When the depth of the country’s electricity crisis became apparent in January this year, I noted with some amazement that Alec “The Bolt” Erwin, the minister in charge of public “enterprises”, told us it wouldn’t harm our economic growth. He seems to believe in the notion that if the collective decrees it, so it shall be. Why he didn’t just exclaim “fiat lux” we’ll never know. Surely, this would solve the perception problems South Africans seem to have in the dark?

I, on the other hand, called him an idiot who learnt nothing in economics lectures. I thought those who don’t believe Africans can run a competent government would claim vindication. I predicted severe inflation, and said that we’d be lucky if GDP stayed in positive territory. We can forget about poverty alleviation and job creation, I wrote elsewhere. Privately, I said, “by this time next year [meaning January 2009] we’ll be in recession”, but I couldn’t find anyone who’d accept even an even-odds bet on it.

Some commenters accused me of being overly negative, and several called me an afro-pessimist. I am pessimistic, yes, but it has nothing to do with people or geography. On the contrary, I have good reason to have faith in the ingenuity and productivity of free people, even in — or especially in — adverse conditions. My pessimism has to do with economics and government.

Maybe I was negative, but lo, just a month later, the first signs of the massive impact on growth in the mining sector became apparent.

Now, four months on, South Africa has double-digit inflation for the first time since our liberation. The central bank has jacked up interest rates by a massive 4.5 percentage points already, and its governor, Tito Mboweni, has just threatened a staggering further hike of two percentage points, which would bring it to 13.5%.

Our economic growth has crashed to not much more than 2% — thanks in part to a staggering 22% decline in the mining sector. The proximate cause? Power cuts, of course.

So now we face that dread curse of inflation that doesn’t buy growth: stagflation. Even the unions now argue that we’re heading for recession.

In response, finance minister Trevor Manuel seems intent on jumping off the same rhetorical cliff as The Bolt. He told parliament not to worry, “The slowdown we are experiencing is of a short-term nature.” He describes the causes of this deepening economic crisis as “short-term turbulences”. There will be growth! Fiat auctus!

Is delusion of competence a contagious condition? Is this what Thabo Mbeki means when he said that cabinet takes “collective responsibility for the decisions taken over 14 years”?

My initial response to Mbeki’s apology was, “Well, off you go then, the lot of you! One takes responsibility by resigning.” I had not considered that all Mbeki meant was that cabinet would get its collective story straight, and collectively play God, because what they say is all that matters. The rest is just racism or neo-colonialism or afro-pessimism or negativity or sensationalism or media hyperbole. Reality is created on command. Truth is what the government declares it to be. Hence its attempts to censor the media and establish its own party-run newspaper.

Don’t get me wrong. I’m not writing this to say I told you so (though I did). I’m not gloating that I know more about elementary economics than our minister of public enterprises (though I do). I’m the most modest person I know, after all (though besides that I have few failings).

I’m just wondering who dared disobey the honourable Alec Erwin’s command that growth would not be affected. I want to find the faithless exploiters of our collectivist misery, and expose them to public denunciation. Put them in the pillory and throw stuff at them, counter-revolutionary traitors that they are.

There’s bad news on the platinum front: AngloPlat’s output has fallen by a quarter. But, says Business Report, there’s a silver lining:

Power cuts and flooding cut platinum output by up to 24%

Cape Town — Power cuts and flooding had resulted in refined platinum production falling as much as 24 percent to 428 600 ounces in the quarter to March, compared to the same period last year, Anglo Platinum said yesterday.

But the power shortages at local platinum mines, which dominate global production, has had a silver lining, as platinum prices shot through the $2 000 (R15 172) an ounce barrier earlier this year to reach a record of $2 255 last month.

Wonder if they’d write the same about food producers. “Bread output is down by a third, and milk production is 25% lower. Lucky their prices went through the roof, so company financials won’t suffer too much.”

Maybe it hasn’t occurred to this reporter that the PR spin from AngloPlat, that price increases made up for production losses, is just that: spin. If they had kept production up, the price would still have increased (albeit by a bit less, perhaps), and AngloPlat results would have been significantly better. You want to sell into rising prices, not sit on the sidelines while your competitors do. Without the production losses, investors would have earned more capital appreciation, which they could have re-invested, which would have improved South Africa’s current account balance, and which would have bolstered overall economic growth.

Instead, the jobs and incomes of mineworkers have been put at risk by lower output. Silver lining? That AngloPlat’s numbers are reasonable despite its inability to exploit rising prices? Tell that to unemployed miners when they can’t put food on the table next month. Perhaps the mineworkers can send a press release to Business Report saying that their second quarter calorie-intake was worse than expected, but in the context of higher unemployment levels in the broader economy they didn’t do too badly, and there’s a silver lining: at least they don’t have to risk the mining safety issues Anglo Platinum management has attributed to the power cuts.

