under-developed countries of the world who have been drawn into the global economy as sources of cheap labour. These improvements are often rooted in exploitative practices of workers abused in sweat shops, for a pittance by western standards, and such-like. Consumers do not always condone these practices in their names, just for cheaper prices, which if only by association may render them complicit in neo-liberal slave labour, and boycotts of certain brands which use these practices break out sporadically throughout the world.

Another downside to globalisation are those left behind by movement of industries from their historic places of operation, to lands with cheaper labour and more exploitative labour practices.

All of this is happening as I write this in 2017. So we have a conflict of outcomes, massively improved life styles for some ironically brought about by abusive capitalist practices and massive losses for others, brought about by the same practices, The only people who seem to benefit consistently are the ruling elite and the big players in the capitalist system.

The point to all of this is that I do not see neo-liberal globalisation as practised currently as a sustainable option. Yes, the rich can continue to get richer and the poor poorer and this can carry on until something gives. Maybe the market place collapses because there are not enough affluent consumers to support it, or maybe the poor just get sick and tired of being poor (a la France (1789-99) and Russia (1917) and Germany (1930-1945)), and history has a way of repeating itself, and the world could slip into another cycle of autocratic despotism. And do we want that to happen? Do we really want democracy and capitalism to collapse to be replaced by autocratic rule? From chaos come autocrats to impose order and that is a distinct possibility.

Is there another way? Is there a way to save capitalism and democracy and to fend off their attackers, whether they are religious fundamentalist (a la radical Islam) or statist autocrats (a la Vladimir Putin)?

I would argue there is.

The only reason either of those or any other extremist versions of society are allowed to gain a foothold is that populations perceive unfairness by existing systems as being unacceptable and will welcome almost anything in their place which promises justice and order, thus allowing extremism to occupy a moral high-ground. “Liberalism has failed”, they will argue. “We (our religion, our autocracy, our order) will restore order and justice to society”, they will argue. And folk, sick and tired of being abused and marginalised will listen, in their misery and hope for something better, forgetting that what comes with the promise of autocratic justice and order is far worse than the limited and imperfect freedoms under a neo-liberal order

What if there were generally order and justice in society? Extremist appeal would be very much diminished. They would have to work harder to destabilise societies to the point where their intervention would be supported even by a disgruntled minority.

Let me explain what I understand by capitalism. Capitalism is the private ownership of wealth and the means of production and distribution of goods and services for profit. I believe that as far as possible, government and bureaucrats should be kept at arms length from capitalism, namely from private ownership of wealth and the means of production and distribution for profit. Can we risk losing that ownership by ceding it to others?  I don’t believe so.  .I believe however that rampant capitalism as practiced by the neo-liberals as evidenced by the examples given above, should not be beyond the scrutiny and censure of society and in particular, capitalists should be accessible to society. That is, there should be in place the means for ordinary people to protect themselves from the excesses of rampant capitalism. How you achieve this last goal is not exclusively part of this discussion.

So, could there be order and justice in a democratic and capitalist society?

I believe there can indeed be such order and justice, one born out of consent of the governed.

Typically, government is run by the political and oligarchic elite, often the same body of people or at least bodies closely associated with one another. There is little or no influence from the electorate except at four or five year intervals for election purposes, and even that is highly manipulated with the same oligarchs and elites controlling media controlling opinion and trends in a manner that is far from objective. We won’t even consider for the moment, the phenomena of false news or propaganda.

If instead there were a senate peopled by ordinary people, through which all legislation and regulation needed to pass for approval, I would argue that such political representation of ordinary people would change the political landscape. It is true that not all the political and oligarchical elite would approve of such a senate, but I believe it would be preferable to any of the revolutionary outcomes cited above.

Such a senate is proposed here for South Africa.

So how does this control the excesses of unbridled capitalism? It would allow the ordinary people of a society to exert their influence on regulation and legislation which may be intended to disempower them or defraud them. I believe that would be a very significant act of empowerment.

So capitalism can otherwise continue making the rich richer and the poor poorer?

One of the primary concerns about rampant capitalism is that tendency. It leaves the poor (the left behinds) poorer and feeling disempowered and helpless and strips wealth and dignity from them. This is a dangerous outcome that needs to be addressed and a very effective way of addressing it is with a Basic Income Grant. Apart from helping to fight poverty, having a basic income will empower people who otherwise may have nothing, not even hope and dignity, and aid others who may not be so impoverished but are borderline cases, with little or no income surplus to their needs.

To those who believe that one should only receive that which is earned, let me suggest that the world is full of capable people equipped and willing to earn but who cannot be employed because the formal labour market is oversupplied. This is not going to get better. This is going to get worse with the advent of automation, computerisation and the gig economy. So how are these people going to survive? A basic income grant will not only provide for basic needs but will give recipients opportunity to invest in themselves, in savings, in education, in training, in businesses and arts and crafts and so on. Whatever you can imagine would be stimulated and advanced by such a grant.

You can think of it like this; a basic income grant paid to your population would be a very effective way of stimulating both the demand and the supply side of any economy and those most in need will spend it on their needs instead of having nothing to spend, and nothing to contribute to the economy. So I believe a basic income grant is a win win solution for many social and economic needs.

A Basic Income Grant is proposed here for South Africa

There are other things one can do to engage your population in your economy. A Sovereign Wealth Fund is one such means, provided that it was owned by each individual of your population, in equal parts, rather than by your government. In turn the sovereign wealth fund invests in your and other’s economies, wherever an investment makes sense and profits are to be made by the fund, and therefore by its owners, your population. In most countries, such a fund would become a very significant part of your economy and give your population a sense that it is engaged in your economy, rather than being divorced from it.

