Monday 30 November 2015

Reluctance to admit root causes of SA’s poverty trap

The Chinese say “May you live in interesting times”.  Well Alberta is getting very interesting with the revenge of Tommy Douglas this week!  And today, a 34-year old black pastor was elected leader of the official Opposition party here, which should make the plot much more interesting.  And tomorrow, Numsa squares off in the High Court with Cosatu, trying force a Congress in July so that members can make decisions instead of the top brass.  You can feel the tectonic plates shifting.  Could a Maimane-Malema-Vavi youth-led coalition be on the cards?  Ask an Albertan…  change has a way of creeping up on us!

Some of you have encouraged me to look for a wider audience but articles the one below do not seem to get through all the editorial filters.  Thanks for your feedback.  Enjoy this piece…


This is my response to Shawn Hagedorn’s astute article in Business Day.  He argues that policies in SA are so bent on fairness and affirmative action that they are actually a “suicidal obsession”.  He cites the case of China, where “the volume of pain unleashed” by Mao’s policies gave way to successors who were “humble and wise enough to import expertise and then diffuse the insights”.  As he put it: “After 30 years of inducing poverty, China’s leadership accepted the need for broad policy changes”.  He manages to avoid using ideological terms like “Left” or “communist”.  He only mentions leaders and countries.

He presents a convincing case that SA is in a similar syndrome of inducing poverty by detrimental policies, and that these are the root of its economic malaise – not just the politics of apartheid as one hears so often from those who led us out of that Egypt - and into a desert of poverty.  According to Hagedorn, the promised land is industrialization and export, the second wave of which in East Asia over the past century followed the first wave - a Western model that began in the UK.

I think this analysis is useful, not as an ideological clincher, but in terms of illuminating a conundrum.  On the one hand, so-called “capitalist” economics are what drive industrialization – if that is really synonymous with development or success.  This does seem to be the “solution”, historically speaking, especially if you can detach the economics from the politics that it is wrapped in.  Too often, there has been dirty politics associated with clean economic development.  They become so intertwined that it is hard to tell them apart.

For example, a party could not promote a policy like BEE without accepting some level of Inequality, fatalistically.  Whereas parties like the EFF that want more Equality are less sure that it can be achieved by playing the race card.  That is a political solution to an economic problem.

On the other hand, Hagedorn is right that fairness and affirmative action are an obsession in SA.  He never says these are bad, he just says that the focus is constantly negative - on unfairness and inequality.  He compares this to the early days of the HIV and AIDS crisis, when denialism got in the way of enlightened policy making.  That was not a health crisis, it was a leadership crisis.  And he believes that SA’s poverty trap can also be managed and overcome.  This reminds me of Henry David Thoreau: “You see things as they are, and you ask Why?  I see things that never were, and I ask, Why not?”  We need visionaries, who focus on the future, not on the past.  Tomorrow’s women and men, not yesterday’s.

Implied is that this will not happen under the ANC.  As Einstein said, a crisis cannot be solved by applying the same kind of thinking that created the situation in the first place.  When he says: “competitiveness has been sacrificed to advance redistribution” he adds a key phrase “rather than blending the two”.  That is the crux.  How to blend these two economic factors.

How can the Opposition form a “United Front” when the diverse parties are poles apart?  First, you have the DA which is the largest party.  It has always emphasized “fairness” by tackling triumphalism and beating the drum of constitutionalism.  Often through the courts or other Section 9 institutions, although these are missing a lot of teeth after various fights with the ruling alliance.  The economic policies of the DA want to put more emphasis on making SA more competitive.  Rather than debating them, the government just plays the race card.  They play the man, not the ball.

Then there are the “new Left” parties like the EFF and a Labour Party in gestation with the unions that are leaving the ruling alliance (largely over the issue of Inequality).  Hagedorn is correct though, that: “Marikana’s analytical takeaway point was that union membership offers little protection when a country is caught in a poverty trap”.   Unions offer even less hope to the unemployed than they do to their own members.  Yet these parties are the ones bent on closing the huge Wealth Gap – not just by making a few historically disadvantaged people prosper, but by mass action.  In Hagedorn’s word, by redistribution.

How do you blend the two?  Hagedorn offers no solutions except that “displacing merit with short-term fairness adjustments erodes purchasing power triggering a poverty gap”.  That makes it sound like the EFF and the unions really on the Left may have to make some concessions to a DA bent on making SA more competitive?  The honest truth is that the DA needs the other opposition parties to displace the status quo.  It must champion law and order to regain investor confidence while at the same time recognizing that the electorate IS obsessed with fairness and redistribution.  Is the “new Left” ready to call its members and even the unemployed to sacrifice again?  To me, being from working class does not preclude you from being disciplined or fiscally sound and being unemployed does not preclude you from being honest and upright.  The looters you watch robbing shops on TV may be unemployed, but they are petty thieves compared to the employed kleptocrats of the ruling elite.

How about a United Front in which the DA runs ministries like Finance, Justice, Police and Trade and Foreign Relations?  While the unions run Education, Labour, Industry, Public Enterprises and Environment?  And the EFF runs Economic Development, Small Business Development and Social Development?  The key is, as Hagedorn put it – blending the two, namely competitiveness and redistribution.  Could a United Front like this be SA’s Way Forward?  Each party can still stand for its own ethos and platform – symbiotically.

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