The three tested policies, Bundy said, have a track record of success in cutting poverty are building infrastructure, improving education quality, and labour intensive manufacture. In an interview on BETWEEN THE LINES about his new book, Poverty in South Africa, Past and Present, Bundy said none of these has been effectively prioritised.
While government policy is to build infrastructure, the decline of South Africa’s infrastructure companies, especially in construction, in recent years indicates the policy is not being implemented. South Africa’s educational rankings continue to decline. And labour-intensive manufacturing is not a government priority.
The book shows a rise in poverty from the late apartheid era, when government and business began to modernise industry, and machines replaced jobs. The success of trade unions in raising wages also had an effect on cutting jobs in favour of capital-intensive mining and manufacturing.
After 1994, the ANC’s embrace of globalisation included the rapid removal of tariffs protecting sectors which went out of business, including many clothing companies. The policy pendulum definitely swung too far, according to Bundy. At the time, after the fall of communism, and later with President George W. Bush in the White House and Tony Blair Prime Minister of Britain, the Washington Consensus view was weakly challenged in the West, and South Africa drank the Kool-Aid.
By 2016, affluence had been deracialised, but poverty remained African.
“Now not all Africans are poor, but almost all the poor are African,” Bundy said.
There has been good research on what has worked in other countries. Debt-funded infrastructure has been successful. And research at the University of Cape Town found no developing country broke the cycle into strong growth and job creation without a rise in labour-intensive manufacturing. This research challenges many experts who have argued that South Africa should accept a decline in manufacturing and focus on other sectors including services.
The ANC government did not employ its political capital to make tough decisions to reduce poverty and inequality.
Finally, faced with a decline in children’s performance in government schools, Bundy said if all Cabinet members were required to send their children to township schools, government’s response to these poor results might be quite different.
Bundy argued that more could have been done in 1994, and still can be. Given that South African inequality is one of the highest in the world, perhaps the very highest, it is not appropriate that taxes on the wealthiest South Africans are relatively low. He proposed an increase in inheritance tax, capital gains tax, and company tax as another part of the solution. This would increase government revenue to be used for pro-poor policies. DM
Photo: Young boys play in a rubbish dump in a township outside Johannesburg, January 25, 2009. REUTERS/Siphiwe Sibeko
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