The fire that claimed dozens of lives in Johannesburg’s inner city recently prompted a predictable round of outrage, recrimination and pledges to do better.
President Ramaphosa described it as a ‘wake-up call’. This has been met with an equally predictable cynicism that the tragedy will serve any such purpose.
Tragic as this has been, the Marshall Street fire is not outside the general experience of a foundering country. Before long, some other obscenity will eclipse it. Actually, a couple of weeks on, the fire is already being forgotten.
Infernos that claim lives, the destitution of millions of people and the opportunities this has created for some of South Africa’s worst elements – think of criminal gangs extorting rent from desperate people seeking a place to stay – are the reality for a society in deep crisis.
Government officials have predictably laid the blame at the door of apartheid. As a descriptor of the origins of these problems, this has some validity. But it doesn’t account for the intervening three decades and the misdirected policies and lost opportunities since 1994.
Foremost, here, has been a failure to move South Africa onto a long-term high-growth trajectory. Post-apartheid South Africa had to extend economic inclusion to those previously denied it. This was framed in terms of the hoped-for benefits: employment, public services, educational opportunities, business growth, expanded welfare programmes and so on. This was reasonable enough, though always depended on expanding South Africa’s capacity for producing wealth.
Economic growth is a measurement of the total economic activity from one period to another, and so can be a rather abstract idea; what does ‘5%’ look like, compared, say, to getting a regular wage or receiving a social grant?
There has also long been an undercurrent of opinion dismissing its importance. Economic growth, so the latter thinking goes, disproportionately benefits the affluent. The bottom 5% or 10% ‘never’ benefit from it, I remember the keynote speaker at a human rights conference saying back in the 1990s… It doesn’t always result in jobs or other benefits. Pursuing it is to put ‘profits before people’.
‘De-growthing’
More recently, the idea of ‘de-growthing’, largely on environmental grounds, has garnered a following in the developed world.
While growth is not necessarily a stand-alone solution to economic exclusion (and may come with other problems), it’s hard to see any plausible solution in its absence. This is the case even for those unable to gain a proper foothold in the economy, since South Africa’s ‘social wage’ – the social grants (some 19 million recipients in June 2023), support for housing and other services and so on – depend on the tax revenue that economic activity generates.
Growth, in other words, would be a necessary condition to create both the household income streams and redistributive space to begin to unravel such issues as South Africa’s urban housing malaise.
Typically, a sustained real annual growth rate held to be necessary for South Africa’s economic rehabilitation has been in excess of 5% per year. The National Development Plan (something of an abandoned project itself, but a useful reference point) looked for 5.4%. The Institute of Race Relations’ recent proposals envisioned a rate of 7%.
Despite a rocky start in the 1990s – substantively because of the inherited problems – growth by the mid-2000s actually began to take off, reaching the 5% threshold and producing millions of jobs. This collapsed with the global financial crisis and the Zuma presidency, and has never recovered; indeed, the period overseen by President Ramaphosa’s nominally reformist government heralding a supposed ‘New Dawn’ has arguably had the worst-record growth of the post-apartheid era, something that was apparent even before the pandemic hit.
Economic growth in turn is best driven by investment, the commitment of savings to new enterprises. This implies a long-term (or at least extended) hope of seeing the initial investment paying off. As Institute of Race Relations colleagues Gabriel Crouse and Mlondi Mdluli wrote in Daily Maverick in March, per capita investment has been falling steadily since 2008. In that year, it stood at R15 000 per person. In 2022, this had declined to R11 036 (constant 2015 rands).
That has meant fewer businesses, less business growth, fewer employment opportunities, and inevitably, fewer possibilities to circulate rands through the economy.
Complex question
Why? This is a complex question, though in broad terms many firms simply lack confidence in the future and see no point in committing their funds to expanded capacity. The so-called ‘investment strike’ is not a nefarious protest against democracy, but a rational response to an inhospitable climate.
The inhospitable climate meanwhile has been brewing for a long time. Today, the daily shutdowns of electricity – load-shedding, in the national nomenclature – place a chokehold not only on sentiment, but on the degree of activity that is possible. This has been a feature of the country’s economic life since late 2007 and was in the making for a decade before that.
For good measure, the Medupi and Kusile power stations that were meant to solve the problem have not only run over their expected timeframes and way over their budgets, but are also reportedly beset by design flaws. Earlier this month, energy expert Chris Yelland noted that, at that time, Kusile was not producing a spark of electricity.
The failure of power provision has its counterparts across South Africa’s economic infrastructure: the post office, roads and rail, and ports. Here again, the problems were predictable, had been predicted and were ignored.
Crime has meanwhile imposed a sometimes lethal impediment to doing business. If crumbling utilities make it difficult to keep machines running or despatch goods to market, a rampant criminal culture threatens to steal the machines, hijack the trucks and even take the life of the businessperson and his or her employees.
Behind all this lies a complex of deadly governance pathologies: a state that has been systematically (if perhaps not deliberately) deskilled and incapacitated by politicisation and the ruling party’s campaign for an illusory ‘hegemony’, a confused policy environment that looks backward rather than forward, and an ideological posture that is at root hostile to business.
Illegal practice
It’s for those reasons that warnings about the illegal practice of cadre deployment, about the drawbacks of preferential procurement and the destructive impact of labour legislation on employment have been ignored.
Indeed, it bears noting that over the past few years, President Ramaphosa’s administration chose to squander the considerable goodwill with which it entered office by a destructive focus on undermining property rights through the Expropriation without Compensation drive. Property rights are a foundation of successful economic progress and wealth creation, and the adverse effect of threatening them should have been glaringly apparent. In the event, it was.
Perhaps nowhere are the consequences of all this as apparent as in South Africa’s mismanaged and decaying cities, even as a deluded political class trumpets the virtues of the developmental state that is even now under (de-)construction.
What took place in Johannesburg was a horrific expression of a systems failure across the country: an economy unable to absorb so many, a sad story of human desperation, and an indifferent state with neither the capacity to perform, nor much interest in performing its functions.
What remains, until things change fundamentally, is real tragedy – and short-lived performative responses.
[Image: Chickenonline from Pixabay]
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