Article: Stop exporting raw minerals: Malema

[DigitalSoldier]

Unless we can manufacture cheaper and better than foreign countries no one will be buying from us. Good luck with that with our current labour laws and our unproductive unskilled out of control unionized work force.

Not too even mention the corruption that will take place by our government.

 

[MegasXLR]

& how are we going to develop these industries to begin with?

That is the question idiot Malema cannot answer, he is all for stopping exports but you need the infrastructure and factories to manufacture goods using the raw materials. Unfortunately with our labor unions going on strike, whenever a mosquito bit a member or a bird shat on one's head, and the cost of our labor, then it can be seen that there are very little chance of real investment in manufacturing. You only have to look at our well protected motor industry or look at the giant like Iscor steel, who had to scale down their capabilities by closing complete plants due to the competitive nature of the real manufacturing giants that can produce goods with cheap labor effectively.

Another ANC and Malema brainfart!

 

[Drunkard #1]

Eh, I think you guys missed simple economics and common sense.

<loooooooooong post> [I only read half]

Does that make ANY common sense?

You're confusing implementation with principles. In an ideal world the government would change the regulatory environment to minimise the cost variation that makes our products uncompetitive. We all know that that won't happen, and so the point is moot, but it doesn't make the idea a bad one. Capitalism needs to be regulated to prevent abuse.

Also, you're using the wrong sort of example. TVs are a bad example; I mean how many LCD or plasma fabs are there worldwide? IIRC, there are three. So we won't be making our own panels, but buying (or building) our own plastic mould and PC board line isn't a bad idea. Cadac bottles are a better example (Research "Why Cadac bottles are made in China"). Labour is a big problem, but again, that doesn't make implementing regulations that favour local production a bad idea.

[argument truncated for the sake of brevity]

 

[zippy]

Can't believe people actually agree with this. Do you really agree with his idea that stopping raw material exports will encourage local manufacturing?

Firstly it will take a lot for a western consumer to take seriously a product such as a tv with a "Made in South Africa" sticker. Secondly the supply of raw materials will be compensated for easily from other countries. Thirdly there are insufficient skills in the country. You would have to import them at a premium, which make the costs high.

If this became official policy, it will first result in a reduction of investment in the mining industry, which result in unemployment and a loss of tax revenue, which would make it even harder to fund new manufacturing.

 

[Jola]

Eh, I think you guys missed simple economics and common sense.

......

Does that make ANY common sense?

Not to the ANC it doesn't, and never will - beyond their understanding. !

 

[nightjar]

Eh, I think you guys missed simple economics and common sense.
etc, etc, etc .........
Does that make ANY common sense?

Without re-quoting.
+1

Processing raw (or recently dug up) raw materials requires substantial investment from somewhere. In the light of Malema's recent rantings about nationalization and expropriating private property without compensation (bearing in mind that he is the ANC mouthpiece testing uncharted waters) the chances of new investment are slim.

On a lighter note.
On 702 radio at 2am today I heard a black caller (who seemed not to be a Malema fan) remark that Malema was the product of a one-night stand and I mentally raised a glass to him. I actually think that Malema was the product of a failed condom

 

[BigBullBully]

But you see this is just the way Mal-enema wants it. He is so infatuated with the structure of the old communist block east. Work camps full of 'comrades' (read slaves) working for the state and sharing in the wealth (well the 15-20% they got farming their own land), the reality of the old block was people were killed for not wanting to work as a slave, or whole communities were wiped out for the land they farmed to sustain their community. He thinks Stalin was such a great hero to his people, the reality is Stalin was as bad as Hitler.

So in conclusion we can deduce that Mal-enema in fact wants to be a Stalin or Hitler, the signs are all there, the latest being formation of ANC youth brigades. If the majority of SA cannot see this way is wrong the sadly SA is doomed. Mal-enema will never realize communism is a failed idea, even the Chinese are relaxing their hard-line communist ways as it does not work in a modern world.

 

[Nick333]

I really don't see how stopping exports encourages local investment. Unless he's suggesting preferential pricing for local investors. Better make damn sure you have the local investors on board before you go ahead.

 

[Drunkard #1]

Have any of you foreign investment fans ever looked at the outcome of these deals? Absa, Iscor, Vodacom? You do realise that after the initial investment, funds flow out of SA rapidly. Most of those investments are repaid within a few years, and all SA is left with is a nasty current account deficit, overpriced goods, and a desperate need to encourage more investment to dig the rand out of a hole. Foreign investment is (more often than not) a curse, not a blessing

 

[Y'all Qaeda]

He's got a point. But is he going to provide the technology and skills to produce something from those raw minerals? Doubt it.

