File: The recommendation by South Africas Public Protector that the Reserve Banks mandate change, says much about Busisiwe Mkhwebane, none of it flattering.
Steven Friedman, University of Johannesburg
What kind of financial system is sure to collapse if the central bank cares about peoples well-being?
The recommendation by South Africas Public Protector that the Reserve Banks mandate change, says much about Busisiwe Mkhwebane, none of it flattering. It says just as much about mainstream economic debate -- and none of that is flattering either.
Mkhwebane recommended that the central banks constitutional mandate, which makes protecting the currency its primary goal, be changed to one which requires it to promote balanced and sustainable economic growth while ensuring that the socio-economic well-being of the citizens are protected. She also said the constitution should require the bank to achieve meaningful socio-economic transformation.
This triggered a wave of protests, as well as an announcement from the South African Reserve Bank that it would take the matter to court. The Reserve Bank had no option. The constitutional court has ruled that the Public Protectors findings are binding unless they are challenged in court. Her recommendation wildly exceeded what she is allowed to do by the constitution or democratic good sense - and the Reserve Bank could not allow it to stand.
Democratic constitutions are changed by large majorities of the people or their elected representatives not by individuals. By making a binding recommendation that the constitution be changed, Mkhwebane signalled that she either doesnt understand or does not care for democracy.
Her report is also very useful to a faction of the governing party which wants to deflect charges of state capture by claiming that white monopoly capital already controls the state. There are real questions about the fitness for office of a Public Protector whose report seems more interested in protecting connected politicians and business people than with taking the peoples will seriously.
But the reaction did not stop at insisting that Mkhwebane has no business telling the people what the constitution should say. Much of it objected not only to her saying what the Reserve Banks mandate should be, but to anyone at all doing that.
An important debate
The prize for the wildest reaction went to the commentator who declared that Mkhwebanes ideas on the Banks mandate were inspired by someone who denied that the Nazi genocide happened. Others stopped short of tarring constitutional change with the same brush as mass murder but were united in claiming that to suggest that the Reserve Banks mandate be broadened is economically illiterate and deeply damaging.
Absa, who was the subject of a separate finding by the public protector on the issue of a controversial bailout, asked a court to rule that her proposed change posed a serious risk to the financial system. For its part the rating agency Standard & Poors, happy as ever to police the boundaries of economic correctness, warned that any interference with the Reserve Banks independence could trigger new downgrades.
To insist that anyone who proposes changing the Reserve Banks mandate is economically damaging and stupid is as contemptuous of democracy and dangerous to the economy as Mkhwebanes excess. It is undemocratic because it seeks to close down policy debate by declaring that only one view of the Reserve Banks mandate can ensure a healthy economy. It is dangerous because it blocks the search for economic remedies by seeking to bully even those who propose only mild changes to what the country now has.
The idea that the Reserve Bank should have a broader mandate is neither radical nor dangerous. The most famous central bank, the US Federal Reserve, has a broader mandate. Its dual mandate requires it to seek maximum employment as well as price stability.
The Australian equivalents mandate includes maintenance of full employment and economic prosperity and welfare of the people. The European Central Bank, famed for its love of austerity, has a mandate to seek sustainable growth.
And the the Bank of Englands website says that, subject to its goal of price stability, it aims to support the governments economic objectives.
In South Africa, not only has the view that the central banks mandate is too restrictive been repeated periodically but it may well have been implemented for a while. In 2010, then finance minister Pravin Gordhan wrote to then Reserve Bank governor, Gill Marcus, proposing a mandate which included growth and employment. Marcus reacted positively, which suggests that the bank acted on Gordhans letter. The financial system survived.
The US, European and Australian financial systems have also not collapsed. Their mandates have not triggered a downgrade and no one has accused these societies of economic illiteracy.
So either double standards are being applied or we are being told that restrictive central bank mandates are essential only if countries are in particular parts of the world (such as Africa) and governed by particular types of people (Africans).
And why does a change in the Banks mandate undermine its independence? A central bank loses its independence if politicians (or anyone else) can tell it what to do, not if its mandate changes.
For all its flaws, the Public Protectors proposal would retain the Reserve Banks independence, leaving it to the bank to decide what promotes the well-being of the people or transformation.
