Blue Flower

Discuss the growth of government expenditure with the aid of Macro-economic models. Illustrate the appropriateness of each model with reference to the expenditure growth by the South African Government.




The student had to explain some of the following concepts and models and discuss their relevance to the government's growth in expenditure:

Marks were given for the approach followed by the student - for example did the learner introduce the topic and set the scene. Did the learner provide a structure in advance ( Did the learner in the introduction also define the concept and explain government expenditure. One point that could be made is for example that government does not produce any value and before anything can be spent that it needs to be expropriated from the citizens in the form of taxes. Taxes that negatively effects growth since it shifts resources from the productive sector to possibly less productive uses. 

The following models should then have been discussed in some detail: Wagner's Law; Peacock and Wiseman's displacement effect, The Meltzer-Richard hypothesis, and then Musgrave and Rostow's stages of development approach. Learners could also have alluded to the recent data and negative correlations between government expenditure and economic growth eminating from the Frasier Foundation ( and from the Heritage Foundation.

A skilled learner would then pull the data together into a concise summary and conclusion.



Elasticity - the relationship between the percentage change in price to the percentage change in quantity. If a small change in the percentage price change leads to a large percentage change in the quantity demanded - it is said to be price elastic. 

This is important information to the seller, because if this is the case it follows that the seller would be able to increase the total income by reducing the price! So it is NOT true that sellers always increase price to increase income.

It is generally accepted that the purpose of business, any business, is to make profit. They do that by providing goods and services that others want.


Steiner: "Ideas shape every institution in society, sometimes coming into conflict as when capitalism's practiced values of competition, ruthless competition, self-interest and short-term gain abrade values of love, mercy, charity, and patience in Christianity.

What bollocks - Christianity - the complete abrogation of the intellect - believe like a child, do not question authority, the belief in something that does  not exist. The practiced values I see in the behavior of those that drove the conflict in Northern Ireland, the values that drive Trump's wall, both the the Allies and Germany and Germany were Christian countries - come on!

Capitalism never promotes the use of force. We have achieved the high standard of living we have today because of Capitalist cooperation between often very different people. Yes self interest to make the best deal - the outcome wealth creation. All parties benefit from voluntary trade as a result.

FMF Media Release
Cosatu again ducks their day in court and delays
 FMF bargaining council legal case until 2016

September 22 2015
Release: Immediate

At the direct and late intervention of Cosatu last week, the FMF has been informed of yet another delay in bringing their constitutional challenge to the mandatory extension of bargaining council agreements - S32 of the Labour Relations Act 1995 (LRA). The date has been postponed from 09 -12 November 2015 to February 22 – 25 2016. This will be almost three years to the day since the FMF launched their legal challenge in March 2013.

S32 is the clause which compels the Minister of Labour to extend private bargaining council agreements across an entire sector to control the unemployed and companies, usually SMEs, which were not party to the negotiations and cannot afford to pay higher wages and offer conditions agreed by larger firms and unions. The FMF seeks to change just one word from “must” to “may”, to allow the minister to apply her mind to what she does, especially concerning the wider socio-economic conditions within an industry, and to think about whether extending an agreement will harm new and existing jobs. 

“We are shocked, angry and dismayed by this development,” said businessman Herman Mashaba, who is leading the FMF’s challenge. “Initially I could not believe it. After nearly three years of delaying tactics, subverting the judicial process and blatant contempt for the rule of law, yet again Cosatu is unable to get their act together and get into court for the dates agreed by all sides. Perhaps Cosatu is afraid of taking their case to court and testing the legality of S32”

Mashaba said he was also baffled by the silence of the Minister of Labour. “The FMF case is about fighting for her to be given the power to exercise her executive role.  She should also be concerned about the delay in the court hearing".

FMF executive director Leon Louw said, “For nearly three years we have been battling with respondents, including Cosatu, who have done everything they can to delay justice for the unemployed and their beleaguered employers. Their actions suggest that they do not respect the Constitution.  Why else would they not want clarity on whether private parties entering collusive agreements should be allowed to force a minister to turn private collusive deals into a laws binding non-colluders? Let the Constitutional Court decide, not Cosatu”.

Mashaba agreed saying, “It appears that Cosatu neither respect nor care for their over eight million destitute unemployed compatriots who are being denied the basic human right to sell their labour and to find dignity in being employed. They neither respect nor care about up to one million small, informal and emerging businesses trying desperately to create wealth, jobs and justice for all”.

“Such delays, although frustrating, do not change the resolve of the FMF to pursue this case all the way to the Constitutional Court. Delaying tactics are unwelcome but will not alter our determination to bring this matter to finality. We owe this to our destitute, unemployed fellow citizens,” he declared.

Louw concluded, “The FMF will put the delay to good use to educate and inform business and labour members of bargaining councils, as well as non-members, about how their freedom to participate in or refrain from centralised collective bargaining is being undermined and sabotaged by their own bargaining councils, perhaps without their knowledge or approval”.

Notes for Editors

1.    Key Unemployment Statistics
•    4.7million people are actively looking for work
•    2.3 million are discouraged from seeking jobs
•    2.1 million are under-employed
•    Only 12% of people between ages 15-24 have a job.
•    According to Stats SA, long-term unemployment among the youth is pegged at 61.9% this year, up from 54.9% in 2008.