As this week’s Sandton shindig will not benefit ordinary South Africans, its vacuous pageantry must inspire a reality check.
The ANC’s destructive economic stewardship traces to incompetence, robust corruption and ideological delusions. At the same time, our ruling party is exceptional at politically exploiting injustices – including those they cause. Countering this begins with objective situational awareness.
While we want to believe that the ANC will be dispatched from the Union Building next year, we know that this is quite unlikely. Nor will fixing our SOEs spur sufficient growth to sustain social stability.
Only failed states have youth unemployment crises comparable to ours. Functioning societies go to great lengths to avoid such situations as it then becomes so easy for bad actors to benefit from sparking large-scale social upheaval or sabotaging the well-functioning parts of the economy.
Astute situational awareness is necessary to identify workable solutions. The recent passing of Julian Ogilvie Thompson is relevant in this regard for at least two reasons. He was charged with navigating a large organisation amid a very combustible environment. Also, he studied Politics, Philosophy and Economics.
For SA to succeed, our domestic politics, commercial economics and development economics must align while being supported by constructive international relations. With the aid of an effective domestic constitution and a rules-based international order, the four should align quite effectively.
However, the ANC’s combination of a massive patronage network and much experience at exploiting social justice memes has diluted our constitution’s ability to hold the ruling party accountable. The Chinese and Russian autocrats who have dominated BRICS use the forum to similarly undermine the rules-based global order.
BRICS confabs are no more additive to the global order than the ANC’s localisation policies are to job creation. The national interests of the members don’t align, yet membership isn’t about national interests. For the rulers of Russia, China and SA, BRICS serves as a collective shield to blunt Western criticisms of their elite-serving policies and practices.
The legitimacy of China’s government was established by decades of successful economic stewardship, which is now fading. The ANC has long scored horrifically in this regard whereas abundant war-crime accusations batter the reputation of Russia’s ruling regime.
Emphasising social justice issues, like inequality, twists our national dialogue away from effectively prioritising poverty and unemployment. This, plus the advantages stemming from massive patronage, opens the door to our ruling elites entrenching their privileges at the expense of the poor and unemployed.
The BRICS summit focusing on diversifying away from using the dollar to settle international transactions is an even less justifiable distraction. The current system works fine and it shouldn’t be replaced until more efficient options become available. This won’t happen soon.
If our elected leaders were focused on creating jobs, they would be looking to the North and the West, not the East and the Global South. Media outlets should more clearly communicate how trading with China benefits that country with a net gain in jobs at our expense. Not only do our imports exceed our exports with them, but we mostly export bulk commodities while importing their finished goods.
Big business and opposition parties have supported investment-led growth initiatives but, given our huge shortfall of domestic purchasing power, this would only spur rapid job growth if the investments expanded our value-added exporting capacity. This can’t happen due to the ANC’s multitude of anti-competitive policies. The ANC only shows interest in creating jobs which expand its patronage network or the meagre number of jobs which follow from commodity exporting.
We passed the point long ago of being able to remedy our unemployment crisis by fixing our domestic economy. More recently, Russia became generally uninvestable for Western companies. China’s direction of travel is similar, and so is ours.
Young people being productive is foundational to economic growth as well as political and social stability. Achieving full employment is not particularly difficult in a robust economy with little poverty and much accumulated wealth. Many Western countries have full employment despite the recent pandemic, current war and a surge in interest rates.
More than half of today’s young South Africans will never be meaningfully employed. Their life-time productivity will be meagre. Our president’s much ballyhooed investment conferences are mostly about preserving an unstable status quo which favours his elite comrades. In the background, ruthlessness is being stoked, domestically and among our lead BRICS partners. This week’s BRICS summit is mostly a public relations exercise for the benefit of China and Russia – and they seek to destabilise the global order to assert their leaders’ legacies.
Our presumptions about investment-led growth reflect how our pre-1994 political economy withstood sanctions by attracting foreign capital to fund commodity exporting operations. The wrong lessons have stuck.
Abundant and free flowing investment capital is a prominent feature of the 21st century global economy as is access to affluent consumer markets – except for the few remaining countries which choose localisation policies and the low growth which follows. Indulging isolationist biases while relying on commodity exports is the inverse of how billions of people were uplifted in the last four decades through adding value within global supply chains.
Globalisation is alive and well notwithstanding a new cold war triggered by Russia’s and China’s autocratic leaders bullying their neighbours. Supply chains are being relocated to favour peaceful countries that respect win-win internationally established norms.
Out of tune
The global economy has rapidly transitioned from industrial-led to services-led growth. There isn’t going to be a resurgence in manufacturing jobs nor will resource extraction be nearly as critical as it was in the 70s and 80s. This cold war coincides with a digitally empowered information age. We are global leaders at inequality and youth unemployment because our economy is so isolated and out of tune with the times.
Today’s intertwined success determinants are market access to affluent consumers and investments in young workers. Sequencing matters. Asia’s high flyers firstly achieved market access; upgraded education outcomes lagged by a generation.
The main investments in a workforce happen in the workplace and at the level of individual workers. The alarmingly perilous trajectory of our workforce reflects not lousy education outcomes – as disturbing as they are – but rather our obscenely elevated, and hectically entrenched, youth unemployment.
Anti-business policies have made South Africa a jurisdiction unfavourable for investment capital. Incentives for investing in South Africa’s human capital have also long been in decline.
Even a university degree does not ensure employment in China, which has combined very high economic growth with a shrinking workforce. If our 21st century education outcomes had been vastly better, the impact on our economic trajectory would be modest – and they could be negative. Might the ANC appreciate that a well-educated but largely sidelined workforce is more likely to revolt?
Our debating sub-subsistence grants shows that neither our political nor business leaders have plans to tame our youth unemployment crisis. Conversely, the workforces in most affluent countries will contract leading to labour shortages while, by mid century, over 40% of young children will be in Africa. Most jobs are already services-based and increasingly digital.
As with the rise of Asia, entrepreneurs and executives will overcome geographic mismatches between the largest consumer markets and the largest concentration of underutilised young workers. Also consistent with how Asia uplifted many hundreds of millions of people, African workers will be recruited for entry-level jobs performing tedious work for modest (by Western standards) wages. That is how high-volume upliftment begins.
For the same reasons that many people can now work remotely, many emerging services jobs don’t require that financial capital be exposed to the harsh regulations of a country like South Africa. Terms like ‘digital nomads’ and ‘geo-arbitraging’ are here to stay because such opportunities are real.
Like the early days of the dot com era, there will be many large and small initiatives and most will fail. The overall effect, however, will be tremendous change.
Amazon Web Services has recently announced that they are planning to train 100 000 young South Africans as certified cloud computing practitioners for free. According to the World Economic Forum, cloud computing capabilities are expected to be required for over 2.6 million jobs globally by 2027.
Our politics and economics are not likely to come right any time soon. Being realistic also means we should expect less from old mines and more from young minds.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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