collapse – praag.org

Small towns are collapsing across South Africa. How it’s starting to affect farming

Wandile Sihlobo, University of the Witwatersrand

Farming and agribusiness play a crucial role in sustaining the economies of small towns and rural areas. There is a lot of evidence of this in the economic literature and in the popular media. This dependency has its inherent risks.

International literature tends to focus on the devastation of small towns in times of drought or when farming lobby groups argue for particular policies. In South Africa, a different pattern has emerged. This is when municipalities fail to provide basic services to their communities and businesses. These services include water and sanitation, electricity, roads and technological infrastructure.

South Africa has a three-tier system of governance. National government sets national economic development policy and drives the search for investment by both domestic and international investors. Provincial government plays a big role too in searching for investment and executing government’s policies and programmes. The most successful province has been the Western Cape, which has achieved the status of the country’s technology hub. But where the investors are located within a province depends on municipalities, specifically how well run they are.

South African municipalities are in deep trouble. For many years households and residents have felt the impact. They have resorted increasingly to mounting protests across the country. But lately, there is growing evidence that governance and service delivery failures are also directly affecting the functioning and efficiencies of farming and agribusinesses in small towns.

A case in point is the recent decision by the food and beverages group Clover to move its cheese production from Lichtenburg, a town in the North West province of South Africa, to an existing plant outside Durban in KwaZulu-Natal due to “ongoing poor service delivery”.

Lichtenburg is part of the country’s maize producing triangle. Three provinces – Free State, Mpumalanga, North West – account for 84% of the country’s maize production, according to latest estimates of the 2020/21 season.

State of collapse

South Africa’s finance minister, Tito Mboweni, recently painted a gloomy picture of the state of municipalities in the country. There are about 278 municipalities in South Africa. Mboweni said that 163 municipalities were in financial distress, 40 were battling to deliver basic services, and 102 had adopted budgets for 2021/22 that they cannot fund.

A growing number are also failing to collect revenue from residents and businesses for electricity, water and property taxes.

Mboweni added:

And, for the first time in our democracy, the national executive has been ordered by a high court to constitutionally intervene in the affairs of a municipality owing to
a financial and service delivery failure.

Municipalities in rural areas and small towns are worst off. A recent study by the Tshwane University of Technology researchers stated that

the level of service delivery in rural communities is less compared to urban areas, and there is no sign of improvement.

Consequences

The multiplier effects of Clover’s decision to relocate are likely to be large. The closure of the firm in such a small town is likely to have a number of negative spillover effects across the local economy.

The company, according to official statements from the government, provided 380 permanent jobs and 40 temporary jobs. It also employs 20 general workers and 20 truck drivers and cleaners.

In addition, the plant gave farmers market access for their produce, and a range of businesses bought and sold products from the company. The income from these activities would have supported many other businesses in the community.

Clover is not the first major company to decry poor municipal services. There’s the long running case of Astral Foods, a poultry producer that also supplies animal feed, and the Lekwa Municipality. Astral has lost millions of rands in production because of failures by the municipality in the Mpumalanga province to provide its poultry plant with water and electricity.

These two cases illustrate how efficiency and economic sustainability of agribusinesses depend on delivery of basic services. Without them, levels of investment in the businesses will shrink in such towns. Importantly, this may affect the sustainability of agribusinesses as some might incur more costs as they try themselves to provide the services that were supposed to be provided by local governments.

The farmers face a similar challenge, directly and indirectly. The agribusiness provides a range of solutions and market access to local farmers. If agribusinesses’ sustainability is threatened, farmers suffer too. More directly, poor roads, unreliable electricity supply and water supply directly affect the profitability and sustainability of farming operations.

Importantly, these are all entities that provide job opportunities to the least skilled South Africans and indirectly sustain the communities around small towns.

The way forward

President Cyril Ramaphosa set out an economic reform and recovery agenda for the country in October 2020. In it he identified agriculture and agro-processing (food security) as one of the drivers of economic growth and job creation, especially in small towns.

But a vibrant agriculture and agribusiness won’t develop if poor service delivery by municipalities continues.

