First published in the Daily Maverick 168 weekly newspaper.
When one of DM168’s reporters was discussing the looting situation with a prominent businessman in the property industry, he said simply, “I really don’t know why I invest in SA. It’s just pointless.”
That feeling of emptiness and despair has probably been the prevailing feeling within SA’s business community this week. Desperation we have known before, plenty of times, and SA has unexpectedly rebounded. But this feels different.
The social contract in SA has always been wafer-thin, with protests a common feature of daily life. What is different this time is that a combination of factors hit simultaneously, some of which we know all about and some of which we are only beginning to realise. It’s been the perfect storm: high unemployment and huge inequality, the seemingly never-ending Covid-19 devastation, a dysfunctional government, a disaffected business community. Add to that a political crisis and opportunists of the worst kind.
On this last point, I think there is some reason for hope, because clearly the Zuma faction who were recently distributing on social media billboards of President Cyril Ramaphosa being shot at by what seems like a pump-action shotgun are suddenly now disavowing their flagrant nihilism.
In some ways, for them, it’s their Donald Trump moment. Just as Trump subtly encouraged the Capitol invaders by telling them to back off – old political trick – the Zuma faction have overplayed their hand. And now they will forever be branded with the economic devastation they encouraged.
If nothing else, it’s a classic lesson in the limits of populism: promising the world by feeding short-term enrichment but delivering grand devastation and extended hardship might be a winning strategy in the short term, but it is always a losing strategy in the long term. As Donald Trump knows.
The past week of looting and violence has in some ways been a graphic, fast-motion version of what the Zuma administration delivered economically over the longer term using the same economic tools: the irresponsible delivery of immediate gains at the expense of gradual, sustainable improvements.
I’ve always thought the most underappreciated fact of the Zuma presidency was how much SA was underperforming its comparators economically. That gradual white-anting of SA’s economic situation put SA in a poor economic position at the start of the pandemic, which compounded the difficulty the Ramaphosa government has had getting the train back on track. And, in retrospect, it’s odd how little it was noticed; every year, it seemed the next year would get better, and it didn’t. It got worse. By and large, SA’s media just went along for the ride. Meanwhile, SA’s middle class began moving assets offshore and businesses started investing more outside the country than in.
The economics of the Zuma faction are absolutely governed by the mantra “give it to me now, give it to me for free”. Apologists for the looting blame poverty and inequality, which obviously play a role. But there are hundreds of poorer places in the world than SA, and it was really eye-opening to see people driving BMWs joining the looting.
The economics of looting are such a curiosity. I’m sure in the minds of the looters, they are winners. Look at my new wall-sized TV! But like the economy of the Zuma administration and populist economics around the world, the gains are a mirage. What seems to be a win reduces longer-term growth and confidence, which reduces employment levels and economic activity, which in turn reduces growth and confidence…
If anything good can possibly come out of this devastating week it will be that ordinary people will trust false prophets less and trust the longer grind more. It’s hard, but going forwards slowly is so much better than going backwards fast. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores until 24 July 2021. From 31 July 2021, DM168 will be available for R25 at Pick n Pay, Exclusive Books and airport bookstores.