<\/p>\n
The defining economic contest may not be capitalism versus socialism, or even the US versus China. It may be efficiency versus sovereignty.<\/p>\n
Governments want control over production, money, payments and data. Households gravitate towards financial gurus offering simple rules.<\/p>\n
In both cases, control feels like safety. Increasingly, however, it carries a price.<\/p>\n
Read:<\/p>\n
The next economic battle is not about oil \u2026
\nThe new superpower test: Who is trusted when fear rises?<\/p>\n
Consider China. Its economy grew by 4.3% in the second quarter, the weakest performance since the lockdown era, despite exports surging by more than 25% in June. Imports rose by 36%, and China\u2019s first-half trade surplus was smaller than it was a year ago.<\/p>\n
China\u2019s export machine is not collapsing, but it can no longer conceal every domestic weakness. Beijing now faces a peculiar problem: it is trying to export and tax its way out of inadequate demand.<\/p>\n
Value-added-tax receipts rose by 6.2% from January to May, collections on personal income tax increased by 12.2%, and the combined government deficit narrowed.<\/p>\n
Instead of stimulus, China is drifting into austerity.<\/p>\n
Meanwhile, pensions, unemployment support and poverty relief are absorbing more spending. President Xi Jinping may prefer futuristic factories to welfarism, but a cooling economy and a greying population do not obey slogans.<\/p>\n
The state may direct capital, but it cannot command consumers to feel confident.<\/p>\n
Fed\u2019s dilemma\u00a0<\/p>\n
The US has its own illusion of control. Quantitative easing has left the Federal Reserve with a $6.7-trillion balance sheet, roughly 21% of the gross domestic product. Banks have redesigned their liquidity models around abundant central bank reserves.<\/p>\n
Drain the reservoir too quickly, and short-term markets may seize up. Keep it full, and the Fed distorts bond markets while looking like the government\u2019s financier.<\/p>\n
New Fed chair Kevin Warsh\u2019s five task forces (inflation, communication, artificial intelligence, data and the balance sheet) show how monetary policy has changed.<\/p>\n
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CONTINUE READING BELOW<\/p>\n
Interest rates are merely the visible part. The harder challenge is managing a financial system that has become dependent on previous interventions.<\/p>\n
The Fed controls the price of money, but not the consequences of that control.<\/p>\n
Fragmented payments<\/p>\n
Payment systems also show how national security can undermine collective prosperity.<\/p>\n
Brazil is defending Pix, India is exporting its Unified Payments Interface, Europe is developing Wero and a digital euro, while China is expanding alternative cross-border rails.<\/p>\n
These are understandable responses to the US\u2019 willingness to use access to its financial system as geopolitical leverage.<\/p>\n
Read: The test for real-time payments has shifted from speed to reliability<\/p>\n
Yet what is rational for each country may be destructive for the world. Incompatible systems would raise costs, obstruct trade, and create opportunities for fraud and sanctions evasion.<\/p>\n
One estimate suggests that financial fragmentation could reduce global GDP by 2.6% by 2030. Sovereignty can quietly become a tax paid by every business and every consumer.<\/p>\n
Ageing economies offer an unexpected counterargument to this obsession with control.<\/p>\n
Research suggests that longer lives need not produce runaway healthcare costs. Americans reaching 66 are gaining additional years that are largely healthy, while hospital-cost growth has slowed sharply.<\/p>\n
Labour scarcity may also encourage automation and productivity. Demography creates pressure, but it does not dictate destiny. Economies adapt.<\/p>\n
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CONTINUE READING BELOW<\/p>\n
SA\u2019s challenge<\/p>\n
This matters for South Africa.<\/p>\n
A young population is not automatically an economic advantage. Without education, employment and productivity, it merely produces a longer queue for public support.<\/p>\n
Similarly, payment sovereignty without interoperability, industrial policy without competitiveness, or fiscal support without growth, would give us control without prosperity.<\/p>\n
Households make the same mistake. American gurus fight excessive debt, British advisors obsess over saving pennies, and Asian finfluencers feed enthusiasm for leveraged trading.<\/p>\n
Read:<\/p>\n
SA cannot redistribute its way to prosperity
\nSA\u2019s next inflation shock may begin with rain that does not fall<\/p>\n
SA\u2019s weakness may be confusing the ownership of financial products with financial well-being. Insurance, retirement savings, property, and offshore investments can each be sensible, yet still fail to form a coherent financial plan.<\/p>\n
Control vs productivity<\/p>\n
The real choice is not between control and chaos. It is between brittle control and adaptive capacity.<\/p>\n
Nations become secure when they can participate from strength, not when they retreat behind financial walls. Households become financially well when their decisions work together, not when every uncertainty is avoided.<\/p>\n
Ultimately, productivity, not control, is the only sovereignty that lasts.<\/p>\n
Dr Francois Stofberg is a financial well-being economist at the Efficient Group.<\/p>\n
#high #price #control<\/p>\n","protected":false},"excerpt":{"rendered":"
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