A+fuzzy+case+for+state+meddling,+Blackmur,+B+Day+letters


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Business Day, Johannesburg, Letters, 13 September 2005**

=**A fuzzy case for state meddling**=

Neva Makgetla’s column, A redistributive vs an industrialisation strategy (September 9), is remarkable for its omissions, lack of clarity and implications.

Important omissions include specification of a national productivity-enhancing policy, and discussion of the skills, information and other requirements of a successful public industry policy. The latter is very important given that the risks of “bureaucratic failure” are arguably more serious than those of “market failure” in SA.

How redistributive strategy and minerals exports are linked is a mystery, unless Makgetla is referring to forced vertical integration through the proposed beneficiation policy. Resources wasted in such an activity will not be available for investment and job creation elsewhere in the economy.

Makgetla says that the state has to lead the growth of new labour-intensive industries.

Within some limits, there is no such thing as an intrinsically “labour intensive” industry. It all depends on the technology, and the relative prices and productivities of labour and capital.

An industry policy without an incomes and productivity policy is a nonsense. And if the private sector has apparently not yet discovered all these new opportunities, what evidence is there that the state is better equipped to do this?

Makgetla’s argument is tantalisingly vague. Does the recommended “redirection of activities” refer to state conscription of resources? Is there a hidden agenda in the assertion about “strong mining groups that could resist restructuring the economy”?

International and local investors — and workers — ought to read very carefully between the lines of Makgetla’s argument. They should look behind the camouflage of the blindingly obvious point that SA needs more job opportunities to overcome the indignity of unemployment and reliance on welfare.

Standard Bank professor of management University of the Western Cape**
 * Doug Blackmur


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A91035