> From: Doug Henwood <dhenwood at panix.com>
> [Patrick, is this guy as bad as he sounds? Maybe Bob Naiman should
> go into the pie-baking biz.]
Doug, this is a good question, and the answer will only be clear when crunch-time comes. Along the left-right spectrum at the centre-right core of the ANC, Mboweni has traditionally been vaguely more sensitive to Big Labour, compared anyhow to finance minister--and current IMF/WB governing board chair--Trevor Manuel, though not compared to the group originally in charge of ANC economic policy in the 1980s-early1990s, a group more or less tossed out for being too Keynesian (everyone on the left here had hoped that a former communist, Vella Pillay, who in exile worked for the Bank of China in London, would become the first ANC Reserve Bank governor, but when in November 1993 he and Ben Fine put a naughty book together for the ANC MacroEconomic Research Group calling for a bit more state involvement including "nationalising" the Reserve Bank, Pillay was brutally nixed, and indeed Mboweni had a very visible hand in spinning the knife) (gory details available on this in my Pluto Press book Elite Transition: From Apartheid to Neoliberalism in SA, just out, which if Doug doesn't mind I'll advertise to deep-pocket, skim-reading lbo-readers).
Anyhow, when like Mboweni, you have the economic-policy hegemony of big business media firmly behind you, you can afford to chuckle and claim a soc-dem label even if the difference between you and the neolib, late-apartheid central banker is invisible (except now for the silly inflation-targetting exercise, which given the low rate he's seeking--since we're now over 7%--puts Mboweni on the right flank of global central-banking).
However, when the rand begins to slide again--it was chopped by 30% in early 1996 and mid-1998--Mboweni will begin to look a bit more vulnerable (the $9 bn hot money inflow he brags about below is in fact, at that point, a very serious albatross). In mid-1998, defending the rand cost about $5 billion of hard currency reserves one drunken weekend, and when that didn't work Mboweni's predecessor put the Reserve Bank base interest rate up 7% over a fortnight. Mboweni is capable of such insanity, no doubt about it (instead of bucking local financial elites by putting exchange controls back on, as the only sane alternative).
Mallet and Wolf are wrong, in that the 1998 crash of the rand began a few weeks before Mboweni's appointment as governor-in-waiting, by the way, but I think it got a bit worse when nubile currency traders heard that someone with the first name "Tito" was taking over (after the sadomonetarist predessor had explicitly requested of Mandela a successor with banking experience... and I think he'd hoped that a Lesotho-born, Wash-Con World Banker he'd put in as his deputy would get the top job).
There was a wee bit of annoyance at Mboweni in yesterday's Business Day, reflecting not the disgust you may read into it, but rather the comfort zone that the BD editorialists have now with Mboweni (the top BD finance reporter during the 1990s is now Mboweni's right-hand woman) (the spat with Manuel was simply over the timing of inflation-targeting, not the #s) (oh, and no, we don't have a NAIRU problem, with our 40% unemployment rate!): "While the Reserve Bank is right to guard against the inflationary consequences of oil prices and floods, and close out the forward book, Mboweni's pot-shots at Manuel and lack of clarity on inflation targeting seem to be hurting the rand unnecessarily." (http://www.bday.co.za)
Another way to look at this kind of coverage, though, is that financial elites (and their hucksters like Wolf) want to pinpoint individuals as being not only the bearers of class relations (ANC economic compradorism), but as the particular fall-guys when deep-seated structural problems once again boil and bubble and pop SA upside the head as they will, within months I would guess...
> Financial Times - March 7, 2000
>
> S AFRICA'S FINANCIAL DISCIPLINARIAN
>
> Central bank governor Tito Mboweni places stability above everything
> else, write Victor Mallet and Martin Wolf
>
> When Tito Mboweni sits in the boardroom of the Reserve Bank of South
> Africa, the bank's 40-year-old first black governor must chuckle.
> There hang the pictures of his predecessors: a rank of grave white
> men. This former economic policymaker for the African National
> Congress has stormed a citadel of Afrikaner power.
>
> The announcement, in 1998, that Mr Mboweni, the controversial labour
> minister, would succeed Chris Stals as governor was greeted with less
> than enthusiasm by the markets: the rand and bond prices plummeted.
> Many commentators decried the appointment of a politician, seeing a
> threat to the bank's independence.
>
> Mr Mboweni was at pains to eliminate this perception, and succeeded.
> When he took over last August, it was a non-event. Everything he has
> done since is aimed at reinforcing his credibility as an orthodox
> central banker.
>
> The most important step has been inflation targeting, announced at
> the beginning of his term. The governor insists on the bank's
> independence in making that commitment. The Bank of England, he notes
> disparagingly, "is not a free bank", but has to accept the target set
> by the chancellor of the exchequer. In South Africa, however, the
> government can only propose. This it has done, suggesting a goal of
> 3-6 per cent underlying inflation for 2002. He has accepted the
> proposal, though the bank's preference would be a target "specified
> as 6-3 per cent" - that is, as a declining trend.