Such a fund is proposed here for South Africa.

Capitalism, which has been so badly managed from a societal perspective as to make it an endangered system, needs to be reinvented to be better managed from a societal perspective, so as to no longer be endangered. What these moves do in effect, is to empower ordinary citizens politically and economically using the tools of capitalism and democracy to help eradicate poverty, and to raise democracy and capitalism to a moral high-ground that radicals of whatever persuasion will find difficult to match let alone challenge.

This post originally posted in John’s Bolg 

Have a look at DDF policy on the Basic Income Grant (BIGand DDF policy on the Total Economic Activity Levy (TEAL).

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There is No Such Thing as a Free Lunch. Part II

In my last post Is a Basic Income Grant Stealing from the Rich I referenced an article There is a problem with the way we define inequality.

This article made a number of interesting assertions about attitudes on inequality, the principle one to my mind being that we should stop obsessing with the rich and super rich and start obsessing with eliminating poverty, and also, importantly, the assertion that peoples’ attitudes were less angry about wealth and more angry about unfairness. As was stated the public perception of wealth inequality itself being aversive to most people is incorrect, and that instead, what people are truly concerned about is unfairness” and also that “People typically prefer fair inequality to unfair equality”, and, as we are beginning to see in South Africa, what really gets folk going is unfair inequality, a la the Zuptas state capture and wealth grabs.

So we all need the right to work harder and earn more and be wealthier than our neighbours, that is fair and acceptable. Just reward for just gainful employment is acceptable. But if you cheat in order to be wealthier, that is just not on.

This got me thinking about the Fees Must Fall movement and protests (see here) because it really is unfair that certain sectors of our society perhaps have little or no access to higher education. Let me be very clear, it is not the access of those who have access that is unfair, but the lack of access by those who don’t have access that is unfair. This is a major argument in the article There is a problem, the issue of unfairness.

A major conclusion of the article is that “the solution lies in addressing the fact that poverty and unfairness exist.”

This set me to thinking about the conflicting unfairness inherent in the fees must fall campaign; the unfairness of the poor being unable to access higher education just because they were poor, and the unfairness of the same poor, expecting those who do not benefit from higher education, to have to pay for the higher education of the same poor. Something simply does not add up.

You cannot fix a wrong inflicted on anyone or group by inflicting another wrong on another one or group. That is simply wrong and unfair and will be perceived as wrong and unfair and is probably why most people object to paying for the education of others who are seen to be unwilling to pay for their own education.

To reiterate, at the risk of being boring, “what people are truly concerned about is unfairness” and “People typically prefer fair inequality to unfair equality”.

So the problem is how to fix one wrong without creating another wrong?

The Direct Democracy Forum (DDF) believe that the Universal Basic Income Grant goes a long way to relieving poverty in a fair and equitable way, Thus all in society contribute to the system in an equally proportional manner and all benefit from the system equally. Is this fair and equitable? Some would say no and others, the DDF included, would argue that imperfect as it may be, it is fair and equitable, and is a lot better than what we have.

But, and here is the big BUT, could all higher education students afford to pay for their education (fees and accommodation) exclusively with a BIG? Of course, students can supplement their income by working full and part-time in internships or apprenticeships or articles, and there is nothing wrong about that, in fact many qualifications require it of you in order to qualify you as a professional fit to administer to (for example) your patients if you are a doctor or your clients if you are an accountant or lawyer. But what if a Basic Income Grant simply isn’t enough because fees and or accommodation have escalated out of all proportions.

Education throughout the world is becoming almost prohibitively expensive. Privatisation of funding is making it even more unaffordable and the level of debt that graduates are left with is making them wonder if education is even worth it, and some of the schemes are just there to make finance providers rich at the expense of society in general and the graduate population in particular. And yes, there are calls all over the world for fee free education, so South Africa is not alone. Indeed there are countries where tertiary education is free, but the much lauded fee free system of Germany is branded by some as being unsustainable. Others are saying the opposite, that fees are becoming, like the dinosaur, extinct, So everyone has a point of view and is looking for a solution.

Maybe then we need a different mechanism

The DDF believe that such a mechanism could exist which may be imperfect, but might none the less be better than what we have. But again there is the question of fairness..

But to address the issue of fairness, it would need to be a mechanism that benefits all equally, maybe a universal education grant. But what about those to whom a higher education is unsuited. How would they benefit from such a scheme? The short answer is that they would not benefit, and we would be back to a situation of unfairness.

Perhaps, as has been suggested about wealth and income inequalities taking our attention away from the real issue of poverty (see There is a problem), we are focussing on the wrong thing. Instead of just focussing on education for the poor we should instead be focussing on the bigger issue of how to better the lot of all. So what the DDF are now considering is the possibility of a once in a lifetime “Universal Advancement Grant”. I can hear the groans – “not another grant!” and “this is a slippery slope?” and “What a daft idea!” – I can just imagine the moans and groans and yes, you have a right to be sceptical. Indeed the DDF still rest on their assertion that there is no such thing as a free lunch so the means to pay for this needs to be found.

But consider this in the light of fees must fall and the issue of fairness; What if everyone had this once in a lifetime “Advancement Grant” and could use it to pay for their tertiary education or as a down-payment on a house or as a business investment or to travel abroad with, or indeed, just to fritter it away on trivia. What if?

And what if this could be substantially paid for by the savings made from shrinking the size and cost of government? What if?

