Europeans must choose between warming their homes next winter or supporting ideals like national sovereignty and a sustainable environment. Here in SA, blind devotion to ideals persists despite their having been hijacked by reckless political opportunists.

Vladimir Putin is betting, not irrationally, that as winter approaches, the coalition which supports Ukraine and sanctions Russia will splinter. Meanwhile, record high summer temperatures in Europe encourage both energy consumption and opposition to substituting coal for less environmentally harmful natural gas.

Putin references various European invasions over hundreds of years to fan his brand of ultra-nationalism. Our governing party routinely exploits both South Africa’s historical injustices and the ideals which were forged during our 1990s political transition to redress them. Their messaging has framed our economic debates in ways that preclude support for policies necessary to achieve a dynamic economy. Rather, national unity and equitable economic outcomes were to follow from quixotically embracing virtues.

Mandela went to New York in 1994 and told investors they could put sunshine in our hearts. Perhaps if he had been young enough to vigorously serve two full terms, and as much a development economist as he was a unifying leader, the ANC would have been able to balance political pressures for redistribution with the need to sustain high growth. Instead, various factions and leaders within his party found that redistribution united them whereas focusing on growth and creating a competitive economy provoked dissension.

Five years of five percent annual growth, ending in 2007, suggested they could have their cake and eat it too. When the Great Financial Crisis then walloped the global economy, our economy held up better than many. This reflected our modest global integration and our eagerly preparing for the 2010 World Cup. Many then still believed that if South Africa lost its way, Mandela would again exert his moral authority to reignite our collective commitment to progress through unity.

Reliance on patronage

Since the early 1990s, global poverty has plunged through low-income workers in dozens of countries adding value to exports. This required that their leaders prioritise global integration and competitiveness. This path didn’t appeal to the ANC or its alignment partners. Focusing on redressing inequality through redistribution better suited communists, cadres, unionists and tenderpreneurs. This also supported the party’s electoral strategy which placed increasing reliance on patronage.

This was always going to end in shambles. The five years of strong growth traced directly to China’s surging demand for commodities. This reflected China’s ability to maintain high growth through prioritising value-added exporting. For South Africa to sustain high growth long enough to create a large middle class, we, like Middle Eastern oil exporters, have long needed to invest the windfalls from commodity booms to boost our value-added exporting capacity. This has never attracted serious attention.

The commodity boom triggered by China’s full membership in the WTO induced a surge in export earnings, leading to a strong rand reducing inflation and interest rates. Consumers splurged on real estate and non-durable goods. Investors built office parks and expanded malls.

A few years later, evidence surfaced, such as the Gupta emails, of ubiquitous patronage and corruption. Mandela had already passed. It was then frequently presumed that Ramaphosa would serve as his moral proxy and purge the ANC of its bad elements.

Our current debates reflect three decades of indulging idealism. Treasury windfalls from the recent commodity boom are to fund subsistence payments to help ease hardships arising from youth unemployment levels which are as unsustainable as they are entrenched.

Shared vision

We now know that patronage beneficiaries are prepared to strike, sabotage and riot if their privileges are threatened. Nonetheless, many now expect that a 2024 coalition will unite disparate parties around a shared vision for sustained high growth – which none of them can currently articulate. The coalition will need to make the police capable and unions cooperative. The cadres and tenderpreneurs are to meekly give way to a new dispensation.

Putting our faith in vague prospects for a coalition government is far less realistic than our previous expectations for Ramaphosa to fix our government and economy. The ANC patronage strategy is electorally formidable. Political analysts mostly expect the ANC to slip below 50% while remaining dominant.

Alternatively, if a significant portion of the millions of adults who haven’t been voting come out against the ANC, that could be devastating for our ruling party. Most of them are unemployed, financially stressed, or both. The ANC’s response is to add them to its patronage club through subsistence grants.

The perception that such people are lazy ignores how creating incentives is foundational to both modern management and economics. None of our leaders can articulate a plan to create millions of jobs. If you are a typical twenty-year-old South African, your employment environment is horrific and you have no reason to think that will change while you are still young. Trying harder can help at the individual level but it won’t make a noticeable dent in the massive unemployment backlog.

We shouldn’t expect our millions of poor and unemployed to vote the ANC out of power if none of the opposition parties can explain how they are going to create millions of jobs. Perhaps the marginalised intuitively appreciate that little can change until we purge our naive idealism about inequality, national unity and heroes-in-waiting.

Delusions

Putin seeks to unite his country around 18th century delusions of Russian grandeur. His action plan hinged on a successful invasion of Ukraine. Rather, this triggered sanctions which will harshly undermine the prospects for young Russians in the coming decades.

Electing Ramaphosa brought on his localisation policies which are a self-inflicted wound as devastating to South Africa’s long-term prospects as Western sanctions will be to Russia’s.

The world’s largest, most resource-endowed country can’t afford to have its leadership exploit past injustices to isolate its youth from a rapidly evolving global economy. Ditto for South Africa.

[Image: https://pixabay.com/illustrations/people-group-of-people-collection-567563/]

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

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contributor

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.