 

[FatBoySlim]

We import from China so you and I can afford to buy these things. If it was made in SA you would need to pay for tenderpreneur, kickbacks, the fake BEE company fronting, and then the real people doing the work.
This would result in hightened inflation, and if you have not realised yet, the method they use to curb inflation is to increase the interest rate -double whammy!!!!

I agree in principle that SA should manufacture more of its own, but why exactly do we import cheap chinese **** rather than making it ourselves?

Our labour laws make it impossible to compete head on with china, hence the reason for us exporting our "mineral wealth".

But yea, great idea, lets put the ANC in charge or our countries biggest resource, like Zim did with their tobacco farms. :wtf:

Sent from my GT-P1000 using MyBroadband Android App

 

[WilD_CaT]

You're confusing implementation with principles. In an ideal world the government would change the regulatory environment to minimise the cost variation that makes our products uncompetitive. We all know that that won't happen, and so the point is moot, but it doesn't make the idea a bad one. Capitalism needs to be regulated to prevent abuse.

Also, you're using the wrong sort of example. TVs are a bad example; I mean how many LCD or plasma fabs are there worldwide? IIRC, there are three. So we won't be making our own panels, but buying (or building) our own plastic mould and PC board line isn't a bad idea. Cadac bottles are a better example (Research "Why Cadac bottles are made in China"). Labour is a big problem, but again, that doesn't make implementing regulations that favour local production a bad idea.

[argument truncated for the sake of brevity]

It is a bad idea.
> The ideological message between the lines is inherently xenophobic and eugenic.
> It will not lead to business meeting consumer demand more efficiently.
> It reduces profitability here, which reduces investment.
> Potentially lead to currency wars.

Its irononic, a business wants to sell his products to the highest payer, so we sell to folks oversees who have more money. This is called "exploitive" and "capitalistic" (With a negative tone).
So government needs to step in, to allow labour (which in economic terms is substituting one product for another) to keep prices high, and yet this is not exploitive?

Two different products, both parties want to sell their product at the highest price, one is "bad" and "exploitive" and the other is what? Good?

You hurt business, you hurt the people employed by those businesses. Remember you cannot have a business with no people, a business is a collection or group of people working together.

 

[WilD_CaT]

Have any of you foreign investment fans ever looked at the outcome of these deals? Absa, Iscor, Vodacom? You do realise that after the initial investment, funds flow out of SA rapidly. Most of those investments are repaid within a few years, and all SA is left with is a nasty current account deficit, overpriced goods, and a desperate need to encourage more investment to dig the rand out of a hole. Foreign investment is (more often than not) a curse, not a blessing

LOL. The myth of the current account deficit.

When we import, we exchange RANDS for goods. Right. Well in what countries can you spend SA RANDS. (I'll give you a hint, its South Africa). So when the foreign country sells to us, they have 4 choices. Either they keep the rands locked up somewhere where it is useles to them (In which case I ask why trade when you are getting nothing of use to you), SPEND IT IN SA on consumer goods (So the money stays here), SPEND IT IN SA on capital goods (Which increases capital investment) or TRADE IT for their own currency, in which case the guy left with SA currency, then has to spend it or trade at. At some point, for the money to be of ANY use to ANYONE they have to spend it in SA.

Spending in SA is GOOD!

But another thing, when we import, if we are importing CAPITAL goods, then these increase production and decrease costs (That is why we import them) which makes us more competitive and drives down local prices.

The mercantilist view of the trade deficit is the one held by protectionists of various stripes, including paleoconservatives like Pat Buchanan and Paul Craig Roberts, CNN News anchor Lou Dobbs and the left-wing Economic Policy Institute. This view in effect holds that the trade deficit kills jobs.
The view that trade deficit reduces growth does not hold for either closer theoretical challenges or empirical "tests". Take for example the two European countries Germany and Estonia. During the last few years, Germany has had very sluggish growth, while Estonia has had among the fastest growth rates in Europe. Given the fact that Germany has very high labor costs and Estonia very low labor costs and given the labor cost theory of trade balances common among American protectionists, the mercantilists would then explain that the growth differential between Estonia and Germany is driven by rapidly rising trade surpluses for Estonia and rapidly rising trade deficits for Germany.