Wouldn’t that solve the issue of fees must fall and fairness at the same time? It possibly would for this and future generations of beneficiaries, but those of us who have already missed that boat would not think of it as fair and to to pay such a grant to all the rest of the county’s citizens would probably be impossible, but could we compensate them somehow? Perhaps an enhanced BIG granted over time (say over 20 years) to compensate those who didn’t receive the advancement grant might work and be affordable?

So maybe a universal once In a lifetime “Advancement Grant” is not so daft an idea after all, and is worth considering.

The DDF have some pencil sharpening to do to figure out how to pay for it all. But that is part of the process.

Have a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

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Is a Basic Income Grant stealing from the rich?

An interesting article from BBC Future (There is a problem with the way we look at inequality) looks at the wealth gap and some publications on the subject and concluded that there were actually three different elements that one should distinguish between in order to understand what needs to be done to rectify an obviously unjust situation. The issue, they say, is not the existence of a gap between rich and poor, but the existence of unfairness”.

So the trick is to understand what of the wealth gap is just and what of it is unjust. We would paraphrase the situation thus, we need to deliver justice without destroying that which is just and desirable, because, if we destroy that which is good in an attempt to destroy that which is bad, what is left for those of us who want the good? Perhaps only the bad. This is reflected in the law of unintended consequences.

English is full of pithy little sayings and a very pertinent one for this topic is; “don’t throw out the baby with the bathwater”. In other words, be careful of the baby (the economy). You don’t wish to destroy the economy.

A point highlighted in the article was that one study argued that the public perception of wealth inequality itself being aversive to most people is incorrect, and that instead, what people are truly concerned about is unfairness” and that “People typically prefer fair inequality to unfair equality”. Nicholas Bloom, an economics professor at Stanford University arguing against a world of absolute equality, observed “why would I work for 50 hours a week if everything I’m given is free?”. Indeed, why work at all if you receive the same as Joe Blogs who works 50 hours a week, when you get the same for not working at all?

The three ideas we need to grasp about equality are 1) People should have equal opportunity in society, regardless of their background, race, sexuality, gender and so on. 2) Fair distribution says that benefits or rewards should be distributed fairly based on merit. 3) Equality of outcome says that all in society should earn the same rewards irrespective of their input into society.

Most of us would agree with points 1 and 2 but many would disagree with point 3 (see Bloom (above)).

Many economist interviewed for the article agree that too much attention is paid to the fact that the 1%, and the super-rich exist. Instead, they argue, we need to concentrate more on helping those less fortunate, who via a lack of fairness, are unable to improve their situation.

Harry G Frankfurt, emeritus professor of philosophy at Princeton University argues in his book On Inequality that “the moral obligation should be on eliminating poverty, not achieving equality, and striving to make sure everyone has the means to lead a good life”.

Experts say the solution to poverty lies in addressing the fact that poverty and unfairness exist because addressing that should be the real moral obligation.

While we at the Direct Democracy Forum (DDF) agree with all of this, our approach is more pragmatic than moral. We suggest it is in fact in the interests of all of society, including the rich and the super rich, that poverty be eradicated, and that it is also in the interest of the market economy that poverty be eliminated. After all, the poor cannot afford to buy cars and washing machines and dishwashers and clothing and medical services and education and housing and recreation and food and travel and electricity and swimming pools and stereo sets and computers and video equipment and so on and so on and so on, while even the modestly affluent, the sort of lower middle class (financially speaking), can, over time, buy all these goods and services. By making the demand side of the economy stronger, we all, even the rich and the super rich, grow richer.

If we use a slightly different analogy, every farmer knows he has to sow the seeds of his prosperity by investing in his land and his livestock. Similarly every person who relies on the economy for his prosperity, both the rich and the poor, needs to sow the seeds of this prosperity by investing not only in the means of production, but also the means of consumption.

So we at the DDF argue that a Basic Income Grant (BIG), funded at first by the economy through the application of a BIG TEAL, will sow the seeds of that prosperity, and should not be viewed as stealing from the rich to give to the poor, but as an investment in the demand side of the economy, and if at the same time, a BIG makes the lives of countless of individuals better and makes ”sure everyone has the means to lead a good life”, to quote Harry G Frankfurt, so much the better.

In addition, it should be remembered that TEAL collects in equal proportion from everyone. While the rich may contribute more than the poor, that is only because the rich are more economically active than the poor. But they all contribute in equal proportions.

So, in answer to the question, is a BIG stealing from the rich, we would answer emphatically and resoundingly, NO! It is an investment in their own and everyone else’s prosperity.

For those who wonder how we could pay for a Basic Income Grant, see how to pay for a basic income grant and take a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

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Mental Health Subsidy Crises? Dial BIG for Help!

Remember the Esidimeni crises when a mental health care facility was closed and patients transferred willy-nilly to other ill-equipped facilities. A health ombudsman report suggests that as many as 80 (others say more and still counting) patients may have died as a result of that fiasco and not just 36 as originally reported.

Could things get worse? Apparently they can.

The San Michele Home, a flagship facility for mental health care, faces being closed because the Gauteng Health Department is withdrawing the R3400.00 per patient per month subsidy, because, the department claims, the facility does not comply with the regulations for such an establishment. These regulations were recently changed and, it is claimed, are excessively stringent and, in any event, the home has not been given a reasonable opportunity to comply with the new regulations.

Forget the San Michele Home for a moment. It appears that as many as 160 (one hundred and sixty) mental care facilities face closure for the same reasons. San Michele Home has about 200 patients in its care, so let us assume that each of the 160 homes have on average100 patients in their care. That means that some 16 000 patients (or more) are at risk, something that reduces the Esidimeni crises to a level of insignificance that is truly frightening.

