Illiberal Russian and Chinese leaders exploit how open societies overzealously embrace key ideals. South Africa’s dismal economic prospects reflect our elected leaders promoting ideals which their policies prevent us from achieving.

The leaders of G-7 and many other nations have been overly confident that free trade creates middle class societies which then foment robust democracies. Dozens of countries have followed this path. Conversely, overbearing leaders of many resource endowed nations – in deference to their web of patrons – block democratic desires and economic modernisation.

While no country has benefited more from the liberal world order of the past few decades, China is governed using a very different set of beliefs. Rather than seeking to strengthen the global structures which supported its rapid upliftment, Xi has now aligned with Putin to undermine it. This may benefit them personally but their countries, and others, will pay a heavy price.

Since Putin and Xi pledged their allegiance to each other earlier this month, the centuries-old project that largely displaced might-is-right with constitutional democracies and a rules-based international order is under threat alongside the sovereignty of Ukraine and Taiwan. National leaders across the West and East can harbour few illusions that China and Russia will reflexively defer to accepted international norms.

Here in South Africa, the relentless referencing of a single ideal, equality, sabotages our politics and our economy. The populace and centres of influence parrot our ruling party’s disdain for this country’s exceptionally high inequality. The ANC then exploits our collective desire for greater social justice to justify its redistribution-focused policies which cripple growth prospects while feeding the party’s massive patronage network.

Yet, neither the ANC, nor most of its critics, want to acknowledge that our domestic economy can’t possibly absorb most of each year’s supply of new job seekers – let alone reduce the massive bulge of unemployed to a sustainable level.

Upliftment escalator

Meanwhile, this era’s rapid upliftment escalator provides abundant employment opportunities through having young adults add value within global supply chains. The global economy has a deficit of young workers and even poorly-educated twenty-year olds can quickly adapt if appropriately managed and motivated.

We have been slow to accept that South Africa is not a wealthy country. A majority of our young adults are at risk of becoming permanent wards of the state via meagre subsistence payments while the long-term prospects for many of our resource endowments, such as coal, are poor. The focus on redistribution has to be abandoned as it is failing spectacularly. Our economy must be transformed in a modernising sense.

The global economy employs few of our young job-seekers due to the anti-competitive effects of our redistribution-focused policies. Instead of recognising the devastation they have wrought and pivoting to follow the lead of dozens of high-growth emerging countries, the ANC recently chose to pursue ‘localisation’ – a doubling down on what can’t work.

The ANC’s framing of issues around ideals is central to its favouring its closest supporters. This flattens growth prospects.

They have conditioned us to include the term ‘inequality’ when describing our economy. Yet it makes no sense for a country with our obscene levels of unemployment and poverty to prioritise inequality. Deng Xiaopeng famously said, ‘Let some people get rich first’. His growth-focused policies then fostered hundreds of millions of jobs. Four decades later, China’s economy has advanced to where it can now reduce inequality while maintaining healthy growth amid vastly improved life-styles.

Historically, the overindulgence of ideals had always been held in check by societies needing to focus on survival. Today, a foetus that reaches mid-term in most middle income countries is quite likely to celebrate seventy or even eighty birthdays. Famines have recently been nearly eradicated and science continues to triumph over diseases. Combat-related deaths should remain much lower than the levels common to earlier eras.

Accusations dressed up as remedies

The ANC’s effectiveness at framing our issues idealistically impedes business leaders and opposition parties from offering workable growth plans. Most ‘recommendations’ to improve the economy resemble accusations dressed up as remedies. Reducing corruption and incompetence is necessary but insufficient.

To upgrade our economic discourse, ideals, values and accusations must yield the floor to assessing solution options. For instance, providing tax incentives and special dispensations from anti-competitive policies for value-adding exporters might offer the most economic upside without creating serious tensions within the ANC or with its partners or cronies.

Instead, we’ve now reached the point where a huge portion of healthy young adults is on track to be idled into middle age and beyond and the ANC has managed to frame the issue as being between fiscal rectitude and moral responsibilities to the poor.

Accepting such framing is madness. The need for such payments must provoke a full-throated debate about abandoning – or at least materially relaxing – the redistribution-focused policies which block adequate growth.

Another form of idealism is the fantasy that our national dialogue can remain accusation-focused and then hopefully a post-2024 coalition dispatches the ANC and then quickly agrees on a potent growth strategy.

The ANC’s electoral resilience – and its patronage network – rely on performance issues being displaced by colonialism-versus-corruption styled bickering and ideals. The world has become a tougher neighbourhood, yet switching to a solutions focus will illuminate a way forward.


The views of the writer are not necessarily the views of the Daily Friend or the IRR

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Shawn Hagedorn worked in banking, finance and capital markets in New York City and London before emigrating to South Africa. He holds degrees in finance, economics, and international business and his writing has appeared in a number of publications including Business Day, Sunday Times, Mail & Guardian, and Politicsweb, amongst others.