The Price of Freedom

A Special Report on South Africa

05 June 2010

The Price of Freedom

Since embracing full democracy 16 years ago, South Africa has made huge strides. But, says Diana Geddes, not everything has changed for the better.

• Most blacks still live in shoddy shacks with poor sanitation in crime ridden townships.
• Bad schools and hospitals.
• Most blacks don't own a car and public transport is bad.
• South Africa - 24th biggest economy, but 129 of 182 on the UN's Human Development Index.
• Contains 90% of world's known platinum, 70% of chrome, 40% of cold, yet 43% of its populations lives on less than $2 a day.
• On the bright side, its cut its murder rate in half, eradicated severe malnutrition among kids, increased enrollment in schools, provided welfare to 15million, and set up the world's biggest AIDs program.

Your Friendly Monolith

The ANC remains powerful

• Everyone loved Nelson Mandela, whites as well as blacks, for his calm dignity and generous spirit of reconciliation. But he was more of an idealized figurehead than a leader and chose to go after just one five year term.

Jobless Growth

The economy is doing nicely--but at least one person out of three is out of work.

The reasons why the region's leading economy, so rich in mineral resources, is failing to keep up with other emerging markets such as India and China:

• 1) South Africa is relatively small without a huge domestic customer base.
• 2) South Africa has a low rate of saving and investing, partly because of political uncertainties.
• 3) Long and inadequate educations system resulting in shortage of skilled manpower.
• 4) Strong and volatile currency, which deters investors and makes its exports less competitive.
• 5) Its infrastructure suffers from severe power shortages.

A New Kind of Inequality

Black economic empowerment has had unintended consequences.

• ANC introduced the black economic empowerment (BEE)
• Instead of benefiting the masses, it ended up benefiting a few individuals.
• BEE came from white business leaders, mostly as an attempt to ward off nationalization.
• It ended up creating a wealthy black class of unproductive crony capitalists.
• 1913 Land Act-blacks not allowed to own land.
• 1994--87% of land owned by whites.
• The new black majority planned to redistribute 30% of white owned land to poor blacks, but just 6% has been handed over. Many of the new owners don't have the skills to run large farms, so some of the land remains fallow.
• Currently, there is talk of having white owners transfer 40% of their land to black shareholders, and possibly capping the amount of land that an individual can own.

Hold your nose

The smell of corruption

• The removal of apartheid-era old guard was understandable, but had disastrous consequences.
• Most qualified engineers, financial officers, doctors, nurses, teachers, scientists were in short supply.
• The terrible shortage of human capital is now the single most important reason for questioning South Africa's ability to move forward - Azar Jammine (head of consultancy Econometrix)

The great scourges

A black middle class is emerging, but poverty and crime blight millions of lives.

• The World Competitiveness Survey rates South Africa worst out of 133 countries for crime--50 murders, 100 rapes, 330 armed robberies, and 550 violent assaults a day.
• Why is South Africa so violent?

1. Legacy of apartheid
2. High unemployment
3. absence of a father in 66% of black households.
4. Alcohol and drug abuse

Last in class

Education needs to take a giant leap

• Spending per pupil is now the same for black and white, yet black children generally continue to fare worse then whites because most of them attend inferior schools.
• Public education was desegregated in 1994---most former black schools remain mostly black because they are in deprived black areas, whereas the former white schools have a good mix of black and white---Catering to just 10% of all pupils, these schools are better endowed, better run, and more disciplined.

Don't get Ill

Or if you do, go private

• Shortage of staff as doctors and nurses have left the country because of bad pay.
• AIDS affects one in eight South Africans

Still Everything to play for

The case for optimism--and the many caveats

• Vast numbers of South Africans live in poverty while the rich get richer
• Hundreds of thousands suffer from HIV and tuberculosis.
• Violence is high
• The economy needs skilled workers, yet millions remain unemployed.
• University dumb down courses to boost pass rates.
• The government seeks to woo foreign investors, but as de Tocqueville noted, revolutions tend to start with rising expectations, not when conditions are at their worst.

War by Other Means - New Yorker

Is it possible to negotiate with the Taliban?

Steve Coll - 24 May 2010

Vice Admiral Robert Harward.

