President Cyril Ramaphosa keeps going on about the smart cities he will build. The $8.5 billion in climate finance South Africa received is, in part, earmarked for electric vehicles. These are socialist pipe dreams, not reality.
I’m a techno-utopian. I believe that while dystopian science fiction serves a wonderful purpose in warning us of the pitfalls of progress, utopian science fiction is not only a possible future, but a likely one.
In 2008, I entered into a casual bet running over 30 years, on what the most common fuel or energy source for personal vehicular transportation would be in 2038. I bet on electricity, and fully expect to share the winning pool with the only other person who said electricity. (Shoutout to the hivemind email list, where I cut my writing teeth.)
I’m a big fan of electric cars, self-driving technologies, and all that good stuff that the detestable billionaire Elon Musk is rushing to market, with the help of lavish government subsidies.
I don’t think the technology is even remotely ready for prime time, however, and I think the government subsidies are not just distorting the market, but transfer money from the poor to the rich.
I believe that one day we’ll all live in smart cities that are environmentally friendly and offer every citizen luxury, variety, a healthy lifestyle, and super convenience. But that day is not today.
I think humanity has the science, the technology, the ingenuity and the ability to solve the world’s most serious problems, should it choose to do so. That includes conquering environmental threats, demographic challenges, and the ravages of disease and ageing.
In many ways, we already live in a science fiction future.
Imagine explaining to someone just 30 years ago that one day soon most of us would be walking around with pocket-sized supercomputers, connected to most of the world’s collected knowledge, offering instant communication by text, voice or video with anyone on the planet, giving us virtually unlimited access to entertainment, and allowing us to buy virtually anything from anywhere in the world for home delivery as fast as physical transport permits, through an interface even granny can use.
Imagine explaining to someone 30 years ago that we could sequence the genome of a virus and design a vaccine against it in a matter of days, leading to multiple fully trialled vaccines in less than a year. Or that laser eye surgery to correct vision problems would be commonplace. Or that we could build mind-reading computers and prosthetics with neural interfaces that are controlled by the brain, all cyborg-like.
We live in the future, and the future is normal – albeit with less poverty, less war, and fewer people dying of natural disasters than we used to have.
War and peace
Government can play a role in enabling a sci-fi future, certainly. For a start, its love for making war makes it an excellent client and R&D patron to private industry. It is to war that we owe the invention or popularisation of everything from tampons to tea bags, wristwatches to zippers, stainless steel to teflon, flu vaccines to antibiotics, jet engines to electronic computers, wireless communication to the internet.
In peace time, however, government innovation is far less reliable. Without a clear focus on things governments are good at, such as killing people on an industrial scale, there is no real way for government planners to predict what will and won’t work, what will and won’t be needed, and who will and won’t use something.
It’s really another case of the economic calculation problem: No single entity has the capacity to evaluate all the information needed to make successful products.
The same is, of course, true for private companies. During the dot-com boom, the mantra was ‘build it and they will come’. Sometimes, the mantra came true. More often than not, however, private investors threw millions, or even billions, down black holes that were destined never to make a profit.
In a free market, this problem is easily solved, simply by allowing those who fail to go bankrupt, and rewarding those who succeed with handsome profits.
This makes government uniquely unsuited to the business of building out grand futuristic projects. If the government fails, it is a dead loss, and it needs to go back to the drawing board. At best, a competent government – rare though that is – can be a serial innovator.
By contrast, private companies innovate much faster, because they operate in parallel, and much fairer, because they only risk the capital of willing investors, not taxpayers.
I remember when the internet was a tiny network of academic geeks and military researchers, using primitive communication tools like telnet, gopher and ftp to send snippets of text around the world, unsecure and unencrypted. The entire thing was built on government money, honesty and goodwill.
It took the private-sector commercialisation of the world wide web to turn the internet into an economic revolution and a secure means of communication and transacting for billions.
Governments never made online payments possible. The porn industry did. Governments didn’t even know online payments were needed.
For government to realise a sci-fi future, its best strategy is to get out of the way of business, reduce hurdles to innovation, dismantle barriers to competition, and allow rapid economic growth.
Intervention, even if it is intended to be positive through low interest rates, protective tariffs, or preferential subsidies, inevitably leads to non-optimal outcomes.
Electric cars
Consider electric cars. Tesla is the most valuable car maker on the planet. However, it has sold fewer than two million vehicles in its entire history since 2009, while leading auto manufacturers like Toyota and VW routinely sell 10 million per year. Tesla’s cars are far more expensive than petrol rivals. A Tesla Model 3, for example, costs almost 2.5 times as much as a comparable Toyota Camry, over five years. Even just on running costs, a Model 3 now costs more per 100km than a BMW 330i does running on petrol.
Of course, that won’t necessarily stay that way, but it does mean that electric vehicles are still a luxury reserved for the wealthy elites. My expectation is that Tesla won’t be the long-term winner in the electric car market, and that traditional, high-volume automakers will produce them much more economically.
For South Africa to be bribed into establishing an electric vehicle industry is simply crazy.
