Two things this week brought home to South Africans the potential reach of the state in defining the condition of national life – the government’s elaborate plans to deliver billions in economic and social relief while managing a phased resumption of economic activity, and the executive order placing the 73 000 men and women of the South African National Defence Force on standby to back up those plans.
The scale of the enterprise and the solemn authority of the man whose heartfelt performances on national television have earned President Cyril Ramaphosa not undeserved acknowledgement combine to form an impression of determination and decision.
Yet, what has the appearance of capacity and means and the will to decisiveness reveals, in fact, the limits of a weakened state, and the much greater power beyond it on which it must depend.
This is a positive truth – but there is a danger in the state’s not recognising it, or, worse, ignoring it.
For all the noughts attached to numbers which suggest we are awash in resources to feed people and keep businesses afloat, we are a country with depleted resources, which can only dwindle the longer the economy is kept in forced dormancy. Households are worse off – nil borrowings or budget reallocations available, there – and, as long as a lockdown continues that staunches the flow of the millions of small earnings that at least put food on the table for a day or two, hunger and anger will mount in equal measure.
Alms and army are not likely to be much of a remedy for long.
Productive capacity
After writing last week that the ‘(unavoidable) truth of our present condition is that without the country’s productive capacity – the private sector – South Africa’s bloated, mismanaged, wasteful, ineffective and corruption-prone state can go nowhere’, a young Johannesburg man, originally from Khayelitsha, posted a challenging rider on Facebook.
‘This post needs to be clear,’ he wrote, ‘that when it says “the private sector” it means the people of this great country of ours, all of them combined, the employees ranging from cleaners to CEOs, not just a few capitalists ….the “people” (collectively) are important….’
And, of course, he was quite right. It does indeed mean, as I wrote in a response, ‘the great resource of individuals making decisions and choices that make sense for them ….’
That is exactly what the private sector is, a free market of individuals acting and transacting and being free to do so. It does not exclude the state, but it is the precondition not only of the state’s legitimacy but of its capacity to serve the national interest.
And this is precisely our problem in South Africa in 2020. We entered the Covid-19 crisis with the long-developing consequences of the state’s costly, wasteful and corruption-ridden overreach – a forecast deficit of -6.8% against an economic growth rate of just 0.9%, unemployment of roughly 29%, and perilous ratings agency grades.
Anxiety
The vast-seeming sums now being promised as the means to rescue the economy and feed the people will be insufficient, and the capacity for refilling the coffers limited. It is little wonder security commentators are eyeing with anxiety that executive order placing the entire military apparatus on standby.
It is true, as some commentators have pointed out, that it’s much easier to stand on the sidelines and tell the government what to do than to actually do the governing. And, for all the legitimate criticism, the Ramaphosa administration is demonstrably applying its mind to the task the IRR has defined as saving #LivesAndLivelihoods, a conception the president himself has expressed in much the same phrase.
But the limits are unignorable.
As News24’s Pieter du Toit wrote this week: ‘This system – a smart, risk-based lockdown – will allow different levels of economic and social activity, depending on health risks. And that means movement and interaction between people and business will be regulated by the state and its implementing agents: ministers, government departments, officials, law enforcement and other bureaucrats at all three levels of the government. The net effect is that the state, weakened over the last decade, with eroded systems of governance, often led by incapable and corrupted politicians, wholly unprepared for any crisis and with limited financial reserves to call upon, will implement and regulate this layered and complicated smart lockdown.’
The key to South Africa’s emerging with anything like stability and the prospects of a reasonable if long-term recovery is now without question the private sector – the capacity of businesses and the ordinary people who work for and buy from them to generate income, jobs, taxes, foreign earnings, investor confidence and growth. There is no other way.
Everything that stands in the way of these things must now be confronted head on and be subjected to a serious policy rethink. The impediments include our notoriously deficient schooling system; wasteful, inefficient and costly state-owned enterprises; ineffective race-based empowerment provisions that fail the bulk of black people and deter investment, sap entrepreneurialism and reduce the scope for job creation; labour policy that makes it harder rather than easier to hire and keep staff; draft expropriation without compensation measures that chase investment away, undermine property rights, obscure pressing land reform objectives in urban areas, and needlessly menace the agricultural economy that feeds us; and the looming risk of a costly and unmanageable National Health Insurance (NHI) scheme that will only deepen our healthcare problems.
Scant signs
There are scant signs that the government is even remotely conscious of these things.
Tourism minister Mmamoloko Kubayi-Ngubane’s dogged attachment to divisive and costly race-based measures in disbursing crisis assistance reveals her own blind devotion to failed ideology at the expense of the economy and the jobs that are the only meaningful lifeline to millions of people. President Ramaphosa’s assertion that the Covid-19 crisis is an opportunity to put the ‘building blocks’ of NHI in place reflects his ignorance of or indifference to the predictable consequences of the scheme.
Most immediately, overzealous regulation is impeding the now urgent reopening of the economy.
As my senior colleague Frans Cronje wrote on Friday: ‘Even if the country moves to level 4, the great majority of businesses, entrepreneurs, and people with jobs will still be excluded from trading effectively or earning an income. The economic and social consequences for millions of South African families will be catastrophic. Already there are millions of people who risk losing their jobs. Many families have exhausted their savings and may lose everything. Tens of thousands of small businesses may never reopen. Riots and looting are breaking out where people face real hunger and desperation. Already the government has mobilised the whole of the army in the event that anarchy and chaos sweeps across the country. Soldiers and police have beaten people in the streets. Power-drunk officials have enforced rules and regulations that serve no healthcare purpose. All of this is going to get a lot worse unless we succeed in lifting much of the economic lockdown.’
At the centre both of these immediate concerns and of South Africa’s longer-term recovery is perhaps the greatest impediment of all, and the greatest weakness in our state: the government’s out-dated and self-defeating hostility to the free market.
Economist Mike Schussler shared an anecdotal insight during an online briefing hosted by the IRR last week which captures the cost of the nostalgic socialist dogma in which the African National Congress and its hangers-on remain trapped.
A businessman friend, Schussler said, had complained to him about the attitude of a minister in the economic cluster: ‘This oke is not our side. I don’t want to be here anymore.’
‘Our side’, the government should be reminded daily, is ‘the people of this great country of ours’, as the writer of that Facebook post put it. It is in the people’s freedom and means to choose and transact that South Africa’s real power lies. Today, the risk of squandering it is a danger the country cannot afford to ignore.
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