The Covid-19 crisis offers abundant international examples of science being politicised. Here in South Africa, the straightforward mathematical calculations necessary to avoid a sovereign debt crisis have fallen prey to the politicisation of racial inequality. We have little choice but to inject far more objectivity into our economic debates.
The ANC’s response to the current pandemic echoes its early response to AIDS. That health crisis only became ‘manageable’ here when science prevailed over politics. In the meantime, huge numbers of South Africans suffered and died needlessly. The ruling party’s politically opportunistic economic policies now condemn a majority of young South Africans to life-long destitution. In many other regions, poverty is being eradicated.
The ANC’s electoral dominance can be traced back to its success at using racial injustice both to brand itself and to frame our various economic challenges. This ‘race politics’ simultaneously damages accountability and the possibility of economic growth. With a sovereign debt crisis now looming, such political posturing must give way to focusing on unemployment, poverty and growth. We should begin by grasping the implications of households failing to accumulate wealth.
The people most vulnerable to the coronavirus are those who are old or have comorbidities. Vulnerable economies have a high prevalence of households with meagre assets or excessive indebtedness, while their workforces are poorly skilled, and poorly integrated into the global economy. Pre-Covid-19 policies made our economy profoundly vulnerable, and subsequent policy choices reflect the ruling party’s further prioritising its interests ahead of the nation’s.
Medical scientists use time-tested tools to assess vulnerabilities and design remedies. Science advances through tackling emerging questions with proven tools. Economic development is no different. Certain important tools and relationships explain how over a billion people have escaped poverty in recent decades. They also show that policies like ours produce poverty and debt traps.
Three factors make South Africa highly vulnerable to the politicisation of ‘racial inequality’. First, most South Africans are poor and many are dependent on the state for vital monthly payments. This, combined with resource wealth, makes our constitutional protections susceptible to patronage.
Redistribution
Second, the ANC’s varied alliance partners and grassroots supporters are united by the way redistribution appeals to all of them. Third, the 1990s transition from the oppression of the majority provoked a unity creed, and the expectation of much redistribution, and this became imprinted upon our national identity.
Various presumed remedies for our distressed economy are overly optimistic. The IMF is not going to ‘bail out’ South Africa. Rather, the odds are high that the international funder of last resort will negotiate a substantial restructuring of our government debts. It will ‘require’ the adoption of commercially sensible, pro-growth policies.
It is also hoped that the ANC will not win a majority in 2024. There are many plausible scenarios but a likely outcome might be that the IMF’s pressuring the ANC to adopt less redistribution-focused policies will benefit the far-left, and that the ANC will become the dominant party in a left-leaning post-2024 coalition. Prior commitments will suffer under such a regime. South Africa’s prospects for a one-and-done IMF restructuring are iffy.
The country’s fate is not sealed, but to reverse the economic destruction that arises from race being politically exploited, we must demonstrate the benefits of embracing objective assessments. The pressure for this to happen within the ANC comes from Tito Mboweni, who is forced to model numbers consistent with ANC policies and then defend them to credit rating agencies and the IMF. But the ANC’s electoral successes and its non-viable economic policies are thoroughly intertwined, while the party is deeply factionalised.
Credit rating agencies and borrowing costs show that the bond market vigilantes don’t have faith in the ANC’s economic stewardship. But neither the credit rating agencies nor the IMF is going to take on the ANC’s racial politics to frame our economic debates. If domestic efforts can’t transcend political posturing, too much will be expected of international actors.
Patronage opportunities
The Democratic Alliance and at least one leading think tank want to reject the politics of racial inequality. Their arguments must now be buttressed by the fact that our household sector is too financially impaired to fuel noticeable economic growth. It can be mathematically demonstrated that the ANC’s latest plan to spur growth through localisation has little, if any, potential to reduce unemployment or poverty. The same is true of seeking growth through massive infrastructure projects. Patronage opportunities, however, would flourish in both cases.
Far too many South Africans remain convinced that this is an inherently wealthy country. Rather, policies preclude adequate growth as the economy becomes increasingly centred around the state, while a sovereign debt crisis looms amid horrific unemployment and poverty. What makes many countries across the East and West well prepared to bounce back from the pandemic is that they have accumulated tremendous household wealth. Having abundant resource wealth is a curse if it provokes patronage instead of policies leading to household wealth accumulation.
It is not possible to justify significantly increasing private investments to serve South Africa’s consumers, as their collective long-stagnant buying power contracted significantly this year. Excessive accumulation of expensive debt means that consumers and government are unable to fuel sustained growth.
Borrowing capacity nearing exhaustion
Thus, with our borrowing capacity nearing exhaustion, avoiding life-long poverty for a majority of today’s young South Africans requires financial solutions, such as debt restructuring, while rapidly growing exports. The IMF can help reset our sovereign debt and key policies, but if racial inequality continues to dominate how our economic challenges are defined, their assistance will be thwarted.
Historian John M. Barry caustically observed: ‘When you mix politics and science, you get politics.’
If we continue toward failed nation status, it will not be lost on future historians that the politics of racial inequality blocked our adoption of policies which have spurred tremendous economic development elsewhere.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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