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Regarding a Western Cape Secession

The debate is being taken up by more and more people.
Chris Becker is Head of Africa Research and Chief Africa Strategist at ETM Analytics based in Joburg, South Africa. He has a particular interest and focus on the macro-economy and financial markets of sub-Saharan Africa.

Regarding a Western Cape Secession

by Chris Becker

With secession fever in the air in Crimea, Scotland, Catalonia, and Venice, Chris Gibbons wrote a blog post at his blog titled “Could the Western Cape Secede?” (Read it here). Chris argues there are too many constraints to the Western Cape being a success un-shackled from the regressing South Africa as a whole, and concludes that:

No, despite the fact that secession might be in the air elsewhere, it really does look as though we South Africans are stuck with each other.

I disagree with this assessment. I believe Chris should focus less on the constraints on the Western Cape as they stand, and more with how the constraints would be lifted under an independent Western Cape. It’s in imaginating a future that doesn’t yet exist, and the policies required to bring this into existence, which is where the Western Cape secession scenario becomes exciting.

I tried to post a comment on the blog but it’s somehow disappeared into the interwebs, so I’ll put my thoughts up below.

 

Chris points out that the DA is more market-leaning in its policy approach than the ANC, which would be a net positive for an independent Western Cape. I agree for the time being. I agree for now, because the longer the DA competes with the ANC in capturing the median voter in order to win national democratic elections (of a unified SA), the more the DA begins to look exactly like the ANC. In other words, to capture the median vote in South Africa, the DA has to become more populist. As a result, I believe the longer the Western Cape remains part of a unified SA, the less optimistic a breakaway of the Western Cape becomes, unless the Western Cape public identifies this shift and drops their allegiance to the DA and votes for someone who looks like the DA of five years ago.

I disagree more strongly with Chris’ “harsh realities for the secessionist venture,”where he uses examples of existing economic realities in the Western Cape that would be a net-negative for the movement. For example, Chris argues that “one elderly nuclear power station at Koeberg would not be enough to sustain its economy,” that “quite a few of the financial services companies currently headquartered in Cape Town would shift to Johannesburg,” and that “wonderful wine farms, windy beaches and scraggy Karoo sheep farms might not be enough to produce sufficient wealth, either.”

These seem to me more opportunities of the secession, than challenges of it. I think we must bear in mind that secession movements by definition are to enforce change of your political representatives and to gain policy independence, in order to effect actual policy change to improve society. Therefore, if the Western Cape secedes, the political environment will change too. This means tax policy, monetary policy, regulatory policy, all of these policies are likely to change as well. The question is whether they move in the right direction to ensure an economic boom in the Western Cape, or whether they move in the wrong direction and ensure collapse at a faster rate than the rest of South Africa is regressing right now.

If the new independent Western Cape government decided to liberalise power production, distribution and marketing, and break the Eskom monopoly, there would certainly be a boom in the sector and soon there would be surplus capacity in the Western Cape. If the new independent Western Cape government decided to enforce laws and policy similar to those of Singapore, Hong Kong and Mauritius, there would be a boom in the financial services industry in the WC. My bet is that financial companies HQ’d in the WC maintain representative offices in SA, and these companies HQ’d in the rest of SA moves to the WC to take advantage of a better business environment. If taxes were lowered on wine farms, one of the biggest employment sectors in the WC would be able to employ even more people, or to pay existing workers much higher than the minimum wage. The scraggy Karoo could have a shale gas boom if fracking was legalised, creating significant wealth for the people of the Karoo.

The people of the townships in the Western Cape would be the first drawn on in an industrial revolution in many of the now idle factories that sit right on their doorstep. Capital inflows and investment into a business-friendly WC, by definition means more tools for workers to work with, meaning more productive workers, leading to higher wages and incomes (and more jobs). Moreover, there’s significant tracts of unused land on the N1 and N2 transport nodes moving north toward the Paarl from the city that could be transformed into ultra-productive manufacturing land, not to mention heading up the West Coast to the port of Saldanha.

This is not starry-eyed speculation. Economists talk about the “economic miracles” that took place in places like Singapore and Hong Kong in the past five decades. I’ve written about these “miracles” before. Hong Kong and South Africa were on a par with each other in terms of wealth in the 1950′s. Their people were no smarter than the average South African, but they did have were smart politicians who understood that economic “miracles” are created by leaving people the freedom and ability to voluntarily exchange goods and services, with as little interference from government as possible.

An independent Western Cape could achieve these same miracles in an even faster time today, thanks to the sharing of technology and information at virtually no cost through the internet. This means that if the Western Cape seceded, and the people were wise enough to force their politicians to copy the economic models of Hong Kong or Singapore, the people of the WC could within a generation become as wealthy as any wealthy developed nation in the world.

Yes, there may be conflict in the event of a referendum to secede along racial lines. But what if a black, Mandela-esque leader (I prefer Ron Paul-esque, but hey) rises through the political ranks who understands that true freedom, freedom from the state and its interventions, is what creates economic miracles everywhere in the world, and convinces a large, black following that a breakaway from a unified SA is what’s required and necessary if they’re ever to grow wealthy?

Maybe that’s where I’m dreaming, but in my opinion, it will become a life-or-death decision for the Western Cape to secede from a rapidly regressing unified SA in the future. It might not happen in the next ten years, but somewhere in my lifetime it will happen. And I hope we’ve got the right public and political mindset to take the Western Cape forward and upward out of this current mess SA finds itself in.

 

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