Saturday, January 31, 2004

Unintended Consequences

What effect did Richard Nixon's decision to take the United States off the gold standard have on the South African economy? Can it be an accident that South Africa's long boom, dating from the 1930s, petered out just about the time that the United States went to a floating currency regime?

If there really was a causal link between the two developments, Nixon's decision will have turned out to be one of those things whose full ramifications remain unclear well after they occur; the apartheid regime's economic prosperity was based on the exploitation of cheap, unskilled black labor, and the shift in the terms of trade away from raw materials exporters served to penalize the South African government for its discriminatory educational policies. Not until white South Africans began to feel the impact of the economic slowdown did sufficient pressure arise to stir Vorster's National Party government from its complacency with regards to African education, and it was the defiance of the students that reawakened what had seemed a completely defeated black opposition.

Of course, there are still quite a few loose ends to be tied up with this conjecture of mine: for one thing, gold prices actually hit their peak in 1980. Nevertheless, it is a fact that South Africa's economy did stagnate during the 1970s, and that this affected all sectors of the country, irrespective of race. What would be most useful in assessing this hypothesis one way or another would be firm statistics about the South African economy during the period in question, statistics I am currently at a loss as to how to obtain.