It’s not the first time that the government has dipped its toes into the electric car business. Remember the Joule? It was to be a home-grown electric vehicle made by Optimal Energy, heavily subsidised by the government. Initially, it was slated for production in 2012. Development costs ballooned from R500 million to R1.5 billion to R7 billion and shortly before its manufacturer closed up shop for good in 2012, they were angling for R9 billion, a third of which was to be provided by government.
South Africa wasn’t ready for electric vehicles ten years ago. Is it ready now? Well, let’s see. There’s not enough electricity in the country to keep the lights on. Only wealthy home-owners can afford rooftop solar installations that might make electric cars economical.
By what feat of magic and mystery does the government hope to produce enough electricity to power a fleet of electric vehicles for the masses?
Sure, electric cars are the future, but South Africa isn’t anywhere near ready for the future. South Africa needs to re-industrialise and catch up with the 20th century, not blow wads of money it doesn’t have on 21st century pipe dreams. They won’t come just because you build it.
When South Africa is ready for electric vehicles, the market will provide them, provided that the market is free, and not encumbered by massive import duties on cars, burdensome restrictions on ownership, or high taxes.
Directing taxpayer funds towards an electric car market now is madness. It will never be a competitive industry in South Africa. Has this government ever built anything that doesn’t require endless taxpayer bailouts and fails regardless?
Smart cities
Another example is Ramaphosa’s much-ballyhooed smart cities. The first of these is slated for development around the Lanseria airport, the second is the Durban ‘Aerotropolis’, and a third being planned for Mooikloof, east of Pretoria. Yet another is being planned for the remote Wild Coast, where the locals are hostile and the Daily Maverick’s pet environmentalists don’t even want a new highway.
As an urban development hub, one could do worse than Lanseria (like opting for the Wild Coast instead). It has an airport, is close to Sandton, Johannesburg’s wealthy northern suburbs, Midrand and Pretoria, and taxis already go that way.
However, like all master-planned cities, it is constructed of nothing but graphic design and buzzwords. It will cater to a wealthy elite, with a wealth of ‘sustainable’ trinkets like rooftop gardens, vertical farms, micro-hydro, solar panels and bio-methane. It’s supposed to be a walking city, but everyone will still need cars if they actually want to go anywhere. Urban farming is stupid. If it wasn’t, everyone would be doing it. Like all such developments, there will be a mixed-income social engineering project, dictating exactly how many people of each income category may live there. It will also be a surveillance state dream. And it will fail.
What South Africa needs is to improve existing cities, and create the environment in which they can organically expand, or new cities can organically grow. That, however, requires politicians to do the rather mundane work of providing reliable and abundant electricity, improving labour flexibility, better business conditions for manufacturers, and effective policing. That will help existing economic hubs generate the growth needed to fund expansion and new developments.
Smart city master plans are, as John Kane-Berman has written, Ramaphosa’s thumbsucks, fantasies and dreams.
Smart cities have been tried before, too. Remember Modderfontein? It was to be an $8 billion (R84 billion, at the time) smart city built by our good communist friends, the Chinese. In 2013, that mean capitalist pig-dog Alec Hogg called it ‘more pie than sky’.
In the end, of course, the mean capitalist pig-dog was perfectly correct. Poor economic conditions, currency volatility and uncertain prospects for the real estate market scuppered the developer, who bailed on the project in 2016.
Africa is littered with similar pie-in-the-sky smart eco-cities that are little more than political master-plan ego-trips fuelled by animated computer graphics.
Forest City Johor in Malaysia is a perfect example of what happens with centrally planned smart eco-cities.
The $100 billion, 700 000-resident development was built around an artificial forest ecosystem, complete with vertical and rooftop gardens, on four islands reclaimed from the sea, very near the city-state of Singapore.
It looked spectacular on paper, with exclusive reliance on renewable energy and innovative road designs that hide traffic below parks, sports facilities and transport hubs. The islands would be well-supplied with golf courses, beaches and swimming pools.
Despite its supposed green credentials, construction started without the legally required environmental impact assessments, and by destroying sensitive coastal wetlands caused extensive environmental damage. Soon after the construction of the first of four islands, cracks began to appear in major buildings due to subsidence of the reclaimed land, which never had time to settle.
Built and funded by Chinese developers, it originally attracted high-flying Chinese customers, which was dandy until the Chinese government implemented currency controls that restricted foreign investment by Chinese individuals, and the Malaysian president, Mahatir Mohammed, reacted to Chinese neo-colonialism by prohibiting foreigners from owning property in Forest City.
Locals couldn’t afford the luxury residential units. By the end of 2019, the project had sold only 15 000 units on one island, and just 500-odd people actually lived there by 2020.
It became a massive boondoggle, riddled with corruption, and is already a commercial failure, long before its ultimate completion date of 2035.
Technocracy
I’m a techno-utopian, but the idea that socialist governments will deliver this utopia is laughable. The Soviet Union was a ‘technocracy’ run by expert central planners to create a utopia for the working class. Today’s government dreams of electric cars and smart cities are no different.
Our sci-fi future will happen. It is happening. But it isn’t happening thanks to the government. It is happening despite the government. If we want a techno-utopia, we’ll have to let the free market build it, with as little government interference as possible.
[Image: https://www.forestcitycgpv.com/community/gallery/sales-gallery]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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