Wednesday, September 28, 2011

Corruption is Worldwide


Around 11:15 this morning, I left my flat and headed towards the Cape Town Gold Coin Exchange to check out their kruggerrand prices today.

(Note: They charge around 10% over spot, and buy coins for about 1% over spot. This is inclusive for all major coins that they carry. They have kruggerrands, eagles, and maple leaf coins in stock.)

I was sitting at a red light not too far from the new football stadium they built for last year's World Cup tournament, when suddenly all the traffic lights went out. I thought it was just a weird anomaly, so I proceeded cautiously.

By the time I reached the coin shop, I realized that the whole city was without power. Again. Entire buildings had shut down, stores closed, and schools let out. It was a full-blown blackout... and it lasted for several hours.

This sort of thing is not uncommon in South Africa. Politicians will tell you that electrical demand is outpacing supply because of the country's rapidly growing economy. That's one way to put it-- lemons into lemonade.

But give that excuse to the nearly 50% share of unemployed youths... or the 1 in 6 people who don't even have electricity, and you'll get a slightly different view.

A few years ago, the major mining companies in South Africa approached the government with a clearly stated problem. South Africa's power grid was failing... and without major investment and political attention to the issue soon, the mining companies wouldn't have the resources they needed to continue producing.

Bear in mind that the mining sector is one of South Africa's most important economic drivers. They are the nation's leading employers and exporters, so you'd think that their pleas for critical infrastructure investment would be heeded.

Here's the thing-- political corruption is rampant everywhere. In the developed world of North America and Western Europe, though, politicians are skillfully subtle at their corruption.

Money rarely changes hands in the light of day, but rather gets funneled through campaign contributions, use of corporate perks, and special 'consultancy' fees upon retirement. These guys get their rewards under the table and after they leave office.

In South Africa, though, the corruption is blatantly obvious. It's almost insulting. The politicians here must think their citizens are so stupid, they won't notice massive financial aberrations.

Julius Malema is a great example. As President of the African National Congress Youth League, Malema draws a small government salary.  Yet somehow he drives around in multiple $100,000+ sports cars and owns multi-million dollar homes.

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