South Africa’s political and economic challenges will remain unmanageable until we reframe our national discourse. Our adoption of a global perspective can be fast-tracked by informing the world about how over-prioritising inequality has devastated our politics and economy.
Our policies and outcomes are out of sync with those of successful nations to an extraordinary extent – and the gap continues to widen. Embracing localisation is just the latest policy misstep.
The likelihood that a majority of South Africans will be poor fifty years after the 1994 transition can’t be calculated precisely. But unless the 2024 election provokes fundamental policy reversals, the probability must be near 90%.
While theoretically there must be a small chance the 2024 election will provoke sweeping policy pivots, such scenarios seem fanciful. The ANC’s leadership offers no indication that they might consider upending their ideological biases to align their policies with those of successful nations. Meanwhile the evidence continues to suggest an ANC majority or commanding plurality.
South Africa’s per capita income peaked a decade ago and it is set to stagnate over the next ten years. The national government’s budgets will remain overwhelmed by public-sector salaries and debt-servicing precludes Keynesian-styled stimuluses. The portion of households which are financially stable is small and likely to decline. That inequality will continue to rise, as much within as across racial categories, is a symptom of low growth mixed with excessive reliance on debt – much of which is prohibitively expensive.
Thus our domestic economy will remain unable to employ most school leavers, and this ensures that the ranks of the unemployed and the poor will remain swollen long after our policies belatedly pivot from over-reliance on domestic spending to growing value-added exports. If the localisation campaign produces some small wins, they will come at the expense of further entrenching massive unemployment and poverty.
Our national dialogue has long presumed this country is inherently wealthy and the political process should redistribute wealth. Instead, with inequality-focused policies continuing to block growth, debt restructurings are set to feature prominently later this decade
Government policies and the national dialogue presume South Africa has the option of rejecting the growth paths the global economy offers. Domestic and global trends both refute such thinking ever more clearly.
Clever engineers can add much value but some physical challenges must be assaulted at the level of the physicists. Our economy is dysfunctional because our national ethics were forged during the 1990s transition, when it was assumed that adequate growth would accompany sufficient redistribution to reduce extreme inequality.
Adam Smith is considered the father of modern economics and capitalism, but he was a professor of moral philosophy. Capitalism’s credibility relies on outcomes. Marx’s revolutionary pen brashly elevated his ideology to the level of truth. Thus, notwithstanding his policies having provoked dismal results before being abandoned almost everywhere, his boldly equating ideology with truth has been reincarnated as today’s emphasis on equality.
The big picture is that capitalism and cross border trading have sharply reduced poverty in all other regions, and global inequality. Our policy-makers would have us retreat from competitive pressures and thus from the global economy. They favour expanding local content while increasing our regional exports. Yet this entire region only has about 1% of the world’s discretionary income – which is central for sustaining high growth.
This era’s star economies have sought broad prosperity and, through pursuing export competitiveness, achieved it. South Africa has shown, at great cost, the tragic consequences of seeking to forge a society around reducing inequality. The antidote to oppression is not income equality but rather the dignity that comes with access to opportunities. Competing is central to individuals and societies determining how they can best add value.
Thomas Jefferson’s famous declaration posited that people have the right to pursue happiness. When someone is half as wealthy, but twice as happy, as someone else, need we judge such inequalities? At its zenith, the ANC’s leadership was deemed by many as competent to make such assessments. We now see a party with modest capacity to judge moral issues. More to the point, their economic stewardship is horrific, largely due to their instinctively judging and redistributing rather than pursuing high growth through global integration.
The broadly held belief that redistribution can adequately reduce inequality has aided and abetted grand-scale corruption and incompetence. We must now openly acknowledge that there was never a path to broad prosperity through redistribution-focused policies. Sustaining high growth is essential but overcoming corruption isn’t sufficient to achieve this. Policy pivots are required.
Despite it now being clear that chronic poverty will be the norm for decades, our economic discourse and policies remain anchored by inequality rhetoric. What can be done before it is too late?
Top global professors in economics and politics have been recruited to South Africa to lecture us on the finer points of their fields. Of course, given the “cancel culture” which pervades many university campuses, these people don’t meaningfully confront the wisdom of our black government’s response to years of racial oppression. We must now reverse roles and inform the world of the dangers of over-zealously pursuing equality – and, in doing so, see South Africa within a global context.
Our country is home to the world’s most persuasive evidence showing why over-prioritising equality becomes destructive. South Africa has been making the pursuit of equality central to its politics and economics. It has underperformed to a remarkable degree – particularly given this country’s potential.
The routine perception is that voters are conditioned to support a liberation party. But to what extent is this tied to the expectation of inequalities being redressed politically, whether through a job or grants? Given the government’s declining creditworthiness, such expectations have now become totally irrational.
Our dialogue is still anchored around redressing inequality through redistribution, despite it having become clear that such policies compound miseries. Engaging foreign audiences with our evidence debunking inequality-focused policies can inspire the global perspective needed to liberate the majority of South Africans who are now chronically impoverished.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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