The failings of South Africa’s state-owned entities, as I wrote about last week in Public-private partnership will not save SAA, are intertwined with the wider economic crisis.
This follow-up column deals with the economy as a tragedy, fittingly so because of the destruction and great suffering most South Africans have endured and will continue to experience for a foreseeable time.
I have organised the economy into development, finance, governance, labour and production frameworks and do not suggest that a specific one is dominant or more important above others. In time I will tackle each on their own, but for now the attention is on the general dynamics, their linkages and their convergence with other frameworks of the economy.
I have previously warned that unless the right policies are adopted to counter the growth slowdown and as a response to the changes in the global economy, South Africa can forget about catching up.
The basic point I make is that the parasitic politics of ruling elites has infected the economy.
These political elites have manipulated the hopes of ordinary people and glorified self-serving behaviour as socio-economic initiatives meant to transform the economy.
The current tragedy has more to do with continuing internal factors, because the South African economy was sick well before this. The Covid-19 pandemic has however thrown a spotlight on the failings of our poor leadership.
- Failure to sustain growth, create jobs and achieve societal development when the economy was growing;
- Failure to capitalise on the commodity boom period;
- Rising government spending and wasted resources;
- Declining sectors;
- Declining productivity; and
- Inability to introduce structural reform (moving from a mining-based economy) as a response to changes in the global economy.
Beneath the surface, several problems were festering:
- Job losses due to declining sectors and slow growth;
- Rising poverty and inequality;
- High levels of unemployed youth, idle and alienated without work;
- The proliferation of policies that sought to determine that the economy perform as politics dictated; and
- Policies aimed at mitigating unforeseen side effects of events, such as the financial crisis on the economy, did not take off.
All these internal causation factors overlapped and converged with external factors, which – were it not for the self-inflicted damage – could be attributed to bad luck and unfavourable timing.
In reality it isn’t about bad luck, because while South Africa was losing ground and missing opportunities, other emerging economies were taking advantage of conducive global capitalism using policies and strategies that enabled the restructuring of their economies.
Government action did not dictate how those economies should work. Instead those interventions were in the choices of policies that, although liberal, enabled economic development – which made achieving socio-economic initiatives possible.
The opportunity cost for South Africa is that policies that have sought to revive the economy may have worked in some instances (such as the Industrial Action Policy Plan in the auto manufacturing sector), but their sum total has been overall failure.
The reason for the tragedy is obvious
Seen this way, the relationship between internal and external factors has created a tragedy – because the interventions aimed at mitigating unforeseen events, such as the pandemic, cannot resuscitate an economy that has compromised frameworks.
How do we solve this economic stagnation and the South African tragedy?
Every downturn has to eventually end. The focus thus should now be on using policy in a way that lessens the downturn by shortening its impact on the private sector.
Firstly, for example, now that the country is in Level 1 lockdown, barriers that prevent sectors such as tourism and hospitality from operating fully should be removed.
Secondly, load shedding and power supply problems are simply not acceptable considering that 2020 is a year when operations and productivity stopped – neither business nor government can afford a halt in economic activity due to Eskom’s faults.
Enough of the asinine rhetoric
At this point, the realisation should be dawning to leaders in government and Parliament that the economy will not improve by subjecting the public to well-meaning but downright asinine rhetoric claiming good intentions of a New Dawn.
Have we not learned that the road to hell is often paved with such intentions?
Not all is lost though.
The shift in the international political economy occasioned by the coronavirus means that an opportunity to end South Africa’s tragedy exists. If taken, it should be based on policies and strategies that understand the importance of an alignment between the pursuit of both economic growth and social justice.
It is perhaps necessary to spell out the obvious: achieving this is possible only if the pre-eminence of politics is removed.
Politicians should serve, not reign. Their focus should be on people, not power.
Remove the primacy of politics, and fellow South Africans might and probably will prove that we are more than up to the difficult tasks that face the country.