Led missions to capture and kill Taliban and Al Qaeda commanders.
Now, he is overseeing the release of these people; his task force aims to reintegrate Taliban fighters into the community as part of a broader American policy of promoting Afghan political reconciliation.

Pashtuns

Ethnic group that accounts for 40% of the country's population.
Most Pashtuns aren't part of the Taliban but most Taliban are Pashtuns.

Obama and Clinton have made public declarations of talks with Taliban leaders but aren't in direct contact themselves because the Taliban haven't completely denounced Al Qaeda.

Since 2001, the US remains undecided about whether the Taliban can be reformed and unable to conclude whether Karzai's government should ultimately seek to defeat the Taliban or learn to share power with them.

Mullah Abdul Salam Zaef

Joined Taliban in 1994, was an ambassador to Pakistan and was imprisoned in Guantanamo after 2001.
After his release in 2005, the Obama administration regard him as an important intermediary with the Taliban.
In his opinion, American policy unnecessarily excluded the Taliban from political participation after September 11th and by doing so, fed into the insurgency.

Iraq - the state purged high ranking officials of Sadaam's Baath Party---policy of de-Baathification was misguided, but at least it was clear.

Afghanistan - Bush's policy was less clear--rewards were offered to capture and kill Taliban leaders.

Richard Holbrooke

peace talks in Afghanistan must be preceded by efforts to win defections from mid-level commanders.

This district by district strategy requires leadership and support from the Afghan government.

In mid-May 2010, Afghanistan Peace and Reconciliation Program was introduced which dedicated 160 million dollars to reconcile mid and low level Taliban fighters--an attempt to erode the Taliban from the bottom up.

In the mid 90s Karzai lived in exile among Taliban leaders when the mujahideen took power in Afghanistan.

As president, Karzai has suffered political insecurities and relies upon southern Pashtun tribes as part of his political base---since some of these tribes identify with the Taliban, Karzai needed to adopt a softer stance towards them.

Peace Step by Step - zigzagging series of negotiations between Afghan government and the Taliban, supported by the US where nobody is fearful of being arrested.

Former Taliban leaders have submitted peace plans to NATO, Saudi Arabia, and Pakistan. But Karzai has been unable to respond because he can't speak for Western powers.

Although, the Taliban haven't publicly renounced Al Qaeda, last September, Mullah Omar, or someone writing for him, issued a statement that described the Taliban ad an Islamic and nationalist movement which is a distinction from the international agenda of Al Qaeda.

Bagram Air Field in 2002 - two Afghan prisoners died there because of abuse by American guards and this has fueled Al Qaeda propaganda. Harward replaced it with a new facility that meets international humanitarian standards.

Obama can approach the Taliban through Pakistan who has long supported the Taliban to project influence in Afghanistan and help control its own large Pashtun population.

All the maneuvering between the US and Pakistan has created an atmosphere of mistrust and confusion in which Afghans feel a new political order might be constructed without their consent.

If the Americans stay, the Taliban will fight

If the Americans leave, the internal fight will begin.

Wall Street is from Venus; Obama is from Mars

Pschoanalyzing one of America's most Dysfunctional Relationships

John Heilemann - 31 May 2010

Good Relationships with Wall Street

• In the early days of the Obama campaign, Wall Street was more important than his grass roots fundraising.
• By election day, Goldman Sachs, Citigroup, JP Morgan were three of the top seven institutions that funded him.
• February 2009 - Geithner's stabilization scheme wasn't meant to punish Wall Street, but to save them by pouring money and restoring confidence with them.
• A bigger question was whether to nationalize the weakest banks which were thought by many to be insolvent.
• As Paul Krugman said, there's a good case for nationalizing, but it will cost trillions and you have to guarantee everything--Obama went with Geithner's plan instead.
• By the spring, big banks had paid back almost all the TARP money they received, and the cost to taxpayers was less than the S&L crisis from the nineties.

Good Relationships with Wall Street go Bad

• After the AIG bonus announcements in March 2009, Obama summoned the banks and laid out conditions for passing the stress test, raising funds to bolster the balance sheet, and showing restraint on bonuses.
• Once the banks recovered, Obama made a speech that Wall Street must remember the debt it owes to taxpayers, but he didn't feel that Wall Street was thankful enough.
• On 60 Minutes, Obama unveiled a tax on the biggest banks that would raise 90 billion over 10 years to cover bailout losses.
• Wall Street feels like they paid back their debt and should be left alone.

