Wednesday, March 28, 2012
What has caused more long-term damage?
The atom bomb?
Government welfare programmes created to buy the votes of those who want the State to take care of them?
Japan does not have a welfare system.
There, you work or do without.
Five key messages:
1. You cannot legislate the poor into prosperity by legislating the rich out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. Governments cannot give anything to anyone that they did not first take from someone else.
4. You cannot multiply wealth by dividing it!
5. When half the people believe they do not have to work because the other half is going to take care of them, and the other half believes it is no good working because somebody else is going to get what they work for, the end of the nation is nigh!
Monday, March 19, 2012
Business Day reported on 16 March that Nersa had agreed to an increase of ‘only’ 31.6% in the pipeline tariffs. The saga of the fox guarding the chickens continues.
First, part of the basis for the award was an increase in the capital base of the pipeline division. Transnet’s asset base went up from around R9billion to around R20billion. But R6.2billion of this increase was due to irregular expenditure, and the individuals responsible have left Transnet. Should the asset base be inflated by wasted money?
Second, the old capital base of around R9billion was highly questionable. It represented the original pipeline, long, long paid for in full. Its book value should have been nil, zilch, nada. It takes a regulator, administering prices, to agree to such a generous valuation.
Third, we must recall how Transnet was awarded the contract for the multiproduct pipeline in the first instance. There was a competitive bid. One tender, from a company with the wonderful name of iPayipi, came with firm price, a guaranteed completion date, a guaranteed cost for operating the new pipeline that was no higher than the old, and a full financial package. It was rejected because Nersa "did not believe its financial guarantees." Instead Nersa awarded the contract to Transnet, whose offer had no firm price, no completion date, no cost of operation and no financing.
The pipeline is hideously late and wildly over cost. Now Nersa, the organisation that handed the job to Transnet on a platter, believes Transnet should receive some reward to make up for all its pain. The award is way above the level of inflation. If this were a trade union asking for a 31.6% increase, we would be crying murder. It translates into another 4c/litre on our fuel. As a motorist, I think this whole administered prices affair needs a major rethink – particularly when the awarder of contracts gets to reward the contractor.
Wednesday, March 7, 2012
Our paths crossed several times during my mining industry career. No matter how good my idea, he remained negative. It would not have mattered so much except that he became more and more senior. "Good chap, old A! Never makes a mistake!" I tracked his decisions over several years, and it was true. His record was faultless. He said "No!" to every decision that came his way. Never did anything to upset his pristine record. Advanced remorselessly up the corporate ladder. Reached the top and retired in a blaze of glory. Never been heard of since.
Over the last couple of days I have been attending an event called the African Economic Forum. I met up with the leader of one of our major engineering companies. He was complaining about the lack of decision-making in Government. I had made a remark about analysis paralysis, the apparent need to study a problem when the root causes were already overt and obvious. He said it was worse than that. Even when the problem was clearly identified, the fix agreed, and the money to carry out the fix had been made available, the decision to move ahead remained stalled.
The reason, he felt, was the fear of positive action. You might be making a mistake. You could end up being blamed. If you didn't decide, you wouldn't make the mistake (whatever it might have been) and you wouldn't be at risk. He cited the case of a sewerage works that had failed. The decision-maker in the local town told him not to worry - the money was in the budget. That fact that the cash had been carried over from the previous budget, and that water-born disease was now rife in the community, was of no concern to the decision-maker - or should that be decision-non-maker?
I did some work with an international think-tank a few years ago. The members of the think- tank had just finished a major study of the differences between India and China. Why had China managed to take off economically, while India hopped along the development runway, up to speed one moment and hitting the brakes the next? They concluded that it was related to the quantity of red tape marking the way forward. China had a few, clear regulations. India surged forward whenever it had a government that scrapped half the regulations, and ground to a halt when the red tape mountain clogged the wheels. All regulations created opportunities for corruption. While central government might strive to simplify things, local government, used to greasy palms in every direction, soon gummed up the works. Such simple concepts made the difference between 8% annual GDP growth and 2%.
This has to have lessons for South Africa. The inability to take decisions, and live with the consequences, is crippling our economy. It was government policy, spelled out in a white paper, that before the end of 1999 it would decide about the next big power station. It didn't take that decision until 2006, but which time it was inevitable that we would run out of power. We have run out of power, to the extent that we are closing down smelters, lifeblood of our minerals beneficiation programme, and losing hundreds of jobs as a result.
Sunday, March 4, 2012
I suppose it had to happen some time. A life of immersion must surely wash some sense into the ageing soul. But it took the Met's Gőtterdämmerung to finally seize my heart. The high-definition film of the New York performance was totally seductive.
This was six hours of absolute bliss. After the first two-and-a-half hours of the first act, I glanced at my watch, and it didn't make sense. How could it be 2.30 in the afternoon? Ah yes! we had begun at noon! The time had flown in a way that proved one had been transported into a magical land. The Wagnerian wizardry worked. All that 'nonsense' about rings and Rhinemaidens and Nibelungs fell into place. Of course Brűnnhilde's forgiving father Wotan could maroon her on a mountain top surrounded by flames. Of course the heroic Lohengrin could walk through the flames to win her heart. Everything was possible, everything was believable, the imagination could soar with the gods.
And so it continued - love potions, curses, an evil dwarf Alberich and his wicked son Hagen, a milksop leader Gunther and his luscious sister Gutrune - even Brűnnhilde's Valkyrie sister Waltraute flying in to bring news from home, about how the gods were about to immolate in Valhalla. The incredible was made credible. You were magicked out of time.
Much of it was the incredible production. The 13t Machine turned into a mountainside, a palace, a courtyard, a waterfall in the woods, the Rhine at one point softly ebbing and flowing over the pebbles, at another tumbling down rapids with wet-suited Rhinemaidens carousing in the raging waters - which then turned to blood when Lohengrin's blood-brother Gunther became an accomplice in his death, and tried to wash his hands.
When Lohengrin dies, his body is cremated by the side of the Rhine, and Brűnnhilde rides her horse into the flames to join him in death, while Hagen rages at the loss of the Ring in the ashes. Is it credible? You bet! The producer at one stage says he had not realized how cinematic Wagner was, ahead of his time. Now, surely, Wagner's conception has been realized, 130 or so years later.
The machine is a magic rock, from which the ropes of destiny descend to be woven by the Norns.
The machine has Brűnnhilde meeting Lohengrin surrounded by fire.
The machine is now the Rhine with a pebbled beach by moonlight!
The machine has turned into a palace, wooden beams supported on pillars!
The wet-suited Rhinemaidens warn Lohengrin - while in the background the Rhine tumbles down the rapids of the machine!