Stop Dancing to Moody’s tune
Moody’s would have known that downgrading SA at this moment would place our government in even greater difficulty in confronting Covid-19 and hobble it in the reconstruction that must follow its aftermath. But they went ahead anyway.
In a recent article in The Guardian economist Adam Tooze wrote:
“In making the difficult choices that lie ahead we have at least gained one degree of freedom. The big idea of the 1990s that “the economy” will serve as a regulating superego of our politics is a busted flush. Given the experience of the past dozen years we should now never tire of asking: which economic constraints are real and which imagined?”
We should keep these wise words in mind as we process the decision of ratings agency Moody’s to downgrade South Africa to junk status, on the first day of a national lockdown to mitigate what President Cyril Ramaphosa described as “a medical emergency far graver than what we have experienced in over a century.”
The cost (see here and here) of Moody’s downgrade, announced on 27 March, is like kicking somebody when they are down. In a few weeks that has seen the public interest and recognition of the need to protect the human rights to health and life influence decisions to cancel events as grand as the Olympic Games, Moody’s’ decision embodied the worst expression of unbridled private interest. Moody’s would have known that downgrading SA at this moment would place our government in even greater difficulty in confronting Covid-19 and hobble it in the reconstruction that must follow its aftermath.
But they went ahead anyway.
However, these are unusual and unprecedented times. As pointed out by Tooze the normal “laws” of economy have all been suspended and upended – even in the heartlands of the cruellest forms of finance capitalism. Ironically, it is the governments of the USA and the UK that have embarked on the largest fiscal stimulus to try to limit the damage to economies and livelihoods caused by emergency measures to limit population movement.
In this light, on 30 March a group of 77 respected economists in South Africa issued a letter to President Ramaphosa calling on our government to follow suit and do everything it takes to prevent a health and social catastrophe. In the letter the economists state:
“While we appreciate efforts already undertaken in each of these areas, we are concerned that they are not comprehensive enough, and are not being implemented sufficiently rapidly or on a large enough scale to prevent real hardship for millions of South Africans.”
The economists then go on to set out concrete steps they believe the government should take to support households and communities; protect workers; sustain business and strengthen public health interventions. Frankly, at this moment issues about debt to GDP ratios etc don’t count. South Africa has reserves; it has vast private wealth; it has options. It’s lives that matter. For these reasons, the letter deserves careful attention from the President and the Cabinet when they meet on Wednesday.
When in Rome do as the Romans do.
So the best response to Moody’s at this moment would be to politely ignore them. We will not be intimidated. We have more urgent business saving lives at hand. The appropriate reaction would be to recognise Moody’s not as some God of the Markets, but as a coterie of grossly overpaid callous, heartless and corrupt men in suits who act at the beck and call of a system that is discredited and which has bred the social conditions and inequality amongst which the Covid-19 virus now runs amok.
However, Moody’s is right on one thing.
The South Africa economy does need structural adjustment. But, President Ramaphosa please note, it is not the one Tito Mboweni envisages. Instead, South Africa (like the rest of the world) needs a structural adjustment that places the realisation of the Constitutional vision of social justice based on equality and human rights at the heart of the economic machine. It needs a structural adjustment that complies with international law, the UN International Covenant on Economic, Social and Cultural Rights in particular, not international finance. One that has the health of nations as its primary objective and which finds profit in ensuring human security and dignity.
This is not a pipe dream.
As we have reported in Daily Maverick, in the last few weeks South Africa has witnessed a totally unprecedented surge of common purpose among its diverse peoples. There have also been millions of unseen acts of humanity both small and large. Many people have come to each others’ aid; rich people have been directly exposed to the precarious lives of poor people, seen the vulnerabilities a system they have benefited greatly from has created for millions of people.
In response, at a national level some big business men have made substantial donations of millions, and in a few instances billions, of rand.
As would be expected there have been recorded examples of meanness by private companies towards their employees (and we should name them). But in my personal engagements around Covid-19 I have seen a willingness to do things that a few weeks ago would have been considered impossible and inconceivable; to repurpose businesses that normally work only to maximise profit, oblivious to the society around them, for the public good of preventing Covid-19; I have heard extremely wealthy men talking about how their business infrastructures and expertise can be used to eliminate the risks of mass hunger that have followed on the decision to shut down the economy.
I have seen a humanity in the rich that I thought had been extinguished.
The trillion-dollar question is: will this continue in the society that emerges after Covid-19 has been brought under control?
But that’s a matter for the future and for the consciences of the rich.
Right now we are faced by a disaster. We are in the critical phase of an epidemic that we still have to bring under control and where everyone’s actions count. But knowing that “Never Again” will we allow finance capital to whittle away dignity and decency, that there is a real commitment to equality, will be a highly motivating factor for many whose lives and hopes were already permanently locked-down in shacks, disease and unemployment. In fact, poverty restricted freedom of movement long before Covid-19 made its dramatic entrance.
Which brings me back to Moody’s. On Wednesday, the Cabinet will meet for the first time since the downgrade. The best advice we could give to the President of our participatory constitutional democracy is to be found in the words of assassinated US President John F Kennedy, slightly amended to reflect our times: “Ask not what your country can do for the economy, but what the economy can do for your country.” DM