Thomas Johnson - Economics Blog

South Africa has implemented the " Twin Peaks" model of financial sector regulation . Two regulators, the Finance Sector Control Authority (FSCA) and Prudential Authority housed in the South African Reserve Bank (SARB), are the twin agencies – “ peaks ” – of the new model.  They were formed with the passing of the Financial Services Regulation Act that “gives the SARB an explicit mandate to maintain and enhance financial stability”. Both came into operation on 1 April 2018. The FSCA replaces the Financial Services Board (FSB) and has control over financial service providers, insurance companies and banks, the last of which was excluded under the old FSB.   It’s responsible for “protecting the consumer and enforcing market conduct”: ●        Protect financial customers by promoting their fair treatment by financial institutions. ●        Enhance and support the efficiency and integrity of financial ma...

Last year, across from the house, the city laid water pipes, an initiative to use treated sewerage water to irrigate parks and sport fields.  Overnight, weekends and downtime a security guard watched over a CAT excavator.  He stood around doing nothing, or because it was cold and raining, sat in its tiny cabin. I thought the machine could look after itself. This is what American anthropologist David Graeber, professor at the London School of Economics, calls bullshit jobs : “pointless jobs just for the sake of keeping us working”.   (He has become a cause célèbre and expanded the theory in a book published May 2018.) Many of us have had one.   In the 1990s I worked for firm of consulting engineers.   During the preliminary, design phase of a project (as it later turned out, my last at the firm), the engineer-in-charge instructed me to perform calculations again and again.  Each week I presented the results.  He looked at it briefly and told...

I wrote the ANC doesn’t understand economics .  While the DA appears to have an overall better grasp of the economy, it’s spoilt by recent naive or misleading statements by senior politicians which makes me wonder if they understand it at all. In a recent  statement   DA leader Mmusi Maimane claimed the DA-led Western Cape created 487 000 jobs since 2009.   As they often do, they take credit for the province having the country's lowest unemployment rate, which actually is mostly beyond their control.  This publicity statement is typical: " The DA-led Western Cape is on the right track to creating opportunities for economic growth and jobs ". Maimane: "Since 2009 when the DA was elected in the Western Cape, 487 000 net new jobs have been created by the DA-led government. That is why unemployment is the lowest in the country" (emphasis added). However, his claim is misleading, and since they ought to know better, a false interpretation of economic dat...

There’s no dispute excessive consumption of most food and drink may have long-term negative health impacts including obesity, cardiovascular disease and diabetes. Particularly, obesity is prevalent in many upper- to middle-income economies including South Africa by the consumption of nutrient-poor foods. This has created a huge public health burden around the world. It’s in this context the tax on sugar-sweetened beverages (SSB) was proposed, which South Africa will introduce from April 1 2018 . The Rates and Monetary Amounts and Amendments of Revenue Laws Act passed approved on 5 December 2017 set the levy at 2.1 cents per gram content that exceeds four grams per 100ml. The first four grams is levy free. A can of Coca Cola will increase by about 11%. A 2014 academic paper , which reportedly proposed the sugar tax for South Africa, said a 20% tax is “projected to reduce obesity in men by 3.8% and 2.4% in women. The number of obese adults would reduce by 220 000”. Note its title ...

A ship provides a good example of how organisations should run.   If the captain, executive officers and crew don’t do their jobs, and strictly follow protocol, it could lead to calamity.   On 17 June 2017 the United States Navy destroyer Fitzgerald collided with a freighter off Japan.   Seven sailors on the American ship died.   The captain, his executive officer and the senior enlisted sailor were fired, and a dozen sailors, including those on watch, were disciplined. The freighter’s role in the collision in the busy shipping route is unclear, but the US’ Seventh Fleet in Japan said “inadequate leadership” on the Fitzgerald contributed to the collision.   (This is the fifth collision this year involving the Seventh Fleet.) British politicians resign on the whiff of scandal.   In 2017 international development secretary Priti Patel resigned over an unsanctioned, “secret” meeting with Israeli politicians; defence secretary Michael Fallon over a...