Closing down debate is common
None of this means that the Reserve Banks mandate must change. Or that central bank independence must go. But it does mean that no one should be discouraged from debating the issue, as people routinely do in other democracies and market economies. What, besides that prejudice which we prettify by the term Afropessimism, explains the insistence that we may not debate what is freely discussed in most other places?
Closing down debate in this way is common in South Africa. It also lies behind complaints of policy uncertainty which does not mean, as it does elsewhere, that government keeps changing its mind and sending mixed messages the macro-economic framework has been stable for more than two decades. It means, rather, that some people who some others may take seriously raise policy ideas the economic mainstream does not like.
This demand that people can say anything they like about economic policy as long as the mainstream likes it too offers a misleading view of the economy. It says that there is nothing wrong with it except political interference and that it will flourish if politicians simply leave alone what is done now.
The contrary evidence is offered by mainstream organisations such as the International Monetary Fund and the South African Reserve Bank itself which have shown that the current economic rut is a product of problems in the private economy as well as what government does.
This means that the economy must change. This, in turn, requires new ideas. They will not emerge unless everything is up for debate and ideas are not silenced because they trigger the fears and prejudices of a few.
Steven Friedman, Professor of Political Studies, University of Johannesburg
This article was originally published on The Conversation. Read the original article.
21 June 2017
Analysts said the inflation outlook for the rest of year meant the Reserve Bank may now contemplate cutting rates or easing monetary policy to boost growth.
21 June 2017
Malikane, a former Wits University professor well known for his radical views, said on Tuesday he could not comment due to his role as Finance Minister Malusi Gigabas adviser.
20 June 2017
'Amending the constitution is something different because it means all chapter nine institutions...may feel they want to amend the constitution,' said ANC Spokesperson Zizi Kodwa.
Read more here:
South Africa's central bank row points to dangerous levels of intolerance - eNCA
- Modern Survival Manual Surviving the Economic Collapse [Last Updated On: December 18th, 2016] [Originally Added On: December 18th, 2016]
- What Explains the Collapse of the USSR? - E-International ... [Last Updated On: January 13th, 2017] [Originally Added On: January 13th, 2017]
- Where Should the External Priorities of the Visegrd Lie? - Visegrad Insight [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- PH gov't, communists urged to pursue talks even without ceasefire - Inquirer.net [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- New Texts Out Now: Helga Tawil-Souri and Dina Matar, eds. Gaza as Metaphor - Jadaliyya [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Kazakhstan Going Into Soft Power Overdrive - EurasiaNet [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Economic Crash 2017 and How the Next Financial Crisis Could Be Worse Than 2008 - Lombardi Letter [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Mass incarceration and the perfect socio-economic storm - OUPblog (blog) [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Give peace a chance, not 'all-out' war, say solons, Leftist Cabinet members - InterAksyon [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Celebrating Black History: Detroit Techno icons - Mixmag [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Why 'financial inclusion' may be the wrong terminology - NewsDay [Last Updated On: February 8th, 2017] [Originally Added On: February 8th, 2017]
- 'Conspiracy' in peace talks collapse seen - Inquirer.net [Last Updated On: February 8th, 2017] [Originally Added On: February 8th, 2017]
- 2017 and beyond: Future unpredictable - Zimbabwe Independent [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Zuma's interventions will deal with white monopoly capital - Office of ANC Chief Whip - Politicsweb [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Lobster crash erodes West Coast way of life - GroundUp [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Hopes remain for revival of peace talks - Manila Bulletin [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Lobster crash erodes West Coast way of life - News24 [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Financial Black Swans Could Rock 2017 Stock Market Forecast - Lombardi Letter [Last Updated On: February 16th, 2017] [Originally Added On: February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - Zimbabwe | ReliefWeb - ReliefWeb [Last Updated On: February 16th, 2017] [Originally Added On: February 16th, 2017]