>
> Is this erstwhile politician committed to this target? Mr Mboweni's
> answer is firm: his "job is to manage the central bank and achieve
> the inflation target. I'm fully aware of the problem of unemployment,
> fully aware of the problem of poverty, but our job here is to hit our
> target. And if we hit our target and . . . if all other policies are
> properly aligned - and I insist on this - then we should have an
> environment of success.
>
> "But if economic policies are going to rely only on monetary policy
> and the inflation target, or only on fiscal policy and the
> achievement of the budget deficit, that would be a big mistake,
> because all the other supply-side restructuring measures must come
> into the pot."
>
> This commitment to stability, he insists, is not new to the ANC. It
> goes back to the late 1980s. "I'm not a rightwinger," Mr Mboweni
> says, "I'm a social democrat. But I know that a successful social
> democrat cannot be reckless on economic policy."
>
> He is also determined to avoid discussing those other policies. "I
> won't comment," he says, "because I don't want other people meddling
> in monetary policy."
>
> To underline his independence, Mr Mboweni notes that he has resigned
> all positions in the ANC. He refuses to discuss the labour market,
> where there is widespread criticism of policy rigidities he himself
> introduced. He is unwilling even to comment on fiscal policy. Central
> bankers who comment on fiscal policy "are wrong, particularly the
> ones at the European Central Bank".
>
> The governor then explains how his independent bank operates. "We
> have a monetary policy committee, with 16 members. It's
> technocrat-heavy. There are four voting members. But we don't vote.
> We reach decisions by consensus." This, he notes with pleasure, is
> the old African style.
>
> Moreover, he stresses, "we don't target the exchange rate. We target
> inflation. We will be concerned about the exchange rate to the extent
> that the depreciation is unwarranted and, secondly, may lead to
> second-round inflationary impacts."
>
> Mr Mboweni's attitude to the currency is partly the fruit of
> experience. The bank's forward exposure reached a peak of $22bn in
> July 1998, though this is now down to $11.5bn. He is determined not
> to repeat that experience. "Importers, whoever, must take their own
> foreign currency risks," he insists. "Why should we take the risks
> for them? They must go to the market. From July 1998, we said we were
> no longer going to intervene in the foreign currency market. We
> learnt the lesson that you can't succeed in a crisis by trying to
> shore up your exchange rate. It was a major, major, major risk for
> the country."
>
> That foreign exchange intervention had been a response to the
> emerging market financial crises of 1997 and 1998. What then can be
> done to reduce his country's vulnerability? Mr Mboweni gives the
> textbook response: "Good policies, good policies, good policies and
> management, management, management."
>
> Would more resources from the International Monetary Fund have
> helped? "I'm more concerned about what happens here, nationally,
> because if you do things wrongly here, you get into trouble. We have
> to make sure that our financial regulation is correct, that we have
> good policies and that we have good management."
>
> Many would agree that the new South Africa is well managed. So is Mr
> Mboweni disappointed by the response of foreign investors? "There are
> times when, yes, I do feel disappointed that the response has not
> been as good as we would have liked, in particular that the flow of
> foreign direct investment has not been as one would have expected.
> But, on the other hand, last year about R54bn ($8.9bn) flowed into
> the bond and share markets of South Africa. That's not chicken feed."
> There has also been substantial investment by car manufacturers.
> "But, in general, there's a long way to go."
>
> How far then would the central bank governor ascribe investor
> reluctance to South Africa's neighbourhood? His response is strong:
> "We are proud to be African. We would not want to turn ourselves into
> some kind of island in Africa. The political leadership talks a lot
> about the need for an African renaissance and in my work as governor
> I want to engage and interact more with the African central bank
> governors.
>
> "I am the only central bank governor from Africa who attends the
> monthly meetings of the Bank for International Settlements," in
> Basle, Switzerland. There, Mr Mboweni is asked to present what is
> happening in the continent. He is also determined to share what he
> learns with his fellow African governors.
>
> He is no less committed to the immediate region. "This is, in any
> case, what we as South Africans have to offer investors. So, always
> we have a South African perspective, but also a southern African
> perspective."
>
> Mr Mboweni, who trained in development economics at the University of
> East Anglia, in the UK, presents himself as the very model of a
> modern central bank governor. "This is a very good time," he says.
> "I'm enjoying myself and I wish I could feel like this for the next
> four years of my contract."
>
> He will be happy to continue "for as long as I'm not bored. I can't
> cope with boredom".
>
> What then? The governor refuses to talk of a political future. He
> mentions, instead, "going into the private sector or academia, going
> fishing, or even becoming high commissioner at the Court of St
> James". For a man with his energy, much of this sounds like a fairy
> story.