Opinion

South African economy not working for anyone

Poverty.jpg

South Africa’s economy is drifting dangerously and directionless on a stormy sea of discontent amongst the fast majority of its population.

One will be hard pressed to find a single pocket of the population that would declare happiness with the direction the economy is heading in and the results that are delivered to them from it.

It is not a uniquely South African drama, but has been playing out across the globe especially since the 2008/09 financial crisis. It caused the financial sector to come under close scrutiny and landed banks in the US in the dock – the wider spinoff of which has now reached South African shores.

While the broad social discontent is smouldering, with the ever-present danger that it could, at any time, flare up in to a raging fire of social unrest, the only seemingly, common ground is that there is a need for structural change to address problems such as inequality, unemployment, declining quality of life – all fed by sluggish economic growth.

However, this common ground itself has become a battle ground as competing groups from their own ideological trenches are fighting for their own version of “radical economic transformation” as if they are the only proprietors of wisdom.

And, ironically, opposing sides at times use the same events or trends as an argument for and against their own cause.

Globalism vs Nationalism

In South Africa we last week saw a prime example of how the same basic facts can be used both ways depending on which side of ideological divides a person finds him- or herself. 

It has become common cause that world-wide there is a battle raging between the trend towards so-called globalisation after World War II, driven by free trade and greatly enhanced by information technology development in recent decades.

In an article published in January, 2017 on the academic website, IssuesInPerspective, Dr Jim Eckman wrote: “For much of the 20th century, ideological discussions and debates have centred on liberal versus conservative, left versus right. No longer.  The ideological divide of the 21st century is emerging as globalism versus nationalism.”

The widest held view, however, is that Brexit and Trump’s rise to power in the US was right-wing ’political earthquakes’ (which) have shaken the complacent preconceptions of the liberal establishment.”

However, last week one of South Africa’s foremost liberal thinkers, John Kane-Berman (policy fellow at the Institute of Race Relations), argued that Brexit was “a liberalising reform long overdue.”

Both the “liberalising-” and the right-wing arguments surely cannot be right.

Also read:  Brexit: Will the Empire strike back with lower taxes?

On a related front, that of free trade, it is also increasingly clear that the free-market ideologues’ blind, or at best one-eyed, belief that “trickle-down” economics will keep everyone in society in the rewards loop of a purely free market economy, has become totally discredited.

Neither will just simple economic growth do the trick in ensuring that all employable members of society will find work and the less fortunate be lifted out of poverty – not while economic growth is calculated on the basis of so-called GDP, in which the purely financial transactions that do not “produce” anything tangible, often make the biggest single contribution to the figure arrived at.

Also readGrowth alone will not solve unemployment problems 

                   To counter Trump-ideology, ditch GDP-obsession

                   Explainer: trickle-down economics

Biggest mistake

The biggest mistake made globally, and in South Africa, by social-, economic- and political leaders, is that they allow themselves to get trapped in rigid ideological encampments when looking for solutions to socio-economic problems threatening the very fabric of society.

The problems caused by simplistic approaches are well illustrated by the Eckman-article when he writes:  ”The globalists have underestimated the collateral damage globalization has inflicted upon workers. They placed too much weight on the strategic advantages of trade and dismissed too readily the value that many ordinary citizens still attach to national borders and cultural cohesion.”

In South Africa the problem is exacerbated by the fact that campaigners for “radical  economic transformation” constantly fail to give proper practical content and context for it, or use it as camouflage for narrow ideological interpretation– like has just happened, again, with the South African Communist Party.

We think

We think it has become urgent that key-players and -thinkers in the debate on economic transformation, which we all agree is necessary, get off their ideological high horses, accept that none of them are in possession of the full solution and start developing a shared vision.

The present situation is, however, not a new one. In the late 1980’s, when the then  National Party’s caucus economic study-group, met with a well-known organised business interest group, my suggestion that we need a mixed-economic model, had me and other “verligtes” contemptuously being called “socialist sell-outs.”  

More than ever I believe a mixed model is needed to quieten the revolutionary noise we hear rumbling, and that is not all that distant.

by Piet Coetzer

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