… politicians and chief executives of all political colours become angry when anonymous markets do not take their assertions at face value. The anonymous market cannot be dictated to or defeated in debate. Leaders cannot shout down, fire or arrest the nonexistent Mr Market.

This from a fine piece of commentary from John Kay in the Financial Times, republished in today’s Business Day.

The article is premised on US and UK politics where “the political left” and “the political right” take opposite views of the market – a state of affairs that does not have an exact corollary in South Africa:

The anonymity of markets delights the political right, which welcomes it as a check on state authority, just as it infuriates the political left, which deplores the freedom of the market from democratic control.

Monetary policy — a market-based policy favoured by the right — restricts spending by price through the discipline of higher interest rates.

Fiscal policy, favoured by the left, requires political choices about levels of taxation and public spending.

In South Africa “the political right” and “the political left” would not be defined in these terms except if you understood the Democratic Alliance to represent “the right” and the ANC “the left” – a set of definitions that is not entirely helpful.

The article neatly summarises why politicians in power tend to hate the judgement of the markets. Who can forget Trevor Manuel’s 1996 comment? “I insist on the right to govern …. I insist on the right not to be stampeded into a panic decision by some amorphous entity … called the market.”

“The market” punished him profoundly for the comment and he seemed to have learned something important from that lesson that came in his first few months of what was to be the longest term of any minister of finance in the world.

Kay’ is no libertarian extremist – he cautions that “all extremists seem to believe that their brand of authoritarianism represents true democracy”.

But he pulls no punches against the politicians who futilely attack “the gnomes of Zurich” and the “teenage scribblers” when markets declare, with magisterial equanimity, their lack of confidence in those politicians.

Catch the full article here.

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