South Africa

Analysis: We must address inequality in South Africa, now

By Stephen Grootes 7 January 2018

As South Africa’s political elite start to gear up for the year ahead, the focus is still very much on the aftermath of last year’s ANC conference, the non-victory of Nkosazana Dlamini Zuma and future of President Jacob Zuma. In some ways, almost nothing is going to happen until he leaves, or can successfully, and very much publicly, stop attempts to remove him. Unfortunately, this will obscure the conversation that we as a nation need to have most urgently: a conversation about inequality. By STEPHEN GROOTES.

There is surely nothing more important in South Africa right now than dealing with inequality – which is, strangely, perhaps more urgent than dealing with poverty. We need to discuss it, properly, right now. Particularly because President Jacob Zuma appears to be about to lose all his political power.

Human beings are not always rational. Time and time again researchers will explain how people will put up with being poor, if everyone around them is poor. But they won’t put up with being poor if some people around them are very rich. This spans across cultures: The Economist recently quoted an old Russian folk tale of a man who was offered anything by a genie-like creature, though he was told his neighbours would get whatever he received, twice over. His response was that he wanted one of his eyes removed. Other international research shows that many people will accept becoming poorer than they currently are, if those around them are poorer still.

For any society to deal with the tension between the haves and the have-nots is difficult. Even in places that are more homogenous, and very well off, such as Sweden, and the UK, and the US, arguments around inequality are paired with feelings of anger and frustration. Almost everywhere in the world, the gaping wound that is the difference between executive pay and the lowly paid masses, is a massive news story. In South Africa, where inequality is rated as the worst globally (or sometimes, depending on what is happening in Brazil, as the second-worst) these tensions were always going to be much higher. Throw in our racialised history, which led to racialised inequality, and you have all the ingredients for a disaster-in-making.

There does appear to be some evidence that these tensions are on the rise in our society. Fewer and fewer people are voting, which suggests they do not believe that formal political processes will change their lives. What we call “service delivery” protests continue; the anger shown by students at universities is a clear demonstration of how frustrated people can be. There are many other indicators that many South Africans are getting angrier by the minute, coupled with the crippling side-effect of losing hope their lives will ever be better.

Some of the main reasons for this must surely include the fact that both formal politics, embodied particularly by the ANC and Zuma, and business, have come to lose legitimacy. In the 1990s and into the 2000s, the ANC had both legitimacy and commanding political power. It was able to direct intense efforts to make the poor less poor. At the time, business was primarily led by white men, and lacked legitimacy to dispute this in any way. Tax rates went to 42%, but people were happy to pay the price of doing business. Government, and particularly SARS, had legitimacy. You may have disagreed with Thabo Mbeki on many issues, but you understood that the money you paid over was being properly spent.

It should also not be forgotten that at the time, business was booming. South Africa had been under sanctions, people were not allowed to invest their profits in other countries, and all of this changed quite suddenly under ANC rule. The Checkers/Shoprite group went from a local operation to an African one; MTN became the biggest cell phone operator on the continent. If you had to pay tax approaching 50% it didn’t really matter, as your actual income was still rising.

Now, that is all history.

When Zuma took over the ANC in 2007, corruption was already a major problem in the party; things simply got worse from there. The daily tide of well-supported claims around the parastatals, about how the Guptas have milked the state through their relationship with president Zuma, and the almost-consensus that the ANC was led by corrupt people (including the fact that those who protested against this in Parliament were simply and forcibly thrown out) has surely all served to weaken, or almost destroy this legitimacy.

While there is a big, and very meaningful, conversation to have about how Zuma was but a symptom and a symbol of this, the fact that his name is so tied up with it also provides a possibly useful marker. In other words, if he were to go, or be removed, that event could be used to start a “new era”, the start of a process of regaining that legitimacy. It would be complicated and difficult, but this could be the beginning of actually using that newly-regained legitimacy to start to deal with the inequality in our society. Certainly, it is pointless having that conversation while he, and those around him, still hold government office. The mining industry would be foolish to discuss wages, or social investments, or anything, with Mosebenzi Zwane while he is obviously a Gupta stooge.

So then, what should be on the table during this discussion; what concrete measures can be put in place to reduce inequality?

Obviously, one doesn’t want anyone to fall below a certain level of poverty. Unfortunately that floor is already terrifyingly low. There are people in this country who don’t have enough to eat every day (although cases of actual starvation are rare). Social grants already play an important role here, and there is strong evidence that children who grow up in homes that receive social grants are taller than those who don’t. There must be a discussion about how much further they should go. There could also be the possibility of a Basic Income Grant. This has been discussed in South Africa in the past and should be discussed now. It is also an idea that people in other places are considering. Even the International Monetary Fund now takes it seriously.

To do something about the other end of the scale, the incredibly high earners, should be much easier. Simply put a self-imposed cap on salaries and remuneration. A few days ago, the now-former CEO of Steinhoff Africa Retail, Ben le Grange, stepped down. He had been paid a salary of over R50-million for 2017. And despite all that he was paid, he did not stop the meltdown of the group. Despite being a chartered accountant, he did nothing to put the brakes on what was obviously fraud and criminal activity. You and I both know he will never give that money back. We see this all the time: an executive will get a huge amount of money and yet not deliver (any) value for it, and still keep that money. In a society as divided and unequal as ours, this is simply unsustainable.

Make no mistake, there will be arguments from many players, those who run banks and cell-phone networks, that they have to compete internationally for talent, and it’s the fault of the rand, etc. This is, of course, nonsense. If you can’t live happily on R10-million, or R20-million a year, you have bigger problems. A self-imposed cap such as this (which cannot be enforced by government, as the Constitution is powerless there) would go some way to reducing both inequality, and – also important – the perception that nothing is being done about inequality. It would be an indication that the rich were doing something from their side.

There are many other issues that should be on the table during this discussion, ranging from making business decisions that would hold creating as many more jobs as possible as paramount, all the way through to better quality education and firming up institutions of democracy.

But for the politicians, the people who claim to speak for the different constituencies in our society, there is still much to gain from having a less than constructive conversation. It will be tempting for some to simply fight to protect the rich, others will claim to speak for the poor but be hamstrung by the fact their leaders are rich. Still others, such as the Economic Freedom Fighters (EFF) may try to make a series of demands that are “non-negotiable” knowing that others at the table would not be able to agree to them. The party is already doing this, by calling on young people to “flood the universities” in a way leaders as educated as they are would know will be unsustainable for the entire system.

However, there is also much to gain for the political leaders of the land to actually address real issues, and address them honestly and fairly. The majority of South Africans are still attracted to those who follow the rules – constitutionalists – those who won’t want to simply break down what we have. Anyone who is seen to represent their constituency honourably and gain something for them would come out with an enhanced reputation: just witness the sky-high popularity of Thuli Madonsela, Pravin Gordhan, Mcebisi Jonas, Makhosi Khoza, and many others. And for all politicians in the formal sphere, there is surely a huge benefit to regaining the trust of those voters who have given up on voting, or even worse, believing.

In the end, there is simply no other course. Either people’s lives need to improve dramatically and quickly, which is surely not possible in the current political deadlock, or the rich, and politicians, need to give something up. The tensions we currently have in our society won’t magically disappear if Zuma goes. The problems we face are becoming worse, and looming in our faces. We may soon start to run out of time if we don’t have this conversation now, and are forced to have it later.

We had better start now. DM

Photo: Friends help a shocked women after she discovered that her entire shack had been destroyed by a fire that broke out in the shacks in the Alexandra township, Johannesburg, South Africa, 07 December 2011. EPA/KIM LUDBROOK

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