Tea and Sympathy - New Yorker

Who Owns the American Revolution?

Jill Lepore - 3 May 2010

• Parliament passed the Tea Act, in May of 1773, in order to bail out the East India Company, which, with a surplus of tea and stiff competition from smugglers, was facing bankruptcy.
• Ironically, by eliminating duties on tea in England and lowering th import tax to just three pence. the Tea Act actually reduced the price of tea in the colonies.
• Originalism - the idea that the original meaning of the framers is knowable and fixed and the final word.
• The history that tea parties want to go back to is fictional.
• 10th Amendment - "The powers not delegated to the US by the Constitution, nor prohibited by the States, are reserved to the States respectively, or to the people."
• Tea partiers want these powers because they feel disenfranchised since they didn't vote nor do they like Obama.

For Want of a Drink

A Special Report on water

22 May 2010

For want of a Drink

• It takes twice as much water to grow a kilo of peanuts as it does a kilo soya beans; Four times as much to produce kilo beef; Five times as much to produce a glass of OJ as a cit of tea.
• Of 2.5% of unsalty water, 70% is frozen in glaciers or permafrost.
• China and India, with over 1/3 or the world's population, have less than 10% of the water
• Water is local and since its heavy, it's expensive to move.
• Surface water, like rivers and lakes, will not flow from one basin to another without artificial diversion.
• Upstream water may be useful for irrigation, but as it nears the sea, the only real uses are to sustain deltas and wetlands.
• Mexico City, Bangkok, Buenos Aires and Jakarta are all overdrawing from their aquifers.
• All humans need a minimum of two liters of water in food or drink each day--which is why some people see water as a basic right

Enough is not Enough

• The biggest cause of child death is diarrhoea.
• Without piped water, 800 million people with access to primitive plumbing, as well as open air defecators, are carriers of disease.
• Yamuna River in India - 95% of sewage that pours into this river is untreated.
• Peepco-personal single use biodegradable bag can also be sold as fertilizers.

Business begins to Stir

• Industry generates 70 times as much value from one liter of water as agriculture.
• Desalination involves boiling and distilling the water or reverse osmosis where water is forced through a membrane; both methods use a lot of energy and is expensive.
• The hope is that solar power makes desalination more affordable.

Making Farmers Matter

• Cut the use of irrigation water by 10%, and apparently you would save more than is lost in all the other evaporation.
• India draws more groundwater than anywhere else accounting for over 25% of the world's total.
• Some of this water is often salty with high natural occurrences of arsenic, fluorides, and uranium.
• Waterlogging - poorly drained soils is over irrigated which results in plants' roots being starved of oxygen, knocking some 20% of the field's productivity.
• Farmers are being brought together to calculate how much water to use, decide which crops to grow, etc.
• Bananas, rice, and cotton which need the most waters have yielded to peanuts and lentils.
• Chemical fertilizers are being replaced by compost.
• The upshot is that although incomes have not risen, most of the crops are eaten, not sold for cash, and are thus sustainable.

Trade and Conserve

• Countries with sustainable systems all use water rights that involve the allocation of supply by volume.
• Property rights can be traded to reallocate water from low-value to high-value use as they are used in the American West, Chile, and South Africa.
• Virtual water content will vary according to climate and agricultural practice.
• Virtual water is not to give precise figures, but to alert people that might be better off growing different crops or moving manufacturing to another country.

To the Last Drop

• International river basins extend across borders of 145 countries.
• Congo, Niger, Nile, Rhine, and Zambezi are shared among 9-11 countries
• Cooperative approach to water sharing--Thailand helped Laos build a dam in return for power.

A Glass Half Empty

• Governments need to share their information about river flows and water tables.
• Non-water policies also help solve water problems where good roads let farmers become commercial since they can transport foods year round.
• Scarcity of water is not reflected in price other than transport--this won't last long.
• The difficult problem lies getting higher yields from food crops without a rise in water loss through evapotranspiration.
• Genetic modification can produce drought resistant crops.
• Until some break through in desalination comes through, the best hope is a happy marriage between supply and demand comes from much greater restraint among water users.