There are some basic practical interventions the government could make. These include ensuring that a municipality has competent management, financial officers, civil and electrical engineers, as well as competent political leadership.

The Financial and Fiscal Commission, an independent constitutional advisory body on financial fiscal matters in the country, recently argued municipalities should look closely at their wage bills. This would ensure that salaries didn’t crowd out money for critical service delivery functions. These include waste removal, waste management, sewerage systems, roads and water provision.

These improvements need to happen simultaneously and not before or after agriculture revitalisation, which is supported by the government’s Agricultural and Agro-processing Master Plans. These seek to expand and grow South Africa’s agriculture and agro-processing.

But a healthy farming sector rests on towns that are functional and that have the basics in place.

This is a challenge that the South African government should face head-on.

Wandile Sihlobo, Visiting Research Fellow, Wits School of Governance, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

How empires collapse

By Charles Hugh Smith.

This is how empires collapse: one complicit participant at a time.

Before an empire collapses, it first erodes from within. The collapse may appear sudden, but the processes of internal rot hollowed out the resilience, resolve, purpose and vitality of the empire long before its final implosion.

What are these processes of internal rot? Here are a few of the most pervasive and destructive forces of internal corrosion:

1. Each institution within the system loses sight of its original purpose of serving the populace and becomes self-serving. This erosion of common purpose serving the common good is so gradual that participants forget there was a time when the focus wasn’t on gaming the system to avoid work and accountability but serving the common good.

2. The corrupt Status Quo corrupts every individual who works within the system.Once an institution loses its original purpose and becomes self-serving, everyone within either seeks to maximize their own personal share of the swag and minimize their accountability, or they are forced out as a potentially dangerous uncorrupted insider.

The justification is always the same: everybody else is getting away with it, why shouldn’t I? Empires decline one corruptible individual at a time.

3. Self-serving institutions select sociopathic leaders whose skills are not competency or leadership but conning others into believing the institution is functioning optimally when in reality it is faltering/failing.

The late Roman Empire offers a fine example: entire Army legions in the hinterlands were listed as full-strength on the official rolls in Rome and payroll was issued accordingly, but the legions only existed on paper: corrupt officials pocketed the payroll for phantom legions.

Self-serving institutions reward con-artists in leadership roles because only con-artists can mask the internal rot with happy-story PR and get away with it.

4. The institutional memory rewards conserving the existing Status Quo and punishes innovation. Innovation necessarily entails risk, and those busy feathering their own nests (i.e. accepting money for phantom work, phantom legions, etc.) have no desire to place their share of the swag at risk just to improve sagging output and accountability.

So reforms and innovations that might salvage the institution are shelved or buried.

5. As the sunk costs of the subsystems increase, the institutional resistance to new technologies and processes increases accordingly. Those manufacturing steam locomotives in the early 20th century had an enormous amount of capital and institutional knowledge sunk in their factories. Tossing all of that out to invest in building diesel-electric locomotives that were much more efficient than the old-tech steam locomotives made little sense to those looking at sunk costs.
As a result, the steam locomotive manufacturers clung to the old ways and went out of business. The sunk costs of empire are enormous, as is the internal resistance to change.

6. Institutional memory and knowledge support “doing more of what worked in the past” even when it is clearly failing. I refer to this institutional risk-avoidance and lack of imagination as doing more of what has failed spectacularly.

Inept leadership keeps doing more of what once worked, even when it is clearly failing, in effect ignoring real-world feedback in favor of magical-thinking. The Federal Reserve is an excellent example.

7. These dynamics of eroding accountability, effectiveness and purpose lead to systemic diminishing returns. Each failing institution now needs more money to sustain its operations, as inefficiencies, corruption and incompetence reduce output while dramatically raising costs (phantom legions still get paid).

8. Incompetence is rewarded and competence punished. The classic example of this was “Good job, Brownie:” cronies and con-artists are elevated to leadership roles to reward loyalty and the ability to mask the rot with good PR. Serving the common good is set aside as sychophancy (obedient flattery) to incompetent leaders is rewarded and real competence is punished as a threat to the self-serving leadership.

