President Jacob Zuma holds different economics theories to those of his main predecessor, former President Thabo Mbeki. Although both men subscribe to the ‘reformed and pragmatic’ ANC Economic Policy of a mixed economy, their emphasis differs significantly.

“Investopedia Definition: ‘Mixed Economic System’ An economic system that features characteristics of both capitalism and socialism. A mixed economic system allows a level of private economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.”

Just over 28% of black South Africans are unemployed – with another 7% under employed, 24.2% coloured South Africans without employment, Indian and Chinese South Africans have unemployment at some 10.8%.

Interestingly white South Africans who are just 8% of the 54 million-population nation have just 6.6% unemployment. In this minority stratum, they have better prospects for overseas jobs, local jobs and extended family safety net wealth accumulated over centuries of white empowerment and race preference.

Of the 7.5 million unemployed South Africans, some 300,000 whites are unemployed leaving over seven million blacks majority of which are youth unemployed, even those with high education and artisanal skills. With this reality, policies to redress the past receive massive push back from opposition parties in Parliament.

A quick perception assessment using media tools you are able to gather that the white population of South Africa is the most miserable although they generally control 70% of all employers, 93% of country net asset value, only 6.6% unemployment among them (some 300,000 white people) and do not generally need a social security net. Of the over seven million blacks without employment, a few million of them are in bad health (an estimated five million are HIV positive), live far from cities and the globalisation of world economies means work opportunities go to China or India on economies of scale competition – with all that, blacks are the less miserable citizens.

Former President Nelson Mandela’s economic policy was rightly built on the foundation of stability first. Money unsettles in an unsettled environment. When Mandela became president of South Africa, the country was in deep economic trouble, just weeks away from bankruptcy after years of mismanagement, political corruption, misrule, racial misallocation of resources and international anti-Apartheid sanctions.

The ANC’s overarching socio-economic policy, the Freedom Charter, had in essence become archaic, out of the times and had not foreseen the globalisation of financial markets and economies. The ‘gold standard time’ Freedom Charter calls for wholesale socialism and had to quickly be ‘pragmatised’ to real times to avoid driving away the international investors needed to avert total economic collapse.

Reconciliation became the cornerstone of Mandela’s economic policy. Indeed this saw market stabilisation and firm foundation of institutional building began from scratch. White wealth has since more than tripled and unemployment among whites has been stable at major powers numbers of between 5 and 6% in all of the first 20 years of democracy. With the exodus of whites in mid 1990s during Mandela presidency, white unemployment reached lows never seen in decades before. Whites have fared very well under democracy.

Some South Africans are quick to believe things ran much better pre-1994, they are not alone as we have heard in various speeches in Parliament that the troubles came with Mandela, Mbeki and then Zuma just made them even worse. However pre 1994, the entire South African government only managed 6% of the nation’s population and regarded the 94% population as non-citizens or half citizens who were either managed via the Bantustans or simply ignored. Any half brained group of people can appear to be managing things better if it’s only managing them for the sole benefit of 6% of the population. Even street pavements were designed and constructed to only be walked on by this 6%, hospitals and all.

Just how much better was South Africa really – inhumane evil aside? The 2006 Report on Grand Corruption under Apartheid indicated that between 1976 to1994, the equivalent of US $54 billion (in the 2005 exchange rate) was smuggled into secret “government” accounts controlled by a small security cluster within the Apartheid government. Much of this money has not been repatriated back to South Africa from foreign accounts.

The Report does not go further to deal with the likes of the Mulder’s, the owners of Freedom Front Plus (FF Plus) in this Parliament, whose family patriarch was a minister in the Apartheid government. Mr JB Vorster, South Africa’s prime minister in 1973, authorised Minister Connie Mulder’s plan to illegally transfer R64 million (in 1974 PPP rate) from the SADF budget for propaganda projects. Vorster and Mulder wanted to buy the Washington Post newspaper so as to control its editorial policy and sell Apartheid ‘sweetheart’ news in the heart of America’s power.

They also used some of the money to establish the local Citizen newspaper as an English only newspaper, to write ‘sweetheart’ stories about Afrikaners and Apartheid for English readers.

Apartheid minister Connie Mulder, who was the mastermind for this grand theft and Apartheid’s blood transfusion plan, is the father of the FF Plus leader Pieter Mulder.

Generally, when investors look at how the main stock exchange is performing when analysing a country’s outlook and its policies. They also look at how its fiscal management is. These two are executive indicators of the real pulse without “feelings” or “perceptions”. The rule of law and systems to combat corruption are also important.

