China’s recent policy pivot to grow its workforce highlights how scarcity-abundance-scarcity cycles have become outdated for most societies. The implications for South Africa run deep.
Famines and pandemics have been fundamental to how communities organised themselves for millennia. Swinging between abundance and scarcity was central to life and it provoked highly inequitable feudal and tribal hierarchies. Concentrating political power and wealth among elites made societies more viable as they could better counter failed harvests and enemy invasions.
Much has changed. Today, all other regions have achieved, or will soon achieve, perpetual abundance. Pandemics persist but science is gaining. Famines are now avoidable, and wars should be too.
China began its rapid ascent over forty years ago, when about 45% of the world’s population, and nearly all Chinese, were impoverished. Less than two decades earlier, tens of millions of Chinese starved to death amid a famine amplified by reckless policy adventurism.
With businesses routinely levering scientific advances, the world has accumulated massive savings alongside highly sophisticated investing capacity. Feeding everyone every day has become fully manageable and the pace of scientific progress is quickening. Global poverty has plunged while China has nearly eradicated the extreme poverty which prior generations considered normal.
In 1999, Amartya Sen, the Nobel laureate development economist, wrote: ‘No famine has ever taken place in the history of the world in a functioning democracy.’ As if to expand on his insight, the overall response to the Covid crisis by scientists, companies and investors has been remarkable. Conversely, most governments have stumbled through it, often with high body-count consequences.
Merit and public service
China is far from democratic but it is arguably the first modern state. Most of China is ethnically monolithic and its culture, emphasising merit and public service, has been entrenched over many hundreds of years. That the world’s most populous nation had long endured rampant poverty and famines traces more to its pre-1978 ideological indulgences than insufficient institutional capacity.
Embracing capitalism in the late 1970s unlocked the country’s productive capacity. To mitigate the risks of food scarcity, China simultaneously initiated a one-child policy which was relaxed to two children in 2015 and is now to be further eased.
The extremely rapid rise of Asia is as impressive as anything humans have ever accomplished. It reflects the swift diffusion of knowledge alongside much trade liberalisation. Our policymakers have shown little interest in either.
Science and commerce advanced across the West earlier and more slowly, with monarchies and feudal structures giving way to representative forms of government. Notwithstanding the howls of inequality, wealth is far less concentrated today and, whereas most people were trapped in poverty when the Spanish Flu struck a century ago, large clusters of extreme poverty only remain embedded where governance is ineffective. Pre-Covid World Bank projections pointed to 87% of the world’s extreme poor being in sub-Saharan Africa by 2030.
Scientific advances have made it easy for humans to meet their basic needs while accumulating household wealth. When women have access to education and good jobs, populations stabilise or contract. Scientific breakthroughs offer manageable pathways for achieving a highly prosperous and sustainable global economy.
Inequality
With perpetual abundance as the new normal, equality is nearly as high a political priority for wealthy nations as growth. Meanwhile, trends clearly point to poverty being in steady retreat in all regions except sub-Saharan Africa.
Deng Xiaopeng, China’s leader, who pioneered their one-child policy while pivoting the country to embrace capitalism, famously said: ‘Let some people get rich first.’ Note inclusion of the term ‘first’, with the implication that broad prosperity would follow.
South Africa’s ruling elites show disdain for free market principles and their motto seems to have been, ‘Let some comrades get rich’. Unlike so many politically attuned voices today, China’s astute leaders have appreciated that poor countries can’t afford the politically corrosive, and growth-limiting effects, of prioritising inequality.
It is more politically accommodating to attribute Africa’s entrenched poverty to ‘poor institutions’ rather than to poor governance. Yet South Africa’s daily headlines refute such mischaracterization.
Improving our institutions would be helpful but our rampant unemployment and poverty can only be overcome through policy pivots as dramatic as China’s. More important than its institutions have been China’s culture of meritocracy and a thorough, and continually updated, understanding of economic development success drivers.
Our policymakers routinely emphasise inequality while ignoring established development paths. The resulting economic underperformance shows how focusing on inequality undermines governance accountability, leading to more poverty and greater inequality – across and within ethnic groups.
Feudal-like tribal traditions
This region is by far the poorest and this traces to poor governance which further traces to how feudal-like tribal traditions undermine institutions and policymaking. Political leaders feel entitled to benefit greatly from natural-resource wealth. As the world economy becomes increasingly integrated and competitive, such governance shortcomings become ever more costly.
Our long-term economic potential, like China’s, is determined by the productivity of our workforce. China lacks sufficient young workers whereas ours are poorly educated and largely unemployed. In both cases, dramatic policy reversals are required.
While China’s foreign policies and trading tactics are vexing, its development policies have been extraordinarily successful; yet our policymakers reject them categorically. We don’t prioritise value-added exporting, or growth, or education, or merit, or household savings. Nor does our government show any interest in necessary policy pivots. Rather, our ruling elites routinely attribute our economic woes to inequality. They have sought to remedy this through redistribution, which has undermined accountability and governance while enriching the politically connected.
China’s most recent policy shift highlights just how entrenched, and misguided, our policy biases are.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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