But the facts are just the opposite of what the mercantilists would predict. Germany has in fact a very large and growing trade- and current account surplus. In absolute numbers Germany's goods and services trade surplus is now the biggest in the world , although Japan's overall current account surplus is still larger because of Japan's high surplus in investment income. As late as 1998 Germany had a current account deficit but now it has a annual surplus of roughly $100 billion or roughly 3.5% of GDP. But "despite" this growing trade- and current account surplus which according to the mercantilist view means that Germany has been able to take more and more jobs from other countries, Germany has had the slowest growth among all western countries in recent years. Estonia , also contrary to the mercantilist prediction, has a large and rapidly growing current account deficit. Last year Estonia had a current account deficit of more than 12% of GDP, twice as high as in America and more than twice as high as it was in 2000 "Despite" this rapidly rising trade deficit which according to the mercantilists means that Estonia is losing more and more jobs overseas, Estonia has had an average growth rate of more than 6.5% during the latest 5 years as compared to an average of 0.5% in Germany.

Nor is this some kind of anomaly. While there are many exceptions, most notably the extremely thrifty East Asian countries whose savings rate is so high that they can both invest so much that they can have rapid growth and have trade surpluses, it is generally the case that fast growing countries have current account deficits and slow growing countries have current account surpluses. And a study by Dan Griswold shows that when trade deficits increases so does growth and when trade deficits decreases so does growth. In the 24 years since 1980, the current account deficit has grown rapidly 6 years, grown moderately ( less than half a percentage point of GDP ) in 10 years and declined in 8 years."

Myth DISPELLED!

http://mises.org/daily/1762
What Are We to Make of the Trade Deficit?
Mises Daily: Monday, March 21, 2005 by Stefan Karlsson

Current account deficits are simply a matter of people in one country on the aggregate borrowing more from foreigners than lending to them. And just as it is sometimes good, sometimes bad for individuals to borrow, so is it sometimes good, sometimes bad for countries to have current account deficits. If the money a individual borrow is going to be used for productive investments it is a good idea to borrow. But if on the other hand the money will be used for excessive consumption and/or bad investments it is a bad idea for the individual to borrow.

And what is true for the individual is also true for aggregates of individuals, like countries. If a country has a large current account deficits which reflects a large capital inflow to finance sound investments, then current account deficits are a very good thing, as we have seen in the case of rapidly growing Estonia. But if the capital inflow is used to finance excessive consumption and/or malinvestments then it is a unhealthy thing.

While the U.S. current account deficit does to some extent reflect the more flexible economic structure and accordingly bigger investment opportunities compared to Europe and Japan, it is also to a large extent driven by unhealthy factors created by the U.S. government. This includes of course the budget deficit which has driven down the national savings rate to dangerously low levels and it also includes the low interest rates policies of the Federal Reserve which has been fueling a housing bubble. The excess demand created by these policies have clearly been a factor in pushing up the trade deficit.

 

[Kornhub]

LOL. The myth of the current account deficit.

When we import, we exchange RANDS for goods. Right. Well in what countries can you spend SA RANDS. (I'll give you a hint, its South Africa). So when the foreign country sells to us, they have 4 choices. Either they keep the rands locked up somewhere where it is useles to them (In which case I ask why trade when you are getting nothing of use to you), SPEND IT IN SA on consumer goods (So the money stays here), SPEND IT IN SA on capital goods (Which increases capital investment) or TRADE IT for their own currency, in which case the guy left with SA currency, then has to spend it or trade at. At some point, for the money to be of ANY use to ANYONE they have to spend it in SA.

Spending in SA is GOOD!

But another thing, when we import, if we are importing CAPITAL goods, then these increase production and decrease costs (That is why we import them) which makes us more competitive and drives down local prices.

The mercantilist view of the trade deficit is the one held by protectionists of various stripes, including paleoconservatives like Pat Buchanan and Paul Craig Roberts, CNN News anchor Lou Dobbs and the left-wing Economic Policy Institute. This view in effect holds that the trade deficit kills jobs.
The view that trade deficit reduces growth does not hold for either closer theoretical challenges or empirical "tests". Take for example the two European countries Germany and Estonia. During the last few years, Germany has had very sluggish growth, while Estonia has had among the fastest growth rates in Europe. Given the fact that Germany has very high labor costs and Estonia very low labor costs and given the labor cost theory of trade balances common among American protectionists, the mercantilists would then explain that the growth differential between Estonia and Germany is driven by rapidly rising trade surpluses for Estonia and rapidly rising trade deficits for Germany.