Under Mandela, the Johannesburg Securities Exchange (JSE) All Share Index equity performance was at 5% per annum. A good achievement under the circumstances and at the time of the Asian economic crisis.

Under Mbeki, the JSE equities had average growth of 14.6%. An excellent achievement in light of the dotcom bubble and other global crises including the rand tanking.

Zuma has shown to have policies and a management style those investors see differently to the common high street talk since he took office in May 2009. The global economy had tanked. Catastrophe all around. Huge financial firms were shutting doors, yet the JSE All-Share Index has grown at a marvellous average annual rate of 18%, higher than any of the country’s presidents before him.

Last week, Zuma, who faces criticism from Democratic Alliance and Congress of the People over the increased ratio of debt to GDP, was bolstered by the IMF’s new position paper, with IMF chief economists saying in a new working paper published by the fund about world economies. “Recent debates have centered on the pace at which to pay down this debt, with few questions being asked about whether the debt needs to be paid down in the first place,” said Jonathan Ostry, from the IMF’s research department, “A radical solution for high debt is to do nothing at all — just live with it.”

As the Medium Term Budget Policy Statement late last year revealed by Minister Nhlanhla Nene, focusing on reducing the deficit requires that taxes be raised; raising taxes limits growth and constrains it. Another poison to focusing on deficit reduction on spending is cuts.

It is important to mention that my assessment of Mbeki’s woes within the ANC Alliance were a confluence of matters, these being HIV Aids management, austerity policies and deficit reduction obsession (aside from ANC internal power schisms).

These woes could easily infect the Zuma administration if it presses the pedal deeper on austerity and the loser and blame would be placed on Deputy President Cyril Ramaphosa’s and not Zuma.

Zuma had not focused his attention on deficit and debt but growth spending underpinned by proper planning in the National Growth Plan, a sub to National Development Plan (NDP). Suddenly Ramaphosa enters the fray and deficit management, largely seen as ‘neo liberal’ comes back on top of the Zuma in-tray would be the narrative.

Because the ANC members and voters largely trust Zuma and defend him as a victim of eager-to-curry-favour civil servants who allowed the runaway security budget at Nkandla, this will not be his poisoned chalice within the ANC, but the appearance of the beginning of austerity policies. The budget of 2016 will be a make it or break it for his political comfort.

The political maths is simple enough; if you can deliver a stock market that makes minority capital wealthier than all past democratic presidents, the suffering majority must earn a stake in the economy via progressive government spending and youth related upliftment programmes like education and training.

Zuma will have to also understand that the NDP or any of other good policies he may come up with, will not amount to much progressive impact without the immediate transformation of the international reserve currency system or the International Monetary System. For as long as the US dollar has deep hegemony and control over six billion people, no matter what South Africa does, it will always come short as the US Federal Reserve (US Fed) puts policy that looks only after US interest at the expense of emerging markets as ours.

It is therefore incumbent upon the Presidency and the National Planning Department to develop stronger focus on how to best utilise diplomatic tools and G20 to lobby for a seat for IMF or on the US Federal Reserve with immediate effect to counter influence decisions made by US on behalf of the world. Items like quantitative easing cannot be allowed to be unilaterally decided while the US has such control over global economy. Even before an African seat on the United Nations Security Council, the IMF with a transformed mandate must have influence on US Fed policy. If G20 could achieve institutionalising Basel Accords on banking, so can the US Fed be reined in.

Zuma has created a number of institutions, importantly the National Planning Commission (NPC) and the monitoring and evaluation department. To make the NPC work, it must work with a parliament that is fully equipped. The Parliamentary Budget Office should not be delayed any further so as to have another layer of an institution that would balance what the Treasury does, the NPC and the actual budget allocation.

Although Parliament is not his province, Zuma must be seen to be fully in support of having a highly sophisticated and fully equipped legislative budgetary office for all his plans to make sense to the people. This is where the issues of deficit versus growth spending can receive public by in.

The ‘gold standard’ may never return. The window that President Richard Nixon closed in 1971 demanded that the Freedom Charter be readjusted to global realities. The mixed economy model does just that but stops at the door of The Bretton Wood institutions and the US Fed. It cannot be. The conflicting interests of the US, Europe and China need a South Africa that looks beyond shallow economic debates in Parliament with solutions that will not work anyway for as long as the status quo remains and the biggest shouters are the Mulders et al. The banks that need proper and fair (inter) nationalisation are the IMF and World Bank not main street banks in Johannesburg. DM