Brian Ashley seems to think rising interest rates are a conspiracy against wage workers (“SA needs to reject the dogma that wages are a burden“, November 30). But, like much of his article, that is founded in a flawed understanding of economics.
Fighting inflation doesn’t reduce wages or hurt workers. Sound monetary policy, even if unpleasant for some in the meanwhile, is necessary for a stable economy. Reducing inflation also helps workers by reducing the escalating price of goods across the board.
Ashley’s proposal to cap food prices is also potentially devastating. Price-fixing and capping don’t keep food cheap; they discourage production and investment. If bread costs R10 to make and can be sold only for R8, bakers will stop baking it. This vicious cycle has repeated in dozens of economies throughout history. Price-fixing doesn’t work.
Ashley acts as if people are attacking wages and stalwartly defends them. But no sane economist thinks workers earning an income is a bad thing. Ashley strays into the same tired old tropes when he attacks neoliberalism and proposes central planning.
But South Africa hasn’t suffered under the brunt of neoliberalism. It has suffered from central planners, play-play socialists and forays into Marxist economics. The solution is liberal economics. The solution is creating jobs that lead to higher and higher wages through cutting red tape that prevents businesses from starting, growing and employing.
Ashley doesn’t want solutions. He wants only to attack what he perceives to be the status quo and the big capitalist bogeyman. But his views do not line up with reality and need to be rejected outright.
Nicholas Woode-Smith
Cape Town
JOIN THE DISCUSSION: Send us an email with your comments to letters@businessday.co.za. Letters of more than 200 words may be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.