As predicted, South African industry is showing signs of being hit hard by the electricity crisis that came to a head early this year. Gold Fields has issued results including a warning that despite a soaring gold price, which normally would make marginal mines profitable, it might have to close those mines because of the 10% electricity cuts it is being forced to make. It operates some of the deepest mines in the world, where life isn’t all that pleasant at the best of times, and is downright deadly without air and water being pumped into and out of the shafts.

It’s worth pulling this story from a major international newspaper, because that makes a point in itself.

Production, the fourth-largest gold producer in the world predicts, will be 20% to 25% down on the previous quarter, and will remain 15% to 20% down for the foreseeable future. Not surprisingly, this brings into jeopardy almost 10 000 jobs — some 18% of the workforce. And Gold Fields isn’t alone in this predicament.

Yet Alec Erwin, the communist unionist in charge of public enterprises — which includes the rather un-enterprising electricity monopoly — told us, not long ago, that despite the power cuts and rationing, “The growth of South Africa’s economy at the current healthy levels can continue.”

What a relief. Presumably, Erwin will put in some extra time to make up for those lost rands of Gross Domestic Production. Perhaps he can also make available, say, 9 700 gardening jobs, paying enough to support a family or so each. He’ll pull through. I have every confidence in his leadership, since his boss clearly does.

PS. Because of other obligations, I’m rather infrequently connected just at the moment. There’s plenty to rant about, but this week will probably be quiet around here. Never fear, though. I’ll catch up.

The more this power crisis hits home, the harder I find it to see any silver lining to the huge dark cloud that covers South Africa right now. The golden lining, however, you just can’t miss.

I have always resisted pessimism, because I didn’t think that the socialist tendencies of the government were crisis-level serious. I thought they weren’t particularly good at generating growth, or creating jobs, or reducing poverty, but I didn’t think they were going to plunge the country into darkness and economic disaster.

Nevermind the money spent on gas lights, generators, solar panels, batteries, laptop replacements for PCs, fluorescent or LED replacements for light bulbs. Nevermind the money lost to small shops that don’t have generators, or supermarket that are required to turf out frozen foods if their refrigeration is off for more than three hours. Nevermind the the time lost in traffic chaos. Nevermind the hospitals that can’t keep diagnostic machines and surgeries powered. Nevermind the thousands of people with desktop computers that now must switch to laptops (if they can afford to do so) or be rendered useless for a quarter of their office hours.

Every time one sits and thinks about it, new and grave consequences of half a decade or more of regular blackouts come to mind, and all of this is a drain on the economy.

If you think the people who complain are just over-reacting pessimists, consider this:

South Africa’s gold mines, and mining companies in other sectors, were instructed on Thursday night by electricity utility Eskom to shut their mines, possibly for up to between two to six weeks.

A letter signed by Eskom CEO Jacob Maroga said that key industrial consumers (KPI) had to reduce their power loads to “minimum levels”. He added that Eskom could not guarantee power supply.

Same goes for platinum. One mine estimates expected daily losses of R60 million, or almost 10 000 ounces, every single day. Goodbye mining jobs. Goodbye precious metals exports. Goodbye to one of the main stays of the South African economy.

Already, the gold price is spiking. Already, the currency is sliding. Mining stocks are not the place to be right now. The only upside is for the gold bugs. Are they sitting pretty? South Africa recently lost its top position in global gold production to China. Soon, we’ll be fighting it out in the relegation zone.

Goodbye to our prized Global Competitiveness Index rating. Goodbye to boasting about the highest industrial output, producing the most power, and exporting the most minerals in Africa.

And the government’s response?

As you’ve heard from Minister [Alec] Erwin [of Public Enterprises, which is in charge of Eskom, the monopoly power utility], we are facing an emergency situation. However, we are mindful that this electricity emergency cannot be solved by government alone, but will have to be a collective effort by both ourselves and South Africans in general. Let’s all put our shoulders to the wheel to deal with the situation we find our selves in. […]

During our deliberations in Cabinet, it became obvious that the interventions that will provide us with immediate relief will be on the demand side management and energy efficiency. It goes without saying that we therefore, all need to ensure that energy conservation is a way of life.

So what you’re really saying, is that it cannot be solved by government at all. And yet, it is illegal for South Africans in general to do anything other than use less electricity.

Here’s the best bit:

South Africa’s current shortage of electricity, which the government has now conceded is an emergency, will not affect the 2010 Soccer World Cup, according to the government.

And why, pray tell, should we believe that?

Even if it results in an all-new all-singing all-dancing alternative energy industry (which is what the greens are cheering about), our ability to grow the economy, create jobs, and reduce poverty, already marginal thanks to high regulatory burdens and an interventionist government, will soon be a distant memory.

I am not invested in gold. Boy, was I stupid. I’m going to the pub. Even if the beer is warm.

PS: Photographer Philip Mostert wrote to say that Anglogold Ashanti, which offers the imaged used above for download in its media and marketing library, no longer owns the rights to it. Credit for this excellent photograph is, therefore, entirely due to him.