It seems that the Gauteng Health Department are trying to discard their subsidy obligations to the mentally ill community and, quite callously, do not care much about the risk of a few more deaths here and there.

One would have thought that they would have learned from the Esidimeni fiasco, but apparently not.

But the Direct Democracy Forum (DDF) are not here to berate the Gauteng Health Department for whatever their lapses may be, merely to observe that if a Basic Income Grant of R5000 per month for every adult South African were in place, all sixteen thousand or so patients would not be at risk, because they could provide for their own medical subsidy at the facility of their choice, and would not need to be subsidised by a reluctant province or even an unwilling national government.

For those who would ridicule the idea of a Basic Income Grant, see how to pay for a basic income grant and take a look at DDF policy on the Basic Income Grant (BIG) and DDF policy on the Total Economic Activity Levy (TEAL).

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Recession? Dial BIG for help

Recession? Car sales down? No problem. Dial BIG for help:

South Africa slipped into recession with two successive quarters of negative growth in the GDP and car sales shrinking 13% to 34 956 units, year on year to April 2017.

Imagine there is in place a Basic Income Grant (BIG) of R5000 per month given to every adult South Africa citizen (see here) in 2017, and 0.1% of that population, say 34 400 of them, decided that they would like to buy new cars in 2017 because with the R5000 BIG they could afford to buy a car and pay it off over say the next three years. That would almost double new car sales for 2017 and boost new car sales by maybe R6.2 Billion, or more, in 2017.

I wonder what effect that would have on the motor industry and on SA’s latest recession?

I wonder too, if the remaining R1.5 Trillion pa additional spend by BIG recipients in 2017 (see here) would have any effect on the rest of the economy? I would guess that yes, it would have an enormous and positive effect on the economy.

Bye bye recession. Hello prosperity!

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How to pay for a Basic Income Grant

How can one pay for a Basic Income Grant (BIG)?

The short answer is that a TEAL (a Total Economic Activity Levy) would pay for a BIG. Later, the role of TEAL as a source for a BIG may be taken over by a Sovereign Wealth Fund, in part or in full, depending on the success of the SWF project (see SWF)

Let us explain how:

First what should a basic income grant be set at?

In the UK people who typically use food banks earn less than £320.00 (at R17/£ = R5440) per month and in the US they are thinking of $10 000 pa or about $800 BIG per month (at R13:50/$ = R10 800) while Finland are talking about €800 BIG per month (at R15.50 = R12 400), so the Direct Democracy Forum’s (DDF’s) suggestion of R5 000 BIG per month is quite modest when compared to other countries’ needs and suggestions. But let’s stick with R5 000 per month as a starting point.

What would the monthly and annual BIG bill be at R5 000 per month?

Our best guestimate is that the adult South African population is about 34,4m. That would mean a monthly BIG bill of R5 000 X 34.4m equals R172 Billion or an annual BIG of 12 times that amount (no thirteenth cheque) or R2.064 Trillion.

That’s frightening. Where on earth do we get R2.1 Trillion Rand a year, an amount rising along with the population as we go on in time? That is almost the value of the current GDP (our estimate at R2.8T for 2017).

The DDF reasons as follows.

If there is a relationship of 30 times the GDP to the amount of money flowing through the banking system (a relationship we observed in an earlier TEAL exercise in 2011) , a GDP of R2.8T would equate to R84T passing through the banking system, per year, We call that the TEA or Total Economic Activity. But each Rand of TEA represents a deposit into one bank account and a withdrawal from another bank account (we call this the doubling factor). So the TEALable amount is the TEA doubled, or R84T doubled to R168T.

Suddenly, 2.1 Trillion Rand seems quite small. In fact a 1.2% levy on the Tealable amount of R168T would deliver R2.1 Trillion. Not cheap but also not that expensive when you consider that the R2.1 Trillion will go back into the economy and effect the money velocity and the GDP (more about that later) and generally increase the size of the pie that we are all eating from.

Is a BIG just a thinly disguised wealth redistribution?  Does it not steal from the rich to give to the poor?  

This is not the topic of this post but for those who are thinking along those lines and do not at first see beyond the wealth redistribution element (yes, there is such an element) then we suggest you consider the effect on the economy of boosting the potential spend of the population by a net R1.5 T a year (remember the social welfare grant offset).  That has to boost the demand side of the economy enormously and provide the suply side of the economy with numerous wealth making opportunities, not just for the existing industrial and commercial powerhouses but also for the small trader and industrialists (the SMEs that everyone says should be the backbone of our economic revival) and individuals at large. In addition the socio-economic benefits for the population as a whole probably make it worthwhile.  But this is discussed more fully here and elsewhere in DDF’s current affairs posts,

Are there dangers? Yes, there are:

Will a BIG effect inflation?

Yes, it probably will, but that would need to be countered by 1) easing into a R5 000 BIG over time (say over 5 years) to ease the inflationary pressures on the economy, and 2)  dropping existing social welfare benefits (for example old age pensions) as the BIG matches or betters them (you won’t receive both an old age pension and a BIG together) and 3) increasing the GDP, in short increasing the supply of goods and services to match the increased availability of the R2.1T of BIG money.

Will a BIG effect the money supply and won’t that in itself be inflationary?

The answer to that is probably not a simple yes or no. Yes a BIG of R2.1 will effect the availability of money but not to the extent of R2.1 T.  Remember the social welfare offsets and that TEAL does not create money.  The economy may become more liquid.  A BIG will probably make existing money more accessible, particularly for the poor, and make money circulate more quickly and more often and that could be inflationary (see above on counter measures).  The No side to that is that TEAL does not in itself create money, print money or borrow money.  So the money supply per se should not be effected by a TEAL funded BIG, and that in itself should restrain inflationary tendencies.

