ON THE FRITZ
Economics as if Gold Matters
Starry-eyed about his daughter, I was nervous about meeting Fritz Schumacher. Rightly so. I have never seen such a piercing pair of blue eyes. His first question, once introduced, was:
“So, you are from South Africa. What have you to say about South Africa?”.
I gulped, cleared my throat and blurted:
“Without gold, South Africa is a banana republic”.
and held my breath. He chortled, glanced fondly at his daughter, and said:
“Exactly what I have been telling their economists for years”.
If it was a test, I passed. It did not matter. I saw little of them ever again. You could conclude I did not interest either of them enduringly enough. Whatever. It was not the last thing Fritz had to do with South Africa, but I will return to that.
More to the point, that was more than half a century ago. If anyone asks the question “How many gold mines has SA opened during democracy”, it will reveal more or less why we became the sort of republic we are.
At one point, I was enough of a rad to chant “leave gold in the ground”, but, after some thought, gave up on that hypocrisy. You see, I like cars, computers, brass instruments and technology. As Alan Savory has said, everything we use is made with fire somewhere in the process. We have coal, we have gold, we need steel, we need manufacturing, exports. For all of those, we need investment. And, we have to choose: a banana economy does not win consumer goods, a gold economy does.
Gold, 1, Bananas 0
The economists Fritz dealt with are surely long gone. I have no idea what they said to him, but he clearly did not agree with them. The facts are, though: Gold ...
- production is way lower than in those “Fritz” times
- has broken $5k per Troy Ounce
- is useful in computing circuit boards
- is useful for IT connecting interfaces
- is thus useful for data centres
... and, data centres are mushrooming worldwide.
It also is worth realising that dumping the Bretton-Woods Agreement was a stroke of the pen, and returning to the gold standard would similarly be at the stroke of a pen. You never know.
I know that the gold price can crash overnight, and that politicians are unlikely to return to the gold standard, but I instinctively feel that gold is worth betting on. Why? Well, it is not about what the suits in Diagonal Street think - I do my best to ignore them. It is because the Zama-Zamas are betting on it. Zama zamas have had a go at West Wits, our only new gold mine in 15 years. Why would anybody willingly descend kilometres deep, into the dangerous black depths of a gold mine, without a salary or benefits? It must be worth it.
And that, I regret, is the extent of my economics. I said, though, that I would return to Fritz and his South African story. Very simply, and because he was a good man, Schumacher agreed to a request from the Transkei Homeland to consult on Appropriate Technology [1].
Make up your own minds as to why this turned out badly for him. The bleating ranged through numbers of jibes starting with ‘apartheid stooge’ to what have you. It interests me to know what social media would have made of it today. What matters, though, was that the Transkei actually established TATU [2]. Fritz was seen to be aiding and abetting apartheid, not good for him, of course, but also totally at odds with the truth. Actually, he would help anybody, anywhere, if he saw a need, and Transkei was not doing well.
Take a look at the Transkei now, and tell me that is economic hub of South Africa. At last read, some grass was cleared for the president’s super cyber city, and that was it. Never mind that 70% of SA rain falls in that area, and that it is therefore the most logical place for a smart city. It will always have enough water. The reality is that some of the richest marijuana fields in the country are also there, and they are not going to make way for any stinkin’ city any time soon, you dig? Nor for a highway, nor high speed rail, or anything. What happens in Transkei, stays in Transkei.
Appropriate Technology far outlived Fritz: what he started is now called Practical Action, has offices in many countries, and has improved countless lives, otherwise offered no hope from anybody, let alone the rich, anywhere. Along with many others on our continent, our populus is interested in funding, not self-sufficiency. We want to buy shiny things, not make them.
Much as I agree with Fritz on limiting growth, I think the world would far rather live with creature comforts and consumer goods until we lose all hope of getting them, rather than try and limit them now, and live more spiritually, as Mr Schumacher advised. We’ll take our chances. We’ll put up with economic growth and ecomomist-speak, with all their warts: maybe not people who want to leave for Mars. Space travel is expensive, utterly inappropriate technology, and, what if things go wrong on the journey? The song of that week would be Baby, it’s cold out there.
So, how about it, Mr/s Minister/s? Isn’t gold worth extracting at $5k per oz, even from deep shafts? Are the Zama-zamas wrong? Isn’t growth what you want too? One new gold mine in fifteen years?