“You don’t play politics with the economy…….An opposition which acts in a way that makes every step forward more painful than it needs to be perverts its function. An opposition which tries, in our times, to say that corrective action is unnecessary, is betraying the Irish people…….I will not play the political game which produces the sort of phony economic analysis which has passed for opposition in the past”.
These words were uttered by Fine Gael leader, Alan Dukes, at a Tallaght Chamber of Commerce event in September 1987, outlining his party’s strategy of supporting the budgetary strategy of their main political rival, in the greater national interest. It was an extremely brave and patriotic act to put national interest first at a time when Ireland’s national debt was an all-time high of 118% of GDP. It was in many ways political suicide and the very antithesis of the political expediency so many of us are used to.
While the exact impact of the “Tallaght strategy” continues to be a point of debate in Irish politics, Mr Dukes’s speech offers lessons for an embattled South Africa and the opposition ahead of the Moonshot Pact Convention later this month. It simply isn’t enough to unseat the ANC/EFF coalition (unseating Jacob Zuma alone should have taught us that). The opposition has to have broad agreement on key issues of national interest that must be made known to the public and adhered to at all costs, if South Africa is to have a similar turnaround to that of nations like Ireland. Poland and Chile, all of which were in worse-off positions than South Africa is today.
Resolve the energy crisis
While the focus of the energy crisis has rightly been on generation capacity or lack thereof, the other part is the government’s failure to unbundle Eskom. Professor David Richard Walwyn argues that government must:
“Create a market operator and a transmission system operator as independent entities. A market operator is an energy “stock exchange”. It facilitates contracts between the energy producers, the transmission system and the distributors. Many countries in the world have already restructured their electricity supply industry to establish such a market and introduce greater competition among the power producers. The UK, Canada, the US and many countries in the European Union have undertaken market reforms like this, with positive outcomes.”
Contain public spending
Since the 2008 financial crisis, government spending has grown faster than South Africa’s GDP growth, driven largely by an ever-growing public service wage bill, as well as other line items such as rising debt-service costs, and social transfers to households. Ratings agencies continually cite the government’s inability to contain public spending and especially the public wage bill as reasons for why the country has sunk deeper into sub-investment territory and why paying off the government’s debt continues to take up an increasingly larger share of the fiscal budget. In other words, the government has made a stupid Faustian bargain of keeping their tripartite alliance partners happy at the expense of the broader South African public and, in particular, the poor.
How else can the fact that for every R100 in taxpayer rands the government receives, R21 goes to paying off the government’s increasingly more expensive debt. It is a negative reinforcing cycle which continues to be a noose around the neck of South Africa Inc.
Advance structural reforms
In a 2015 article titled, How flexible is the South African labour market in the short and long run? Stellenbosch University Development economist Dieter von Fintel argues:
“ ….wage demands (either from individual workers or via formal wage-setting institutions) are indeed sensitive to local labour market conditions. On average, wages are about 35% higher in regions with no unemployment than in regions where the whole labour force is without work. More specifically, within the areas where the workers live the statistical correlation between wages and unemployment rates is negative. It is remarkably similar to the pattern found in almost all countries in the world. Wages do appear to be flexible – they respond to local unemployment rates.”
In other words, South Africa must put the cart before the horse. The current regime of artificial increases via bargaining councils, and what are ultimately random minimum wage laws create market distortions which exacerbate unemployment by pricing young workers out of the market. What needs to happen is an at-all-costs approach to job creation which may result in lower wages in the short term, but because of a long-term labour-market tightening will lead to higher bargaining power for workers (and higher wages). This will not distort the labour market and increase (youth) unemployment. This will require courage and backbone and a willingness to do hard and unpopular things on the part of the Moonshot Pact.
Educational reform
South Africa spends roughly R1 600 per month per pupil in the public education system, and yet for that return we have 81% of our grade 4s unable to read, write or count properly and barely six out of ten of our pupils who start grade 1 finishing matric. This is a poor return on the astronomical investment the country makes into education. Contrast this with the rise of low-fee private school groups, such as Curro and Spark, which working- and middle-class parents are increasingly sending their children to. Clearly those with the means (who are unfortunately being double-taxed) are choosing low-fee private schools.
The obvious question is why shouldn’t this choice be extended to more parents, especially those who cannot afford it?
While there are structural issues around teacher training and quality in South Africa, a low-hanging fruit would be to change the power dynamic in schools away from unelected government bureaucrats towards parents. This could be in the form of a school voucher system. This is especially pertinent for the Democratic Alliance (DA) which holds power in the Western Cape (education is a provincial discipline).
The DA must show courage. It must take on the special interests in education like the teacher unions and choose the working class and poor parents and their children over the political expediency of the ruling party and its alliance partners. This is what being a real alternative means.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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Image by Robert Owen-Wahl from Pixabay