Will a BIG of R2.1 Trillion lift the GDP to R4.9 Trillion?

No, probably not: 1) the BIG will substitute for existing social welfare grants, so there will be an offset factor, and 2) any increased demand trend will probably be met by a trend to import more, not produce more (remember we are in a post industrial phase in South Africa and are more a nation of consumers than producers, and I squarely blame the ANC for that).

So how do we move the supply trend to produce more and import less?

This will need a concerted and coordinated effort of the private and public sectors to boost production, maybe even engaging in targeted programs of import substitution and production benefaction, particularly by engaging as many of the BIG recipients as possible to invest as much of their BIG in production capacity, either of their own or through the JSE by investing in corporations which can expand their capacity to compete for the expanding markets for their goods and services, and of course, investments by the Sovereign Wealth Fund in South Africa’s production capacity.

Would a DDF administration have an overarching socio-economic-industrial strategy?

Yes, there would have to be such a strategy. In short, all the damage that successive ANC governments have done and in particular the damage the most recent (2014-19) ANC government has done, would have to be reversed. This is a tall order but when South Africans can stop hating one-another and when even the poorest of the poor has a stake in the economy and has some security and hope for the future, we believe that a united and determined South Africa can do just that, and in fact must do it, because the alternative is an ever downward spiral toward abject misery for most of our population.

So that is how a Total Economic Activity Levy will pay for a Basic Income Grant.

Capisce?

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Unpacking State Capture:

The Public Affairs Research Institute (PARI) have produced a report which unpacks the Capture of the South African State by Zupta Inc in a very clear and dispassionate manner that makes sense of and expands on, Thuli Madonsela’s (our ex Public Protector) State of Capture report and details very succinctly the manner in which Denel, Eskom, Transnet, Prassa, to name a few SOEs (State Owned Enterprises) and Treasury were taken over by Gupta surrogates and then milked.

Page 42 of the PARI report Betrayal of The Promise details the modus operandi for milking an SOE. We paraphrase:

New minister (say for energy) changes the SOE board composition

SOE embarks on new capital expenditure projects

The new board support radical economic transformation or has close personal links to bidders

Tender is awarded in circumstances of clear conflict of interest.

This is a process that can take years to put in place and clearly is part of a systemic process of looting compliant state coffers and public and private purses (for example, how much do you pay versus how much should you pay, for electricity?).

To add insult to injury, the DA’s Natasha Mazzone suspects that Eskom engineered the rolling blackouts (remember them?) in order to create a panic filled and compliant market place to ensure that the coal deals of Eskom’s choice and terms and conditions were met, as part of the milking process. Well, the Direct Democracy Forum (DDF) pretty much suspected that was behind the rolling blackouts, and it wouldn’t be the first time that Big Power (here and elsewhere) manipulated the market place to their profit. Wherever there is a monopoly these behaviours are pretty much a given.

Then came the email exposé about the extent of the state capture and President Zuma’s planned retirement bolt-hole in Dubai, and further still, the role Bell Pottinger had, (also see here) a UK PR firm contracted by the Gupta’s to run a disinformation campaign aimed at the South African public, duping the nation and creating red herrings to detract from the looting that was happening in front of our very eyes.

It is all pretty sickening, particularly given the state of the economy, wide-spread poverty and the terrible need for social, economic and administrative justice in South Africa.

South Africa is not entirely alone in this sense. If you haven’t heard of Operation Car Wash, a Brazilian equivalent to Zupta-Gate, read all about it, it is very informative. There are lessons to be learned from Brazil’s experience.

There is not much you or I or the DDF can do at the moment but they say that truth is stranger than fiction and there are upcoming elections and, while the DDF having the necessary political clout to do anything substantial about this is unlikely, sometimes the unlikely happens against all odds. We also think that the members of Zupta Inc should contemplate the fact that many in South Africa will be looking forward to seeing justice done when a government of integrity takes power from the ANC.

So, our message to them is, “You can run but you cannot hide”.

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Molefe Eskom-Tegeta Scam

 

An analysis of the State Capture Timeline of the events from 1st November 2011, when Glencore et al purchased Optimum Coal Holdings (OCH) and Optimum Coal Mines (OCM) to 1st January 2017, when Brain Molefe resigned from Eskom in disgrace, shows four clearly distinct sub-sets.

These are the periods 1) 1st November 2011 to 1st March 2015 2) 1st April 2015 to 8th April 2016 3) from 11th April 2016 to 14th April 2016 and finally 4) from 23rd May 2016 to 5th September 2016.

The first period 01/11/2011 to 01/03/2015 is an approximate three year and four month period during which Glencore and partners purchased Optimum Coal Holdings and found that the pre-existing twenty year Coal Supply Agreement (CSA) with Eskom was a loss-making deal to the tune of some R100M per month, which needed to be re-negotiated. Around 1st March 2015, a draft addendum to the CSA agreeing to sell coal to Eskom at cost through to 2018, was said to be approved by the Eskom Tender and Procurement Committees.

The second period runs from 1st April 2015 when Brian Molefe joins Eskom Holdings SOC Ltd, through his stewardship until 11th April 2016, when the Loan Consortium approved the business plan which saw OCH and OCM sold to Tegeta (aka Oakbay/Guptas).