9. As returns diminish and costs rise, systemic fragility increases. This can be illustrated as a rising wedge: as output declines and costs rise, the break-even point keeps edging higher, until even a modest reduction of input (revenue, energy, etc.) causes the system to break down:

A modern-day example is oil-exporting states that have bought the complicity of their citizenry with generous welfare benefits and subsidies. As their populations and welfare benefits keep rising, the revenues they need to keep the system going require an ever-higher price of oil. Should the price of oil decline, these regimes will be unable to fund their welfare. With the social contract broken, there is nothing left to stem the tide of revolt.

10. Economies of scale no longer generate returns. In the good old days, stretching out supply lines to reach lower-cost suppliers and digitizing management reaped huge gains in productivity. Now that the scale of enterprise is global, the gains from economies of scale have faltered and the high overhead costs of maintaining this vast managerial infrastructure have become a drain.

11. Redundancy is sacrificed to preserve a corrupt and failing core. Rather than demand sacrifices of the Roman Elites and the entertainment-addicted bread-and-circus masses to maintain the forces protecting the Imperial borders, late-Roman Empire leaders eliminated defense-in-depth (redundancy). This left the borders thinly defended. With no legions in reserve, an invasion could no longer be stopped without mobilizing the entire border defense, in effect leaving huge swaths of the border undefended to push back the invaders.

Phantom legions line the pockets of insiders and cronies while creating a useful illusion of stability and strength.

12. The feedback from those tasked with doing the real work of the Empire is ignored as Elites and vested interests dominate decision-making. As I noted yesterday in The Political Poison of Vested Interests, when this bottoms-up feedback is tossed out, ignored or marginalized, all decisions are necessarily unwise because they are no longer grounded in the consequences experienced by the 95% doing the real work.

This lack of feedback from the bottom 95% is captured by the expression “Let them eat cake.” (Though attributed to Marie Antoinette, there is no evidence that she actually said Qu’ils mangent de la brioche.)

The point is that decisions made with no feedback from the real-world of the bottom 95%, that is, decisions made solely in response to the demands of cronies, vested interests and various elites, are intrinsically unsound and doomed to fail catastrophically.

That’s how empires collapse: one corrupted, self-serving individual at a time, gaming one corrupted, self-serving institution or another; it no longer matters which one because they’re all equally compromised. It’s not just the border legions that are phantom; the entire stability and strength of the empire is phantom. The uncorruptible and competent are banished or punished, and the corrupt, self-serving and inept are lavished with treasure.

This is how empires collapse: one complicit participant at a time

Source: oftwominds.com

Rescue workers among six dead in Latvian supermarket collapse

The scene overnight in front of the collapsed supermarket

Six people including two rescue workers were killed and 35 others injured on Thursday when the roof of a supermarket collapsed in a suburb of Latvia’s capital Riga, emergency services confirmed.

“Rescue efforts will continue through the night but it’s too early to name a cause or say whether there will be more victims or survivors,” emergency services spokeswoman Viktorija Sembele told AFP.

Two firefighters working at the scene to rescue trapped shoppers were among the six dead, she said, but was not able to immediately provide information about the age or sex of other victims.

Soon after midnight two people were pulled alive from the rubble, raising hopes that more survivors would be found.

Visiting the scene while rescue efforts continued, Prime Minister Valdis Dombrovskis confirmed that police had launched a criminal investigation to determine the cause of the roof collapse and said he would be holding an emergency meeting Friday morning.

Mayor Nils Usakovs announced he was cancelling leave and was also calling an emergency meeting of municipal and rescue services for Friday.

“As soon as rescue work has finished, construction experts will investigate the causes,” said a press release from his office.

Up to 13 emergency brigades and 17 ambulance teams were working at the site late Thursday with support from military personnel.

Run by the Lithuanian-owned Maxima chain — Latvia’s number two retailer after Rimi — the supermarket was built in 2011 and was nominated for an architectural award, according to local media reports, which also said it had recently been under renovation.

Maxima published a statement on its website overnight saying the company was “overwhelmed and shocked” by the disaster but that it was not yet aware of the cause and was providing “all the information at our disposal” to the authorities. – AFP