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Zille's tweets and mining's legacy

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Zille's tweets and mining's legacy

11th April 2017

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Helen Zille’s supposedly controversial tweet about the ‘colonial legacy’ not being all bad was not a reference to the mining industry. But it might well have been. Zille, it will be recalled, was returning from a visit to the city state of Singapore, the most successful development story of the current era. Among the many observations she made was: ‘For those claiming legacy of colonialism was ONLY negative, think of our independent judiciary, transport infrastructure, piped water etc.’

This comment attracted little substantive engagement but instead a storm of umbrage, much of it manufactured and accompanied by frenetic virtue signalling. Many of the comments moved rapidly from ‘Helen shouldn’t say this sort of thing’, to ‘Helen shouldn’t say anything at all’, followed by calls for her permanent silencing through resignation. But, in fact, there is every reason to examine legacy issues honestly and openly. Only on this basis can we understand where we are now and what we need to do next.

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In truth, the colonial legacy is not only multifaceted but also varies from one society to another. As a broad generalisation, it might be said that the consequences fall into one of three categories: the Good (Rule of Law, infrastructure), the Bad (economic distortion, political exclusion), and the Ugly (violence and exploitation). The appropriate response is to utilise the Good, correct the Bad and atone for the Ugly. The recent history of South African mining has much to tell in all three areas.

The Good. It is no secret that South Africa’s modern economy is based on mining. The country’s vast network of financial institutions, law, transport and, indeed, manufacturing, would be far less extensive and sophisticated without the industry. It is true that mining is not the force it once was, having been displaced by financial capital at the apex of the economy. But if mining were to once again thrive – and the resources still in the ground are so extensive that it could, given appropriate laws and policies – the boost to the rest of the economy would be spectacular.

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Despite its travails, the industry still employs over 450 000 people, who are accompanied by some four-and-a-half million dependants. These employees earned R116.7 billion in 2015, more than the nominal GDP of 52 countries. The tax and welfare implications of a revived mining industry are big, but it is in the backward and forward linkages into the manufacturing economy that much of the real potential lies. It is no coincidence that historically dominant firms like AECI (explosives), PPC (cement) and Iscor (steel) owe their early success to their role in supplying the mining industry.

The Bad. South Africa has never been subject to some of the biggest problems associated with resource riches – an enclave economy, Dutch Disease, and the ‘Resources Curse’ – and, for this, the country can be grateful. We need only consider the Democratic Republic of Congo to see just how baleful the legacy of mineral riches can be. What has made the difference? There are many elements that distinguish South Africa from the instability and poverty which bedevil other resource-rich societies, but underpinning them all is a legacy founded on how South African mining developed – a gradual move away from limited access (to resources) and stability based purely on economic rents. This required the development of the only possible alternative – a market economy based on the incremental expansion of the Rule of Law and its foundation, private property. It is the mining industry we have to thank for these bulwarks of freedom. 
Of course, until 1994, political exclusion was a different matter altogether. This criticism is now moot, having been corrected by democratisation. In fact, those who argue that political freedom has not brought significant economic change need to re-examine their data.

The dominant owners of South Africa’s mining industry are no longer individuals, black or white, but institutions – including, especially, pension and investment funds – with state entities like the Public Investment Corporation (which manages government pensions) and Industrial Development Corporation owning over 15 percent of the industry between them. It is difficult to imagine a better way of spreading the wealth generated by the mining sector than through pension funds, which combine the virtues of prudential savings and investor conservativism, and are easily accessible to every employed person.

The Ugly. The migrant labour system which mining created and on which it depended during its first century has the unfortunate, but historically accurate, reputation of being founded on the ruthless exploitation of politically powerless migrant workers drawn from all over southern Africa. These comprised the backbone of a labour-intensive model where a small number of white artisans oversaw a mass of low-paid and unskilled black workers. Shift bosses were paid bonus rates based on output, while ordinary miners received only a fixed salary. The situation was maintained by a regulatory skills bar which, among its many discriminatory provisions, prevented black miners from acquiring mining apprenticeships or blasting licences. And, of course, (male) miners were isolated in single sex hostels and expected to return to rural areas at the end of their contracts. It is not a model a person of any social conscience could want to return to.

This is an uncomfortable history, but it is one the industry has confronted directly in recent years. Better working conditions, meeting global safety standards, building townships, converting single-sex hostels to family units, and creating programmes to develop 'labour-sending areas', is only a part of the process. Today ordinary miners are paid at a rate well in excess of what individuals with comparable skills sets command elsewhere in the economy. The industry no longer relies on migrancy, and the last vestiges of the system, which is no longer coercive, are being eliminated by urbanisation and generational change.

Mining's history is complex and, as some of its leading figures acknowledge, not always positive. Sibanye Gold CEO Neal Froneman said as much in October last year when he spoke of 'a past that continues to taint the present'.  But in disentangling the Good, the Bad and the Ugly – and understanding what each means for now and the future – needs a nuanced grasp of the issues. Helen Zille displayed this by following her tweets with a 3 000-word essay on the lessons Singapore may have for South Africa. In it she noted again and again that Singapore was only 'partially free' (according to Freedom House). This is a fine example of the honesty that needs to prevail in the debate over the future of South African mining.

Such honesty will offend some. They simply need to be faced down.

Written by David Christianson, a Policy Fellow at the IRR, a think tank that promotes economic and political liberty. Follow the IRR on Twitter @IRR_SouthAfrica.

 

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