But the facts are just the opposite of what the mercantilists would predict. Germany has in fact a very large and growing trade- and current account surplus. In absolute numbers Germany's goods and services trade surplus is now the biggest in the world , although Japan's overall current account surplus is still larger because of Japan's high surplus in investment income. As late as 1998 Germany had a current account deficit but now it has a annual surplus of roughly $100 billion or roughly 3.5% of GDP. But "despite" this growing trade- and current account surplus which according to the mercantilist view means that Germany has been able to take more and more jobs from other countries, Germany has had the slowest growth among all western countries in recent years. Estonia , also contrary to the mercantilist prediction, has a large and rapidly growing current account deficit. Last year Estonia had a current account deficit of more than 12% of GDP, twice as high as in America and more than twice as high as it was in 2000 "Despite" this rapidly rising trade deficit which according to the mercantilists means that Estonia is losing more and more jobs overseas, Estonia has had an average growth rate of more than 6.5% during the latest 5 years as compared to an average of 0.5% in Germany.

Nor is this some kind of anomaly. While there are many exceptions, most notably the extremely thrifty East Asian countries whose savings rate is so high that they can both invest so much that they can have rapid growth and have trade surpluses, it is generally the case that fast growing countries have current account deficits and slow growing countries have current account surpluses. And a study by Dan Griswold shows that when trade deficits increases so does growth and when trade deficits decreases so does growth. In the 24 years since 1980, the current account deficit has grown rapidly 6 years, grown moderately ( less than half a percentage point of GDP ) in 10 years and declined in 8 years."

Myth DISPELLED!

http://mises.org/daily/1762
What Are We to Make of the Trade Deficit?
Mises Daily: Monday, March 21, 2005 by Stefan Karlsson

Current account deficits are simply a matter of people in one country on the aggregate borrowing more from foreigners than lending to them. And just as it is sometimes good, sometimes bad for individuals to borrow, so is it sometimes good, sometimes bad for countries to have current account deficits. If the money a individual borrow is going to be used for productive investments it is a good idea to borrow. But if on the other hand the money will be used for excessive consumption and/or bad investments it is a bad idea for the individual to borrow.

And what is true for the individual is also true for aggregates of individuals, like countries. If a country has a large current account deficits which reflects a large capital inflow to finance sound investments, then current account deficits are a very good thing, as we have seen in the case of rapidly growing Estonia. But if the capital inflow is used to finance excessive consumption and/or malinvestments then it is a unhealthy thing.

While the U.S. current account deficit does to some extent reflect the more flexible economic structure and accordingly bigger investment opportunities compared to Europe and Japan, it is also to a large extent driven by unhealthy factors created by the U.S. government. This includes of course the budget deficit which has driven down the national savings rate to dangerously low levels and it also includes the low interest rates policies of the Federal Reserve which has been fueling a housing bubble. The excess demand created by these policies have clearly been a factor in pushing up the trade deficit.

How do you know so much ? *BOWS DOWN*

 

[Ronjay]

I know a guy that manufactures a product for gas canisters. His entire business is export based. Why, because the demand overseas is far greater then here for his product. So, my questions are: Would there be demand for minerals if government decides to cease exports? Are there enough manufacturers and producers internally to support the industry if exports stopped. Remember it would have to be based on demand, so would thee be enough demand for products from the manufacturers? I doubt it, and I would think that it would lead to a complete collapse of the industry once the money stops rolling in. The knock on effect could be catastrophic. Not to mention what a huge part of our economy would cease to exist.

It sounds good, Lets stop exporting commodities all together. Stop getting in money externally while we're at it. Our economy should grow really well then.:erm:

 

[FatBoySlim]

Same applies to imports. Cheaper to import , less hassle, less lazy people to deal with, no unions, lee BEE compliance requirements (if u are smaller), no striking, less theft etc

I know a guy that manufactures a product for gas canisters. His entire business is export based. Why, because the demand overseas is far greater then here for his product. So, my questions are: Would there be demand for minerals if government decides to cease exports? Are there enough manufacturers and producers internally to support the industry if exports stopped. Remember it would have to be based on demand, so would thee be enough demand for products from the manufacturers? I doubt it, and I would think that it would lead to a complete collapse of the industry once the money stops rolling in. The knock on effect could be catastrophic. Not to mention what a huge part of our economy would cease to exist.