During this period Molefe, (who Eskom assures all of us had no influence over board decisions) appears to have intervened to:

  1. force OCH/OCM into Business Rescue by refusing to approve the addendum to the CSA (see above) needed by OCM who were losing up to R120M per month on the Hendrina CSA, as well as having Eskom impose a R2.1765 Billion penalty on OCM,

  2. quash any hopes of sales to bidders other than Tegeta, and there were a few alternative bidders (any sale required Eskom approval, probably in terms of the extant CSA) as no approval was given except for the Tegeta deal,  and

  3. to force upon the sellers the sale of Optimum Coal Holdings and all subsidiary business assets, including the Koornfontein Mine and the Optimum Coal Terminal Concession (very significantly), as well as Optimum Coal Mines, to Tegeta. (see above – any sale required & etc ….. )

Also during this period,

  1. on 4/03/2016, Tegeta obtained a certainty letter from the Bank of Baroda as cover for the purchase of all shares in OCH, viz the Tegeta share of R2.15B as agreed.

  2. on 30/03/2016, Eskom signed a release on the agreement for OCH and

  3. on 8/04/2016 the Loan Consortium approved the underlying business plan (assuring them they would be repaid the outstandings on the revolving loan granted Glencore et al in January of 2011).

On 11th December 2015 an agreement was struck for the sale of OCH (as above) for R2.55B, payable to the Loan Consortium, R2.15B by Tegeta and R400M by Glencore.

Everything sort of looked ok.

The third period ran from 11th April, 2017 to 14th April 2016:

  1. 11th April 2016 Tegeta defaulted on the sale agreement (they were short R600M) and tried to re-negotiate the deal with the Loan Consortium, which effort the Consortium rejected.

  2. 13th April 2016, Eskom prepays to Tegeta a R659.5M pre-payment on a CSA for Arnot power station, supplied by OCM, but paid to Tegeta at a premium of R1.20 / GJ, being a profit to Tegeta which should have been for account of OCM under management of the BRPs,

    1. At that time OCM was still owned by OCH and managed by the BRPs whose mandate only expired 31st August 2016.

  3. 14th April 2016 Tegeta and Glencore settle their full monetary obligations to the Loan Consortium

The 4th period ran from 23rd May 2016 to 5th September 2016: This period can only be described as raiding the honey pot:

  1. 23rd May 2016 Tegeta transfered R280M from the Koornfontein Rehabilitation Fund to the Bank of Baroda.

  2. 21st June 2016 transfered what is variously reported as R1.4612B or R1.4699B from Optimum Mine Rehabilitation Fund Trust to the Bank of Baroda.

    1. The interest on these funds at 7% pa would amount to R122.5M

  3. 5th September 2016 Oakbay/Tegeta/Guptas sold the Optimum Mines coal export allocation at Richards Bay Coal Terminal to Vitol, an international coal trading firm, for a cool US $250M (R3.68B). The allocation was acquired through the purchase of OCH by Tegeta, paid for on 14th April 2016, a 5 month profit of R1.5B, while still retaining all the remaining assets of OCH.

Then of course, only on 31st August 2016 do the BRP’s relinquish responsibility and obligations for OCM. Until that point the BRP’s were still managing OCM.

The final chapter of this saga was Brian Molefe resigning as CEO of Eskom, in disgrace, having had his fraternisation with the Gupta’s publically exposed.

How to summarise this.

From 1st November 2011 to 1st March 2015 business was amiable between OCM and Eskom with emphasis on securing the coal supply for Eskom to the benefit of both parties.

From 1st April 2015 when Brian Molefe joined Eskom to 8th April 2016, relationships soured and OCM was pushed to the wall by Eskom’s unwillingness to negotiate mutually beneficial business deals with OCM, penalising OCM to the tune of R2.1765 Billion and OCM were forced to sell to the buyers of Eskom’s choice (viz Gupta’s Tegeta) on terms and conditions of Eskom’s choice (the Gupta’s wanted the Coal Concessions at Richards Bay Harbour for a song).

From 11th April 2016 to 14th April 2016 Tegeta tried to re-negotiate the deal as they were short of R600M and having failed to renegotiate, Eskom bailed them out by pre-paying Tegeta R659.5M on a CSA contract that was not even Tegeta’s to have (they had yet to close the OCM/OCH deal).

From 23rd May 2016 to 5th September 2016, even before OCM management had shifted from the Business Rescue Practitioners, the Gupta’s plundered the assets of OCH, including transferring some R1.75 Billion of Rehabilitation Trust Funds into Tegeta business accounts at the Bank of Baroda and selling the Richards Bay Coal Export Concessions at a R1.5 Billion profit.

Was this shrewd business dealings or a monumental multi billion Rand scam involving hundreds of millions of Rands belonging to a state owned public enterprise?

We at the DDF believe Molefe was the Gupta’s inside man at Eskom, and the scam plan from the outset was to defraud Glencore, owners of OCM and OCH, of their assets, in particular the Richards Bay Coal Terminal Concessions, and to profit thereby, because when it looks like a duck and walks like a duck and talks like a duck, that’s what it ducking well is, a duck.  So when a deal looks like a scam, there is no alternative conclusion to arrive at than it’s a scam.

Brian Molefe: This is the same man whom having resigned from Eskom in disgrace for fraternising with the Guptas, was offered an ANC seat in parliament, then offered a R30 Million severance package by the Eskom board after only 18 months of service, and when that last piece of chicanery was overturned, re-established as Eskom’s CEO.

This is the land we live in.

South Africa.

A land of infinite opportunities if you know the right Gupta.

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Fake News

The American presidential election stirred a lot of mud in the USA and internationally. There are theories that Russia interfered in that election by hacking democratic party e-mail accounts and leaking the results through wiki leaks and other compliant avenues in an attempt to discredit the democratic campaign and in order to install a pro-Russia candidate in the White House. Sometimes theories can be concocted to match outcomes but in this case, my guess is that there is some credibility to the theory that Russia did its best to discredit Clinton and the Democrats and install a much more malleable candidate, namely, President Donald Trump of the USA.

