On Monday Standard Bank Group announced that it had suspended Chris Hart, Global Investment Strategist at Standard Bank Wealth and Investment. This followed the controversy over tweeted concerns by Hart on Sunday 3rd January 2016 over the increasing “hatred towards minorities” being articulated in public debate. Hart’s offending tweet was one of a series. As a matter of public record Politicsweb is publishing the full string of Hart’s remarks (though not the re-tweets). Hart began by saying:
SA economy in decline. Losing competitiveness. State institutions failing badly. Blame game in full swing: “the whites” and “private sector”
Yet on ideological and ANC control grounds, “the whites” and “private sector” are increasingly being pushed out of govt institutions
More than 25 years after Apartheid ended, the victims are increasing along with a sense of entitlement and hatred towards minorities….
Poisonous ideologies are flourishing - I have been retweeting some of them. Economies are never built on entitlement but on productivity
He then commented:
To sort out the maladies, the economy desperately needs growth derived from bottom up not trickle down. Investment in business activity
The reality (whether a legacy of any sort or not) is that all wealth gets originally produced by business and enterprise activity
The reality is that (whether a legacy exists or not) that no new economic activity comes into existence without investment
The reality is that (whether there is a legacy or not) that all investment is resourced through saving
point is, that whatever the past has been, SA needs to win the future. That does not mean ignoring the past, but it is needs to be helpful
The vitriol is expected. All about ‘white privilege’ apartheid beneficiary. But nothing about building the economy
Let’s take education. Pass rate falls: reality of hiding problems through lowering standards is being exposed. Lower standards did damage
In education, there are schools that don’t have proper ablutions. More than 20 years after 1994. Yet money has been allocated to fix this
No ablutions in schools? Blame is very appropriate on the Apartheid govt. but now? Blame very appropriate on current govt.
Hart’s Tweet about the increase in the growing sense of entitlement and hatred expressed towards minorities began to be met with critical and supportive responses, some of which Hart re-tweeted. For example, Oxford Rhodes scholar Eusebius McKaiser – a proponent of unapologetic racial discrimination against South Africa’s white minority - responded:
.@chrishartZA You right wing idiot.
Actor, model and comedian Siv Ngesi @iamSivN proceeded to Tweet a series of threats against Hart to his 22 000 followers calling for “black Twitter” to mobilise and teach the Standard Bank economist a lesson:
Utalk of entitlement like white people dont feel entitlement!Like it's some black disease!Black twitter pls make Sundayroast of @chrishartZA
I have a feeling @chrishartZA will regret his twitter rant! Black Twitter here's the new project!
Hart then returned to his theme:
Apologies - I cannot keep up with the responses. I will continue with the main points I was trying to make.
Firstly, my opening tweets were OBSERVATIONS, not my view. Secondly, the economy faces major challenges. Thirdly, we can and must do better
The economy is struggling & with a local election looming, blame game is in full swing. If policy strategy is not changed Econ will struggle
The economy is capital deficient and is battling with low growth and high inflation. Jobs are not being created
Policy strategy involves increased state spending and a focus on infrastructure spending led by the SOEs
However, against that strategy, there is a triple deficit: current account; govt budget and households (tax base)
SOE driven infrastructure spending has not worked well. Cost overruns, schedule overruns and capital deficiency are problems
At the same time, sovereign credit rating is at risk to be downgraded to junk. A certainty if govt expenditure grows agains stagnant Econ
There are four expenditure threats: wage bill; national health; SOEs and nuclear. All unsustainable without economic growth
The consequences of low growth is that unemployment continues to rise. SA needs to turn itself around and avoid a downgrade
The rise in state spending has effectively transferred resources from high multiplier activity to lower multiplier activity, slowing growth
Falling state institutional effectiveness further reduces the expenditure multipliers.
Yet to get growth, investment into business and enterprise activity is most important. Infrastructure of secondary importance
Like water flows downhill, capital also gets attracted to the more welcoming jurisdictions. SA has become more difficult to do business
SA now 96th most economically free. Ease of doing business also more difficult. These things must improve for SA to grow and lead Africa
The three key mistakes: labour unrest; regulatory escalation and taxes that target capital formation and investment viability
So while the global economy slows, SA is seen as a risk destination. We should become a haven destination.
Essentially, redress policies have focused on economic transfer rather than growth. Yet exclusion is perpetuated by lack of growth
The labour force numbers: (roughly) 110 000 unemployed whites; 8million unempl blacks; 14mil employed (total); 2 mill employed whites
The actual numbers show unemployment problem is essentially a black problem. If one normalizes participation rate, 10m+ jobs are required
Even if there was full economic transfer and full exclusion of white from the economy, there would be a massive black exclusion problem
The reality is that we can bemoan the legacies of Apartheid but that does not solve the problem of the massive number of unemployed
Economic transfer policies may satisfy the more emotional side of Apartheid redress but provides zero solution to the excluded
SA also needs foreign investment to be part of the modern economy. Foreign investment brings technology that we could not possibly replicate
In conclusion - for transformation and exclusion to be resolved, SA needs a massive expansion. The economy is currently way too small
Apartheid is SAs national scar. But unemployment has become a bigger scar. SA needs saving, investment and growth.
Resolution of unemployment diminished most other socioeconomic problems: poverty, inequality, education, health, crime, housing
Unemployment has to be the most important policy priority. At the moment policy confusion has relegated job creation to a low priority
Unemployment needs employers. If 10-15m new jobs are needed, then 2-4m new businesses are needed. Businesses employ. Infrastructure doesn’t
Govt strategy of creating 100 black industrialists problematic. Nowhere near a solution when it needs to be tens of thousands at least
A focus less on what exists but what needs to come into existence is what will really accelerate transformation
While it is psychologically NB to focus on the lack of black top 40 CEOs, reality is we need to be building another crop of top 40 companies
…and that is NOT saying transformation of existing companies must be ignored
In response to the outrage then manifesting itself on social media over his earlier tweet Hart commented:
This tweet has caused offense - never intended for which I apologize wholeheartedly. Meant to be read in context of slow growth
This discussion has taken longer than usual. I need to check out now. I appreciate the robust debate. Cannot get to all…
….i still wish everyone including those that disagree a wonderful new year. Hopefully with good discussion, we can turn the economy around