The expression to sell or sell off the family silver might not be as well known in South Africa as it is elsewhere in the world. The ‘silver’ is actually silverware. It is the silverware of a family, handed down from generation to generation, which is considered to be of great value, materially or otherwise. The expression means to part with a valuable resource for immediate gain.

“Selling off the family silver” was also an accusation made by Harold Macmillan – a former British Prime Minister – against then Prime Minister Margaret Thatcher. Macmillan contended: “The sale of assets is common with individuals and the State when they run into financial difficulties. First the Georgian silver goes, and then all the nice furniture that used to be in the saloon. Then the Canalettos go.” (‘Canalettos’ refer to the paintings of eighteenth-century artist Canaletto.) Adding to the accusation, Macmillan ventured “to question the using of these huge sums as if they were income”.

So, is the money derived from the sale of the family silver income or capital? No, income and capital are not one and the same thing, even though modern-day economists tend not to be willing or able to draw a distinction. There is a distinction. ‘Capital’ means wealth in the form of money or other assets, while’ income’ is money received on a regular basis.

Thus, by selling off the family silver, there is an immediate capital gain, but it is not income. Once the asset has been sold, it cannot be sold again by the original seller and neither can further income be derived from it in future . . . unless, it is nationalised.

You would agree that privatisation is nothing more than selling off the family silver. It just sounds so much more empowering being presented as privatisation instead of being presented simply as what it is – the sale of State assets.

This begs the question as to whether a government is the custodian of the State’s assets or its owner. As with income and capital, there is a difference: ‘custodian’ and ‘owner’ are not the same. A custodian is someone responsible for taking care of or protecting something, while an owner is someone who owns something.

On July 30, Business Day ran a story headlined ‘Desperate Treasury eyes State asset sale’, with this tagline: ‘Bid to bring down debt bill and avoid further downgrades could see failing companies put on the block’. Apparently, there are 700 State-owned companies in South Africa, which are also known as State-owned enterprises (SOEs). The inconsistent use tells its own story. It is said that these SOEs make up about 30% of the South African economy.

Armed with this information, what State ‘assets’ do you believe government would wish to sell, and which do you believe potential buyers would wish to acquire?

Another question that arises is whether government would, in selling SOEs, be willing to throw good money after bad. This is an expression you might not be more familiar with, but it too has been around for a while. I fear this likely government inclination the most. Think of South African Airways (SAA). In my view, a national airline is no more than an ill-affordable vanity project.

The thing with SOEs is that they provided an ideal opportunity for financial (you might read ‘wealth’) distribution. They played no small part in the rise of the ‘tenderpreneurs’. The thing is that this was a risk-free opportunity, while the acquisition of State ‘assets’ would not, unless government wanted to offer some guarantee, but this would be a self-defeating action – unless the intention is to redirect State ‘assets’.

I fear that the decisions to be taken in the sale of State ‘assets’, possibly in March 2018, after the National Treasury has completed its audit of which SOEs are core and which are noncore, might not be driven by rational thinking. Apparently, the National Treasury has raised the prospect of the sale of government’s near 40% stake in telecommunications company Telkom to help fund SAA, a stake said to be worth about R14-billion. You will recall that, in March, SAA requested a R10-billion bail-out. The National Treasury already gave SAA a R2.2-billion loan in July. The perpetual bailing out of SAA makes no commercial sense.

In pursuing its selling off of State ‘assets’, government might well want to consider decision theory, which is the mathematical study of strategies for optimal decision-making between options involving different risks or expectations of gain or loss, depending on the outcome. Let us pray that the consideration is not for the latter: loss.

But who would the potential buyers be? Also, what price would government expect to realise through the sale? If the potential buyer is aware of the reason, and urgency, of a sale, then the price which the buyer will be willing to pay will be much lower than what the seller will expect.

The concern with selling off the family silver is multidimensional. When would the ‘assets’ be sold? Who would the buyers be? What price would be realised? But the most obvious concern would be why the State ‘assets’ should be sold.

If the inherent reason for the failure of the South African economy is not addressed, the sale of State ‘assets’ would merely serve to mask the failures, but not effect structural change. In essence, it would at best provide the South African economy with a reprieve, and the pain will return, but this time – at best – only the Pierneefs would be able to be offered for sale.