Since then, there have been lots of reports of fake news, one for instance dubbed pizzagate, where the Democrats were alleged to be running a paedophile ring out of a Washington DC pizza parlour See here. Crazy? Yup! But apparently some idiot took it very seriously and went in there with a gun to check out the story. See here.

Some fake news is just motivated by greed. The more ludicrous the claims the more they are shared the more advertising revenue they generate for the web site reporting the absurd. To these sites and their owners it is just a money game. Many of the sites reporting fake news are allegedly run by East Europeans. See the transcript of this discussion between Craig Silverman of Buzz Feed and David Davies of NPR (US National Public Radio) Fake News Analysis Transcript. Wherever the site is based, the criteria is how many hits and revenue can a story generate and the truth of the matter is that the truth of the matter is of no concern.

So if a fake news story generates conflict between two nations who live on the brink of mutually assured destruction (only a slight exaggeration) as was reported on here between Pakistan and Israel, so much the better for the story. What is the big deal if some idiot shoots some of the staff at a pizza parlour (it didn’t but could’ve happened) or a nuclear conflict is precipitated (it didn’t but could’ve happened)? So what, they will argue, as the till clangs ‘k-ching’?

And in case you imagine for one moment that we in South Africa are immune to these machinations, may I draw your attention to the likes of Dr Eschel Rhoodie and the Information Scandal of the Apartheid era (he had a real PhD) and the current scandal surrounding Hlaudi Motsoeneng (who has a fake or no Matriculation Certificate at all), who, while in charge of the SABC (South African Broadcasting Corporation, South Africa’s public broadcaster), decreed that there had to be 70% positive news stories broadcast about South Africa by the SABC, and that there would be no coverage of unrest (of which there is a fair amount), and who decreed that SABC should broadcast 90% local content and who ruled the media department at the SABC in what has been described as a reign of terror, all of which demonstrates the relevance to South Africa of the curse of fake news and manipulation of the news and the media by the powers that be, past, present and future. It gets even more complicated when big business takes over government and the media serves their interests

Take the story of Iqbal Surve. Born in Cape Town in 12th February 1963 in poor circumstances he apparently pulled himself up by his own shoelaces and became a medical doctor (the facts are unclear – Cape Town U, or did someone mention Cambridge U, or does he even have a MBChB degree?) and confidant and medical advisor to Nelson Mandela (apparently while still a junior medical student) and a recipient of multiple awards from organisations who have never heard of him. His life appears to be a fabrication (see much posturing, political favour currying, more incredulity). In fact, he seems a bit of a charlatan who has got into bed with the ANC and who managed to con the Public Investment Corporation (or maybe they were complicit) into parting with R900 000 000 (Nine Hundred Million) of public pension funds apparently to buy the Independent Newspapers, which sum is alleged to be non-repayable, whatever that means. One’s head spins. And this person heads up the not so Independent Newspaper Group. The largest group of English language newspapers in South Africa is headed up by this apology for a media mogul and ANC stooge. And that is the relevance of Iqbal Surve to the topic of fake news.

Surve is not the only worm in the can.  If you only concern is how government departments spend your hard earned money, look no further than the new Nielsen report which highlights the Gupta owned New Age rag (I hesitate to imply it has a better status) having hooks into major government departments and parastatals, sucking them dry of their advertising budgets.  Read all about it here and be as appalled as I am..

As if that were not enough to make the average South African nauseous, the ANC has, apparently for years, run a black ops department, specialising in tailoring news and information for public consumption. One of the Black Ops contractors is now suing the ANC for unpaid fees for fake news activities. The ANC of course are claiming this is fake news, which is sort of the point of this entire blog. Who and what to believe.  See Lies will always out.

So when Putin says with a wink and a nod that no Russian regulars are engaged in military activities in the Ukraine, the media, in an effort to be non biased, print the assertion even though the evidence suggests otherwise.

The point of all this is, who in the world do we trust to keep us informed and not to misinform us. On what do we base our decisions on who to elect as future leaders and what if anything can we do to discredit and maybe punish purveyors of fake news? Is it not, after all, a question of fraud? But if you go after the news fraudsters you are bound to damage genuine media outlets as well, who could in self defence engage in self censorship. Dare we publish this or that story? Kind of self-defeating.

Of course, fake news is nothing new.  Britain used it on China to encourage China to Join against Germany in the first world war, Germany used it  in the second world war against the Jews and other non Aryans and against the Allies, Goering was Nazi Germany’s propaganda wizard. Fake news has always been with us.  What has changed is the method of delivery with media like twitter and Face-book and the news media trying to keep abreast of itself.  Fake news that took months or even years to plan and disseminate before now happens in moments on the Internet and has an avid global audience.

But some of the things we can do to protect against fake news are discussed here, here and here, and a good dose of skepticism will go a long way. You can also read up more here and here.  Sadly this is actually never ending. So let me at least end this now.

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The Age of Anger and the Educational Divide

The angst generated by Brexit and the Trump election is still generating much comment with all sorts of views being expressed.

Pankaj Mishra, writing in the Guardian in an article titled “Welcome to the age of anger” asserts that emotions of fear, anxiety and humiliation played a significant part in both Brexit and the election of Donald Trump and asserts further that a rigid contemporary belief that what counts is only what can be counted and what cannot be counted – subjective emotions – therefore do not (count). He points out that these emotions are also what drove Germany into the second world war and are driving anti-western sentiments in China, Russia and India.

