CAPE TOWN – If asked whether they would prefer to see inequality or poverty reduced by 50%, many people will actually hesitate before answering. Reducing extreme inequalities in incomes is desirable but alleviating poverty is much more important and it requires sustained high growth which, at least initially, often leads to rising income inequality.
Defining equality in terms of incomes is perversely materialistic but politically it is very appealing to SA’s ruling party, despite severe economic effects.
Defining a common enemy is a long-standing tactic for leaders to rally support. SA’s ruling party’s heritage was defined in opposition to racist policies which is among the many reasons it should now avoid patently anti-white positions. Rather it is increasingly defining its policies and objectives in terms of inequality. This may be clever political packaging but the lasting economic damage threatens everyone’s interests.
Some sympathy for the ANC’s dilemma is appropriate. SA’s black-white politics would be much less challenging were it not for the extremes which define the country’s rich-poor politics. If the ANC does not play the inequality card, it risks its grassroots support being hijacked by a populist movement rallying around inequality issues.
The ANC must deflate populist desires such as nationalising large chunks of the private sector while maintaining sufficiently pro-business policies that the economy grows fast enough to reduce unemployment and, eventually, to have income inequality recede. But it should now be clear that the trajectory of the economy is insufficient to meaningfully reduce either poverty or inequality. This primarily reflects two factors: the global economy has become harshly competitive; and Pretoria’s policies aren’t working.
Political parties exploiting the politics of income inequality is international but it is not global. Most people are Asian and many Asian cultures focus more on the community than the individual. It is easier for such societies to emphasise progress ahead of fairness. Their formulas for progress often involve having to endure much pain and sacrifice. This means there will be far fewer decent jobs in the world for those whose skills and education are modest.
The rise of Asia has made inequality more common among nations unable to consistently deliver education services and pro-business policies. But why is inequality seen in such starkly materialistic terms? This was very much not the case a hundred years ago. What had always been unfair about life was early death and debilitating injuries and diseases. The odds of infants surviving child birth and living to seventy has vastly improved over the last century and death, due to war and violence, has plummeted – particularly over the past twenty years, excluding Africa.
Almost all people of at least middle age in the East and the West grew up with food stress or heard their parent’s or grandparent’s tales of rationing during the World Wars or the Great Depression. The vast majority of every nation’s population had always been poor until industrialisation led to – initially quite bleak but relatively well-paying – factory jobs. Prosperity expanded decades before broad middle-class societies emerged with moderate inequality.
Today’s teenagers see themselves as victims if their parents can’t afford to buy them the latest fashions and parents can consider themselves disadvantaged if they have to use public transport. In earlier eras people accepted their lot in life as upward mobility is a relatively recent phenomenon. Rather, humans focused like most species on surviving long enough to reproduce. For almost all of today’s new-borns, this is virtually a given. Unlike other species and prior generations of humans, even physically quite weak children now survive to adulthood. This core aspect of evolution now ceases to apply among humans. Yet poorly managed economies are more vulnerable than ever. Competency is no longer sufficient; workers must be competitive.
Hundreds of billions of Asian are willing to accept a few decades of extreme income inequality if it leads to improved opportunities for their offspring. SA has become the epicentre of societies conflating the benefits of advances in the biological sciences with those in the social sciences which include economics.
Before the causes of the Black Death were identified, majority groups applied their prejudices to attribute the causes of the disease to groups of people different from themselves. Once the sources of the disease were understood, the prejudices remained but a key justification for oppressing others was vanquished.
Today’s economics have nearly vanquished forced oppression. The much larger problem now is insufficient opportunities. Slave labour could not successfully compete with the employment terms many low-skilled Chinese workers freely accept. While if Swaziland and Switzerland were magically transposed, SA would be vastly better off as workers here could provide goods and services to millions of wealthy neighbours.
SA may have the world’s most extreme income inequality and this could lead to political instability. Yet the country’s wealthy are not the problem. The problem is that prospects for school leavers are so poor due to government policies and delivery shortfalls. The wedge politics of using inequality to scapegoat the well-to-do is making matters worse.