ECONOMIC PLANNING OP-ED
Better Choices: Can South Africa avoid the perfect and potentially violent gathering storm?
Why the world is getting richer and Africa — South Africa in particular — is falling behind, is a key question behind a new book, ‘Better Choices: Ensuring South Africa’s Future’. The book has its genesis in a series of questions about the art of the possible in South African policy making, and the extent to which the direction and trajectory of any country is a political choice.
The South African government’s fascination with economic planning and state plans seemingly has ideological roots — the latest version of the Soviet practice.
Why such an approach to “central planning” that ultimately failed in Bulgaria, Romania, Poland and elsewhere might work in South Africa is as perplexing as is understanding why a development and reform dynamic has failed to take root in a country which embraces, at least rhetorically, the notion of a better life for all.
This dissonance relates to the systemic failure to acknowledge the centrality of growth to the SA development “story”.
One key indicator illustrates uniquely how far the fortunes of SA — along with other African countries — have plummeted while the world has comparatively prospered.
South Africa’s share of global per capita Gross Domestic Product has been halved since 1960 and sits today at just 54%. That means South Africans are — on average — half as rich as they were six decades ago, about the time Southeast Asia began its spectacular development rise.
Asia started from the same level as Africa in 1960, and while its average GDP per capita is now greater than the global average, Africa’s has fallen to just 15%.
Why the world is getting richer and Africa — South Africa in particular — is falling behind, is a key question behind a new volume, Better Choices: Ensuring South Africa’s Future.
This book has its long-term genesis in a series of questions about the art of the possible in South African policy making, and the extent to which the direction and trajectory of any country is a political choice.
“Governments come and go,” warned Denis Healey, “but the rules of arithmetic and geography remain the same.”
The former British Defence Secretary and Chancellor of the Exchequer might have been referring to the fiscal constraints facing the South African government, or the limits of economic redistribution in the relative mismatch between political and individual aspirations and the absence of investment and growth, or its trade constraints at the relatively poor (by the global norm) southern tip of Africa.
This has led some analysts to conclude that there is little hope — that we must go down before we go up, even though the period of recovery is invariably at least as long as the period of decline, and there is still a long way down given the relative richness, diversity and depth of the South African economy.
While it may be impossible to return to the hopeful optimism of 1994, when the world was at South Africa’s feet and everything seemed possible, even within the hard contemporary fiscal boundaries and political dysfunctionality, there remains considerable scope for policy manoeuvre.
The soft space of this dimension was explored in Mcebisi Jonas’s refreshing 2019 take on South Africa’s economic options after the Jacob Zuma presidency, After Dawn: Hope After State Capture.
The insights of the former deputy finance minister, one of the co-editors of Better Choices, fuelled, in turn, a debate on how to translate this thinking into the immediate-term and practical policy steps.
As South Africa’s economic crisis has deepened, so too heightened the sense of urgency to respond in a constructive way, hence this volume.
No avoiding the hard choices
Economic policy is also a product of politics.
There are profound debates to be had about the role of leaders. Do people get the leaders and governments, and thus the policies, they deserve?
In a democracy, Joseph de Maistre maintained, this was true. And what if, at least in some circumstances, the system turns good people into bad leaders, incapable of doubling down on difficult reforms?
Some see the system in a terrible bind.
“The real problem is that the ANC doesn’t yet understand this incompatibility”, writes RW Johnson, for example, between maintaining the ANC in power and society’s desire for a modern industrial society. “And doesn’t want to understand it,” he adds.
“It continues to promise more industrialisation, more investment, new cities, bullet trains… even to promise that it will, somehow, continue to run an airline. But it can’t do any of those things — it’s all pie in the sky.
“It’s been brought up on the Freedom Charter, which suggested that, to govern, all you had to do was pass resolutions. ‘There Shall be Work and Security! The Doors of Learning and Culture Shall be Opened!’ etc.”
This path has led South Africa to increasing penury and failure. It will not stop there. A perfect and potentially violent storm is gathering, with high unemployment, rising food costs, increasing interest rates and load shedding.
And yet we should take heart from the Asian experience, the study and relevance of which was a further prompt for the Better Choices analysis, which appeared in 2020 as, The Asian Aspiration: Why and How Africa Should Emulate Asia — and What It Should Avoid.
Asian societies have assumed a responsibility (and suitable mindset) to fulfil their part of the development bargain, which is reflected in the commitment of their leadership to popular welfare above all else.
By contrast, many in Africa have simply “opted out” of politics — out of fear of repression in some cases, out of a fear of being labelled along racial or ethnic grounds, or just because they could not be bothered.
If the turnout of the electorate is anything to go by, South Africans are increasingly disengaged from politics and the choices that lie behind our national direction, which fell from nearly 90% in the 1999 national election to the 2021 municipal poll, when just under half of registered voters turned out.
Asia reminds us of the value of a change in policy direction by leadership, whether this be from Mao to Deng in China, or from a command to a free-market economy in the case of Vietnam, both countries which could easily justify their policy inertia and choices on a bloody and divided history.
In this way, development is a Zen experience. It is about learning when and how the state should let go, and in what to remain engaged.
There are easier choices: leave out overarching master plans for industry, no matter the morbid curiosity in following the lead of Trade and Industry Minister Ebrahim Patel in this regard.
Increasingly get the state out of key sectors, from airlines to energy, ports to railroads.
Make it easier for rich people to spend money in South Africa through our visa regimes and responsiveness, and similarly entice skills that can go anywhere.
Finally, be willing to devolve power in (and money for) policing to those municipal authorities with the data and will to tackle this challenge.
Herein lies a key — and so far unresolved — tension for the ruling party.
It is likely not possible to avoid confrontation and be universally popular and lead the country on a development path at the same time.
By instilling the sort of far-reaching reforms that South Africa requires, the fear is that the leadership of the ruling party will commit suicide from its narrow power base.
And yet absent such reforms, national suicide beckons regardless, as a consequence of a perfect storm of increasing inflation, rising fuel and food costs, rampant unemployment and pernicious insecurity.
While structural reform is unpopular and the incentives for leadership tend towards short-sightedness, eventually political popularity will depend on reform.
Fears that inhibit a change of direction are frequently exaggerated and then seldom remembered as the development benefits of reform accrue.
South Africans also have a remarkable ability to step back from the abyss and snatch victory from the jaws of defeat.
Doing so, and delivering on the promise of 1994, demands displaying leadership in seeing the full available spectrum of policy options rather than an ideologically defined chink of narrow space the ANC currently inhabits.
Herein lies the key message from this collection of essays by leading South African public and private sector intellectuals: We have options, and we don’t have to be prisoners of our past.
If the government fails to do so, the gravest structural challenge to the SA economy will prove to be the ANC itself.
If so, then the only way to progress becomes removing the ANC as the stumbling block to reform. DM
Dr Greg Mills and Ray Hartley are with the Brenthurst Foundation. www.thebrenthurstfoundation.org