He quotes Robert Musil speaking of the critics of Enlightenment rationalism, who observed that the problem was not that we “have too much intellect and too little soul” but that we have “too little intellect in matters of the soul”. This is a statement that resonates with me.

He further observes that seeking the “rational actor” we fail to see the individual as a “deeply unstable entity” particularly prone to ressentiment, a French word describing an emotion “caused by an intense mix of envy, humiliation and powerlessness” and resulting in a sentiment that can be expressed thus, “that it is not enough to succeed. Others must fail”. (Gore Vidal). So ressentiment “is poisoning civil society and undermining political liberty everywhere” which is further exacerbated by the inability of our “grotesquely unequal societies” to satisfy expectations of the equality of social conditions and individual empowerment presented as ideals of modern democracy.

Pankaj Mishra observes that “Never have so many free individuals felt so helpless – so desperate to take back control from anyone they can blame”. He concludes that we need a “radically enlarged understanding of what it means for human beings to pursue the contradictory ideals of freedom, equality and prosperity”.

Mishra says a lot more and is worth a read here.

In a related article, “How the education gap is tearing politics apart” David Runciman, also in the Guardian, observes that the chasm in education between the poorly educated and the well educated elite is ever growing and “has become a fundamental divide in democracy” and “how people vote is being increasingly shaped by how long they spent at school” and to a significant extent, this is what helped shape the Brexit results. Runciman succinctly states the fears that “democracy will mean rule by the poor, who will use their power to steal from the rich” and “rule by the ignorant, who will use their power to do the dumbest things” and that “both these worries go back as far as Plato” (428/427 bce – 348/347 bce) and recur “at times of political crises”.

Walter Lippmann, an American propagandist of the first world war, wrote of democracy that it was impossible to believe “that the knowledge needed for the management of human affairs comes up spontaneously from the human heart”. Evidence and reasoned argument mean little to the average voter, he argued, and that only specialist experts could rescue politicians from the dubious instincts of the people and direct them to what evidence required.

Runciman argues that to think that 2016 was a return to a democratic norm would be a big mistake. Runciman instead suggests that the educated tend to flock together and share common values and vote one way, and that the uneducated would do much the same but vote another way. Greater freedom tends to produce more social stratification rather than social diversity and this tends to support political choices of both groups, the educated and the less educated, with the divide highlighting alternative values ‘often characterised as opposition between libertarians and authoritarians” and this “represents a gulf in mutual understanding”.

Neither Runciman nor Mishra offer solutions, just analysis. That is more than enough. The solutions must come from those who heed their analysis.

How is this significant for the Direct Democracy Forum (DDF)?

First, the DDF senate proposal permits participation of ordinary citizens in the day to day political process. But the DDF’s Senate is not a legislative body. It is an approval element of a legislative body. So, the Senate cannot approve a law where the poor raid the rich unless the experts (the legislators) actually pass such a bill and send it to the senate for approval. Nor can a DDF Senate legislate something abysmally stupid unless the same legislators pass such a bill and send it to the Senate for approval. One would hope that the DDF Senate, even if presented with such a bill, will have the good sense to reject the bill, because it would have first to debate the pros and cons of such a bill and those presenting those pros and cons would also be part of the ‘learned elite’, who we believe will no doubt seek to alert the Senate members of the pitfalls surrounding such a bill.

Thus meaningful participation in the legislative process would be accessible to anyone who volunteers and is selected to sit. For details of the process and of the proposed Senate, see here. It will be obvious that the senate would have the power to quash any legislation or regulation that it feels was elitist or otherwise undesirable, no questions asked, and would need to be convinced of the desirability of any bill or regulation passed by the legislators or regulators but, importantly, would itself be unable to initiate legislation.

This should address in part, the sense of helplessness felt by so many referred to by Mishra and to enable human beings to pursue the contradictory ideals of freedom, equality and prosperity in a structured, peaceful and democratic manner.

Then there is the sense that society is being divided between the well educated and the not so well educated. The only way to address that is to ensure that all have the opportunity to be adequately educated, according to whatever their intellectual capacity is.

Here the DDF are proposing a number of interlocking policies which will support an education system, paid for from funds made available through a Basic Income Grant and available nationally to all South African citizens. Thus, government would no longer be the primary employer of education resources. Instead the students and the parents would be the employers and educators would, amongst other features, suddenly have their ability to blackmail all of society with threats of nationwide strikes, curtailed, because there would no longer be one service provider but thousands of service providers, all of whom would need to be negotiated with separately. In short, the DDF are proposing a free market solution where freedom of choice is paramount. If you don’t like the choices offered your child at school A, remove the child and the fees he is paying from school A to school B or C, whichever school works best for you.

OK, the solution is not a quick fix. There are no quick fixes in a process with a twenty five year cycle from entry into pre-school to exit from post-graduate school, but improvements to the entire system would be immediately available to scholars and students in the system, from pre-school to post-graduate school, from day one.

Of course, one cannot have education without qualified, competent and enthusiastic educators. So educators would be well paid and education would be a prestige occupation reserved for the competent.

The DDF do not claim that this would remove the education chasm that is growing year by year, but it first would slow the growth and later on, with more and more scholars having access to quality education through the whole process, there would be less of a divide between the highly educated and the not so well educated, and an education would be respected by all of South Africa and would be delivered as a right, not as a privilege.

As to fees must fall, there is no such thing as a free lunch so those receiving the benefit of a tertiary education will have to pay for it, before, during or after receiving their degrees.

All of this is not a perfect solution but is much better than what we currently have in South Africa.

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