RIGHT OF REPLY
An inability to see the crisis for the trees: A response to Tim Cohen’s recent IEJ tirade
‘Cohen’s decision to opt for mockery and distortion serves as a means to avoid plainly stating what his policy conclusions are.’
A friend once told me that in the public contestation of ideas, you “can’t bark at every passing car”. And so when I read Tim Cohen’s evening newsletter on Monday, 16 October, attacking the Institute for Economic Justice (IEJ), of which I am the Executive Director, and a recent open letter by over 100 policy experts and civil society organisations, I shrugged it off as public debate of questionable quality.
However, when the next evening Cohen used his newsletter to again heap ridicule, it contained disinformation egregious enough to warrant this response.
In case you missed those evening missives, the context for Cohen’s attacks is the much discussed “fiscal crisis” that South Africa is reported to be careering towards.
The IEJ and open letter signatories questioned whether characterising the present situation as an acute fiscal crisis was accurate, and called for a halt to the indiscriminate budget cuts proposed by National Treasury as a strategy for balancing the budget.
We demonstrated how these ill-conceived cuts will intensify hunger, cripple service delivery and worsen our long-term fiscal challenges.
The letter advanced a balanced set of measures to address the current budget mismatch while protecting basic rights.
Cohen has taken exception to this call for cooler heads to prevail, and rather than engaging with the analysis and recommendations we make, has chosen to attempt to discredit them – for some reason, via drawn out and convoluted Mr Bean and Blackadder analogies.
Tactic 1: Overstate and distort
Cohen’s first approach is to grossly overstate the arguments we advance in order to reduce them to the absurd.
He implies that – in questioning the extent of the reportedly acute fiscal crisis – we dismiss the idea that South Africa is facing a deep economic crisis. Nothing could be further from the truth. The poor state of our economy and its impact on communities is the driving impetus behind our daily work.
By arguing that the current budget mismatches are not historically anomalous and can be resolved by means other than the proposed budget cuts, we are not suggesting that “SA’s fiscal position is hunky dory” (in Cohen’s words) or that the “R60-billion budget shortfall is… sustainable” or “not a problem”.
In these representations of our position, Cohen displays an impressive capacity for caricature reminiscent of, shall we say, Rowan Atkinson. Rather, our policy brief notes at the outset: “The current trajectory, without meaningful economic expansion, is unsustainable over the medium term.”
The debate on “crisis” is far more subtle than Cohen’s characterisations allow for. Our contention is twofold:
First, language and consistency matter. If we faced the same revenue shortfalls in 2017, 2018 and 2019, and no one referred to those as “fiscal crises” to justify their preferred policy measures, then it is legitimate to question such a characterisation and attendant policy conclusions now.
Decades of evidence show how governments – with cover from the business press – utilise moments of crisis (real or exaggerated) to force through unpopular, anti-poor policy measures, illustrated, most famously, in Naomi Klein’s Shock Doctrine.
This is not to argue in favour of the policy choices of the past, nor for a lack of action. It is to reveal the manner in which ‘crisis’ can be selectively deployed to justify the wrong policy actions.
Second, the National Treasury narrative has privileged a reported acute fiscal crisis over the deep, long-term economic and social crises we face.
A fifth of households in this country regularly go hungry and send a household member out to beg – that is the crisis that should be at the forefront of economic policymaking.
While it might seem perverse to rank crises, where you place the emphasis has very real consequences.
The reported fiscal crisis is being used to justify policies that would make hunger worse. This will in turn make our macroeconomic outlook worse and perpetuate the negative cycle.
We know, for instance, that the National Treasury is vehemently opposed to the extension of the life-saving Social Relief of Distress grant and is using budget challenges to justify scrapping it.
Against National Treasury’s brutal cuts, it is essential that we interrogate our current fiscal position and advance every alternative for protecting the most vulnerable.
Tactic 2: Pretend we don’t say what we do say
Cohen’s second manoeuvre is to make the same arguments we do, but to pretend that we didn’t. This is best captured in the discussion on the relationship between debt and growth.
Cohen notes that while our debt levels may be in line with peer countries, our debt is less sustainable because we do not have a credible growth trajectory. He then brazenly asserts: “This fact doesn’t feature in their analysis at all.”
To the contrary, both IEJ’s Policy Brief and the open letter are at pains to highlight that the only way to address our high debt costs in the medium term is to grow the economy for the benefit of all.
We state clearly that “[t]he state needs growth to sustain a larger debt stock”.
The recommendations in the Policy Brief are prefaced by: “Ultimately, it is essential to devise and present a credible plan for economic expansion. Without the right sort of economic growth, debt may continue to rise… and room to increase revenue will run out.”
By pretending that we are not in fact beginning from a similar starting point, it is easier to dismiss our conclusions out of hand.
For instance, Cohen presumably agrees with us when we write in the Policy Brief that: “South Africa’s debt story is one of the failure to utilise the expanded borrowing that has occurred to finance long-term structural change.
“The use of debt for fiscal spending is not currently increasing investment or levels of productive capital stock sufficiently, nor sufficiently improving employment or social outcomes. This has led to weak growth and weakened the demand for local bonds.”
However, we may disagree on the implications of this for policy.
We go on: “… debt and growth can be mutually reinforcing if the borrowing is put to productive purposes. On the flip side, reducing resources available for the provision of critical economic and social priorities, will not improve those outcomes.
“Financial crime, corruption and poor management cannot be ‘budgeted away’. Reducing expenditure on infrastructure and social services will reduce the overall size of the economy over the medium-to-long-term.”
It is this policy conclusion, not our underlying analysis, that Cohen presumably takes issue with.
Let us engage on these important policy issues. In fairness to Cohen, his second missive does contain some engagement with the real issues at stake – for instance, the role of government spending and the relationship between fiscal policy and economic growth.
If Cohen had attended the launch of our Policy Brief – to which he was invited – he would have been able to participate in a thoughtful debate on such matters.
In addition to seeking to discredit us, Cohen’s decision to opt for mockery and distortion serves as a means to avoid plainly stating what his policy conclusions are.
Reading between the lines, it appears he believes that cutting services and eroding social protection is the most desirable macroeconomic path available to us in the current moment. If correct, he should have the courage to come out and say so.
Tactic 3: When all else fails, say they are agents of corruption
But there was one allegation made by Cohen that was so egregious (defamatory, really) that I was left with no choice but to bark at this passing car.
In a seemingly throwaway comment, he writes: “The proponents of fiscal irresponsibility pretend to be concerned about a growth strategy, but what they care about most is government reducing the feed to their troughs.”
This allegation – not just against IEJ, but a section of South African academia and civil society who have steadfastly stood for socioeconomic rights, and against corruption – is deeply disturbing.
If Cohen has a shred of evidence that the IEJ, or the signatories of the open letter, are driven by such motives, then he must produce it – or publicly apologise.
Otherwise, he is partaking in the same kind of dangerous and ugly anti-NGO rhetoric that has risen to the fore in recent months.
I will not presume to guess at Cohen’s motives in penning such ugly and ham-handed attacks on those who grapple regularly with how to improve all of our society.
It is no secret that I disagree with Cohen’s more laissez-faire economics, but think we can hold these debates in a far more constructive fashion.
Quite frankly, I believe the subscribers to his newsletter deserve better. DM
Dr Gilad Isaacs is Executive Director of the Institute for Economic Justice (IEJ).