Quick commentary today, in honor of it being International Brevity Day. I’m pretty sure that’s today because somebody shared an announcement for it on Facebook.
Looking at the South African rand versus USD, I see that it’s taken a smidge of a tumble in recent days (when viewed using the last several years as a backdrop). My personal opinion on that subject is twofold: I think it’s a miracle it hasn’t done far worse; and, it’s going to get far worse eventually.
I’m not much of a subscriber to doom and gloom forecasts that predict the end of the world. Most of the time, what really happens in a crisis is that after a lot of noise and anxiety, things muddle along painfully for a while, getting a little worse before eventually straightening out. And while I don’t think South Africa will fall any further into or out of the ocean than its present position, I also think that some complex events are just beginning to unfold there that will harshly challenge the region.
Specifically, the mining industry is eating itself to death. From far away (I am NOT a mining or South Africa expert!), it looks to me like there are tens of thousands of people employed in that industry that are having a pretty miserable time: Tough working conditions, tough living conditions, and not exactly what you’d call middle-class wages coming back home every month. In the Cliffs Notes version of the past couple of months, some of those people went on strike, and then more, and then more. Mining companies responded more or less as expected, and now some miners are back at work, many are not, some are being fired, and more strikes are still being contemplated.
What complicates things further is that there are a lot of mines in that region that have relatively uninspiring output, so the mining companies are running archaic high-labor operations to produce relatively small amounts of metal. They’re not operating at a loss (the words “generous” and “mining company” don’t really lump together in my head), but in some cases there is already explicit talk about just abandoning troublesome operations in favor of developing higher-producing properties elsewhere in the world.
There aren’t many data points to connect in this story. Massive strikes lead to unemployment and economic trouble for both company and workers. Companies fire thousands of workers or suspend operations altogether, which produces less tax revenue for the region while greatly increasing the social unrest and demands for social services within a newly unemployed population. Since many of those people aren’t going to be easily placed in other jobs (seriously, if you had the qualifications to be a nurse, doctor or schoolteacher would you really be out working in a mine?), this places a tremendous burden on the government there.
Hence, painful financial problems, (at this point I wave my hands elegantly to take the place of a long and tedious economic argument), and you see the rand fall down pretty hard. That’s not something I’d trade, of course; I’m merely pointing out that I don’t think the current prices reflect what’s coming down the road.
Yeah, I sort of lied about the “brevity” thing. I don’t think this essay qualifies. Well, you know that old quote, “Brevity has the soul of a twit.” Albert Einstein said that; one of my Facebook friends has it in their profile.