First published in the Daily Maverick 168 weekly newspaper.
I was recently reading a story in the Wall Street Journal about Lebanon, a country of enormous resilience and enormous attraction. But, recently, things have been going south at a spectacular rate.
Power outages have become frequent; inflation is running at 400%; shoppers are rushing to buy bread, sugar and cooking oil before they run out. Doctors are leaving in droves and murder rates are rising fast.
The article quotes debt-financing expert Mike Azar, who said: “At some point the crisis gets so bad that even the building blocks of a recovery end up disappearing.”
It also makes the point that while many economic crises stem from wars and natural disasters, or more recently the pandemic, Lebanon’s collapse “reveals the government’s nearly bottomless capacity for self-inflicted harm”. I couldn’t help feeling that was so reminiscent of South Africa; an almost bottomless capacity for self-inflicted harm.
Lebanon, which managed to survive a civil war, millions of refugees from neighbouring countries, countless conflicts with Israel, a host of political assassinations, is finally being laid low by the pandemic. It’s amazing.
But look around the world, and you will notice Lebanon is not the only place that’s struggling. The Economist this week points out that Colombia has suffered violent protests and Tunisia faces a constitutional crisis. What is more, illiberal governments are in fashion. Peru has just sworn in a Marxist as its president and independent institutions are under attack in Brazil, India and Mexico.
Which brings us all back to an interesting question: what has happened to that odd concept “emerging markets” over the past two decades?
For the first decade of the new millennium, “emerging markets”, broadly stated, were growing much faster than developed economies. The notion of the BRICS countries was all the rage; they were the future. But in the second decade of the millennium, countries in the group started parting ways.
The “up” group was led by China, of course, and to a lesser extent, India. Brazil and Russia have both tottered, and are now led by autocrats.
The “down”, of course, includes South Africa, which is now a more unequal society than it was during apartheid. Growth has flatlined, unemployment has increased, and although some GDP per capita gains post-apartheid are still visible, the gains made in the first decade are being eroded by the second.
The Economist’s article includes an interesting statistic: the proportion of countries where the level of economic output per head was growing faster than in America rose from 34% in the 1980s to 82% in the 2000s. But in the 2010s, the share of countries catching up fell to 59%.
There have been some quieter success stories, particularly in Asia – Malaysia, Indonesia, and Vietnam. And there have been some very loud disasters, including Venezuela’s ruinous experiment with deep socialism, and Turkey’s shift to authoritarianism.
What should South Africa learn from all this? To my mind, the first point is that obvious problems cannot be left lying. SA’s disastrous failure to improve its education system is a glaring blot. Corruption is destroying South Africa, as it is destroying Russia.
But the most curious thing is this: why, when you have a fairly obvious “catch-up” instruction manual (absorb foreign technology, invest in manufacturing and open up the economy to trade), is it not being used?
This simple system, with some geographic help, has been the formula for success for all the countries that continue to succeed.
What the ANC’s befuddled and confused economic mandarins need to answer is this: why would that not work here? DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.