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Cosatu's call for the "nationalisation" of the South African Reserve Bank (SARB) indicates their inability to understand even the most basic economic principles and how they apply to the real world. You cannot nationalise a government institution. Behind the idiocy contained in this statement, a very real threat seems to lurk - Cosatu wants to do away with checks and balances on government power. Saying the Bank needs to be "nationalised" is like saying the judiciary should be nationalised - that is not democracy and stands in direct opposition to the Constitution.

If Cosatu had a look at the management structure and mandate of the Bank this would have been crystal clear: the fact that the Bank has private shareholders is of nominal value to its actual operation. These so-called "shareholders" at the SARB serve as council, have limited say and they can be outvoted by government. Furthermore, in order to "nationalise" the SARB, the existing "shareholders" would still have to be compensated - an expense that will have very little effect and be as wasteful as Blade Nzimande's new BMW.

It seems as if Cosatu is running out of things that they want to nationalise - first it was mines, then the food industry and now it's the Reserve Bank. What will be next, the Competition Tribunal?

In keeping with this dazed and confused theme, Cosatu general secretary Zwelinzima Vavi stated: "We don't want total independence [of the SARB] because it can be manipulated by politicians."

Quite what this means is difficult to understand. Nationalisation would mean politicians will actually be in direct control - not less. Economics 101 or even common sense would tell you this. Vavi seems to suggest there would be less manipulation if politicians (ANC politicians at that) were in direct charge. Are any of Cosatu's ideas grounded in reality at all?

And what would Cosatu do if it had the opportunity to take over the SARB? The simple answer is hyperinflation - something that Zimbabweans know all too well. A drastic cut to the interest rates would result in the following:

Higher cost of imports: Exchange rate depreciation that will increase the cost of imports needed for production.
Hyperinflation: High inflation that would reduce the value of the rand.
Return to a barter economy: Because the rand would no longer be valued as a store of value, people would revert back to trading commodities.
Higher unemployment: Without a stable currency, business would not be able to function efficiently, and foreign investors would not want to put their money into South Africa.

It is reasonable to ask whether Vavi actually understands what he is talking about. The message is becoming clear - instead of talking sense and engaging in real debate, Cosatu would rather throw words around which they clearly don't understand. They are behaving more like an illiterate five-year-old than a labour union that is supposed to act on behalf of workers. It is no surprise that their membership is falling - the workers are realising what poor service they are paying for.