It sounds good, Lets stop exporting commodities all together. Stop getting in money externally while we're at it. Our economy should grow really well then.:erm:

Sent from my GT-P1000 using MyBroadband Android App

 

[Ronjay]

Same applies to imports. Cheaper to import , less hassle, less lazy people to deal with, no unions, lee BEE compliance requirements (if u are smaller), no striking, less theft etc


Sent from my GT-P1000 using MyBroadband Android App

Shhhtt. Don't give Malema ideas. He will start wanting to ban imports next.

 

[Drunkard #1]

It is a bad idea.
> The ideological message between the lines is inherently xenophobic and eugenic.
> It will not lead to business meeting consumer demand more efficiently.
> It reduces profitability here, which reduces investment.
> Potentially lead to currency wars.

Its irononic, a business wants to sell his products to the highest payer, so we sell to folks oversees who have more money. This is called "exploitive" and "capitalistic" (With a negative tone).
So government needs to step in, to allow labour (which in economic terms is substituting one product for another) to keep prices high, and yet this is not exploitive?

Two different products, both parties want to sell their product at the highest price, one is "bad" and "exploitive" and the other is what? Good?

You hurt business, you hurt the people employed by those businesses. Remember you cannot have a business with no people, a business is a collection or group of people working together.

It's not xenophobic or eugenic, it's regulation designed to encourage local growth. Or do you prefer 25% unemployment and being the murder and rape capital of the world?

The regulations we're looking at are related to flaws inherent in capitalism. They allow capitalism to remain the number one choice for ensuring a good quality of life for all and rapid scientific, economic and social progress. The alternative is communism (the most painful way of getting from capitalism to capitalism), because unregulated capitalism is exploitative and therefore unsustainable.

LOL. The myth of the current account deficit.

When we import, we exchange RANDS for goods. Right. Well in what countries can you spend SA RANDS. (I'll give you a hint, its South Africa). So when the foreign country sells to us, they have 4 choices. Either they keep the rands locked up somewhere where it is useles to them (In which case I ask why trade when you are getting nothing of use to you), SPEND IT IN SA on consumer goods (So the money stays here), SPEND IT IN SA on capital goods (Which increases capital investment) or TRADE IT for their own currency, in which case the guy left with SA currency, then has to spend it or trade at. At some point, for the money to be of ANY use to ANYONE they have to spend it in SA.

Spending in SA is GOOD!

But another thing, when we import, if we are importing CAPITAL goods, then these increase production and decrease costs (That is why we import them) which makes us more competitive and drives down local prices.

<snip>

the trade deficit.

The exchanges mentioned all happen within markets regulated by supply and demand; prices fluctuate based on the trading in those markets and this has a real impact on peoples lives. It's not a zero sum game - there is a real risk of our currency "going to a ball of ****" and leaving us all worse off.

The rest was too long and boring to read.

How do you know so much ? *BOWS DOWN*

Google and copy pasta.

I know a guy that manufactures a product for gas canisters. His entire business is export based. Why, because the demand overseas is far greater then here for his product. So, my questions are: Would there be demand for minerals if government decides to cease exports? Are there enough manufacturers and producers internally to support the industry if exports stopped. Remember it would have to be based on demand, so would thee be enough demand for products from the manufacturers? I doubt it, and I would think that it would lead to a complete collapse of the industry once the money stops rolling in. The knock on effect could be catastrophic. Not to mention what a huge part of our economy would cease to exist.

It sounds good, Lets stop exporting commodities all together. Stop getting in money externally while we're at it. Our economy should grow really well then.:erm:

How did "encouraging local industries to further process our iron ore" turn into "banning all exports"? Your friends gas canister exports are exactly the sort of thing that this would encourage, compared to the current situation of selling iron ore to China at 50c a kilo (just random figures) and buying back Cadac bottles at R 20 a kilo because an Indian living in London prices his South African steel at "import price parity" so that he can maximise his returns, which he then ships off to London for spending, further weakening our currency and leaving South Africa with nothing but a sore arse.

 

[Adoxographist]

Sure we have to develop local industry but Eskom can't handle the load

 

[djtzar]

this from the same guy that wanted to nationalize mining ? I smell a rat...