- 'Bumper harvest to stop aid politicisation' - Nehanda Radio [Last Updated On: February 16th, 2017] [Originally Added On: February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - New Zimbabwe.com - New Zimbabwe.com [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Who We Play For saving lives through athlete heart screenings - Tallahassee.com [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Terrorist resurgence - Daily Times [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Seeing Sabon Tasha in new light - Daily Trust [Last Updated On: February 20th, 2017] [Originally Added On: February 20th, 2017]
- Facing tragedy with courage - The News International [Last Updated On: February 28th, 2017] [Originally Added On: February 28th, 2017]
- Socio-Economic Collapse | Prometheism.net - Part 3 [Last Updated On: March 1st, 2017] [Originally Added On: March 1st, 2017]
- Rethinking Nonviolent Resistance In The Face Of Right-Wing ... - Huffington Post [Last Updated On: March 3rd, 2017] [Originally Added On: March 3rd, 2017]
- Vladimir Putin Isn't a Supervillain - Foreign Policy (blog) [Last Updated On: March 3rd, 2017] [Originally Added On: March 3rd, 2017]
- First ceiling collapse at Charlotte Maxeke in January already, claim staff - News24 [Last Updated On: March 3rd, 2017] [Originally Added On: March 3rd, 2017]
- Rethinking Nonviolent Resistance in the Face of Right-Wing Populism - The Wire [Last Updated On: March 4th, 2017] [Originally Added On: March 4th, 2017]
- Historical Materialism Versus Historical Conceptualism - Dissident Voice [Last Updated On: March 6th, 2017] [Originally Added On: March 6th, 2017]
- World Bank, Sokoto Govt commit N9b for rebuilding of collapsed ... - THISDAY Newspapers [Last Updated On: March 8th, 2017] [Originally Added On: March 8th, 2017]
- Nigeria: Sokoto Govt and World Bank pledges $28.8million for rehabilitation of collapsed Dam - Ecofin Agency: Economic information from Africa [Last Updated On: March 9th, 2017] [Originally Added On: March 9th, 2017]
- Time for a rebirth of Zimbabwean politics - Bulawayo24 News (press release) (blog) [Last Updated On: April 8th, 2017] [Originally Added On: April 8th, 2017]
- This Brexit battle is cold, hard capitalism vs. civilised, co-operative order - The New European [Last Updated On: April 8th, 2017] [Originally Added On: April 8th, 2017]
- Swet Shop Boys: Why white skin is no longer a safety net - Deutsche Welle [Last Updated On: June 6th, 2017] [Originally Added On: June 6th, 2017]
- Impact of Prez Akufo-Addo's W/A tour on economy - Graphic Online [Last Updated On: June 6th, 2017] [Originally Added On: June 6th, 2017]
- Important meeting for our nation's future | Deniliquin Pastoral Times - Deniliquin Pastoral Times (registration) (blog) [Last Updated On: June 8th, 2017] [Originally Added On: June 8th, 2017]
- Creating a Better Economy with Data Science - Stanford Social Innovation Review (subscription) [Last Updated On: June 8th, 2017] [Originally Added On: June 8th, 2017]
- TB Joshua : 'Investigate Fani-Kayode's claims on Synagogue building collapse' - Analyst - Pulse Nigeria [Last Updated On: June 11th, 2017] [Originally Added On: June 11th, 2017]
- Integration and security: Estonia's Russian-speaking minority - New Eastern Europe [Last Updated On: June 12th, 2017] [Originally Added On: June 12th, 2017]
- Late Matanzima celebrated as a visionary- Education, development described as his legacy - Daily dispatch [Last Updated On: June 16th, 2017] [Originally Added On: June 16th, 2017]
- Prof. Guy Standing: Every country can afford Universal Basic Income - EURACTIV [Last Updated On: June 16th, 2017] [Originally Added On: June 16th, 2017]
- Climate, social equality also behind collapse of govt formation talks: Green leader - NL Times [Last Updated On: June 17th, 2017] [Originally Added On: June 17th, 2017]
- Country needs USDA Rural Development - Iowa Farmer Today [Last Updated On: June 17th, 2017] [Originally Added On: June 17th, 2017]
- The downgrade and retirement funds: what does it mean? - African Independent [Last Updated On: June 18th, 2017] [Originally Added On: June 18th, 2017]
- National priorities defy convention in St Lucia - St. Lucia Times News - St. Lucia Times Online News (press release) [Last Updated On: June 20th, 2017] [Originally Added On: June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers - Ghana News Agency [Last Updated On: June 20th, 2017] [Originally Added On: June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers ... - BusinessGhana [Last Updated On: June 22nd, 2017] [Originally Added On: June 22nd, 2017]
- Op-Ed: South Africa's central bank row points to dangerous levels of intolerance - CNBCAfrica.com [Last Updated On: June 22nd, 2017] [Originally Added On: June 22nd, 2017]
- Collapsed bridge cut off over 5000 residents in llorin - National Accord [Last Updated On: June 22nd, 2017] [Originally Added On: June 22nd, 2017]
- The Wonderful World of Binary Categorizations - Geopoliticalmonitor.com [Last Updated On: June 23rd, 2017] [Originally Added On: June 23rd, 2017]
- Dangerous levels of intolerance exposed in Reserve Bank row - Independent Online [Last Updated On: June 23rd, 2017] [Originally Added On: June 23rd, 2017]
- Reserve Bank battle points to dangerous levels of intolerance - Mail & Guardian [Last Updated On: June 26th, 2017] [Originally Added On: June 26th, 2017]
- There is a strong economic case to preserve future of traditional fishing - Alfred Sant - Malta Independent Online [Last Updated On: June 27th, 2017] [Originally Added On: June 27th, 2017]
- Empowering Women in Developing Economies - HuffPost [Last Updated On: June 30th, 2017] [Originally Added On: June 30th, 2017]
- Is this the end of Daesh? - Arab News [Last Updated On: July 2nd, 2017] [Originally Added On: July 2nd, 2017]
- Nkomo could have saved Zim: Zapu - NewsDay [Last Updated On: July 3rd, 2017] [Originally Added On: July 3rd, 2017]
- Govt completes inspection 1.6 lakh bridges, plans new tech - Zee News [Last Updated On: July 3rd, 2017] [Originally Added On: July 3rd, 2017]
- Centre claims to have completed safety audit of 1.6 lakh bridges; to work on 147 dilapidated structures - Firstpost [Last Updated On: July 3rd, 2017] [Originally Added On: July 3rd, 2017]
- Collapse of UT and Capital banks A case of a collective national failure (Article) - Citifmonline [Last Updated On: August 24th, 2017] [Originally Added On: August 24th, 2017]
- UNZA vice-chancellor lays down marker - Zambia Daily Mail [Last Updated On: August 24th, 2017] [Originally Added On: August 24th, 2017]
- What Makes a Terrorist? - The New York Review of Books [Last Updated On: August 24th, 2017] [Originally Added On: August 24th, 2017]
- How the Collapse of Venezuela Really Happened - The ... [Last Updated On: February 18th, 2018] [Originally Added On: February 18th, 2018]
- Socio-Economic Collapse in the Congo: Causes and Solutions [Last Updated On: October 3rd, 2018] [Originally Added On: October 3rd, 2018]
- Sick Bees Part 18F8: Colony Collapse Revisited ... [Last Updated On: April 25th, 2019] [Originally Added On: April 25th, 2019]
- Classic Maya collapse - Wikipedia [Last Updated On: April 25th, 2019] [Originally Added On: April 25th, 2019]
- Great Civilizations Aren't Murdered, They Commit Suicide ... [Last Updated On: May 5th, 2019] [Originally Added On: May 5th, 2019]
- Dollar Collapse Predictions: What Will Happen When It Happens? [Last Updated On: May 5th, 2019] [Originally Added On: May 5th, 2019]
- 10 Steps to Prepare for Americas Economic Collapse [Last Updated On: May 31st, 2019] [Originally Added On: May 31st, 2019]
- Do you really think NDC faithful would ever condemn a coup dtat? - Modern Ghana [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- Economic and Institutional Restructuring for the Next Nigeria - Soludo - Proshare Nigeria Limited [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- ET CEO Roundtable: Build a wealthier nation with state help, industry execution - Economic Times [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- Ghanaians could well face the wrath of God should they betray the Free SHS provider! - Modern Ghana [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- The Return to Power of Local Hotel Brands? | By Robert Govers - Hospitality Net [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- Brexit: Systemic Risk and a Warning - Resilience [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- Why is Poland's Law and Justice party still so popular? - EUROPP - European Politics and Policy [Last Updated On: October 1st, 2019] [Originally Added On: October 1st, 2019]
- Presidential elections in Tunisia: who are the globalists betting on? - United World International [Last Updated On: October 16th, 2019] [Originally Added On: October 16th, 2019]
- Kevin Taylor, youre a reporter, not an opinionist; youre guided by the rule of impartiality! - Modern Ghana [Last Updated On: October 16th, 2019] [Originally Added On: October 16th, 2019]
- The Unholy Mess of US Middle Eastern Strategy - Valdai Discussion Club [Last Updated On: October 16th, 2019] [Originally Added On: October 16th, 2019]