The economics of kindness

2011-02-26 09:34

The symbol governing the understanding of the national Budget, tabled by Finance Minister Pravin Gordhan this week, is that of him as a juggler, balancing South Africa’s disparate interests.

And he does so expertly: for over a decade, the National Treasury has managed to expand spending while keeping the deficit in check.

At the same time, debt-servicing levels have reduced substantially, opening up fiscal space to fund development.

But still, the juggler’s image fails the imagination for it sets society up as comprising equal interests and that all our political leaders do is mediate those interests.

In a developing country in sway of a progressive government, budgeting must go much deeper than that.

Every year, sadly, the interests of neo-liberal corporate interests or the ideological interests of trade unions set the budget narrative.

So we are occupied by whether exchange controls are being stiffened or loosened (who cares, really, except for businesses wanting to diversify offshore, or the super-rich who have the Julius Malema jitters), or whether pension reforms will allow high earners to squirrel away, tax-free, even more.

On the other side, we write and read rote headlines about Cosatu slamming the allegedly neo-liberal budget.

This union-driven narrative is that of a tight-fisted treasury, which is squeezing the life out of public goods and public servants, and is too enslaved by the inflation target to give a damn.

It’s nonsense, of course.

This government has delivered real increases in education, health and infrastructure for longer than most of us care to remember, and keeping inflation in check is as much a benefit for workers as it is for corporate interests.

And, we never stop to inquire, what exactly the duty is of unionised civil servants (teachers, nurses, clerks, etc) to spend the money well.

Is the Left really Left or is it conservative in that it seeks to maintain the status-quo privileges of an employed elite?
So, I seek a new way of understanding the Budget. Recently, I have read of the “moral budget” – a way of looking at a budget that understands that it must respond to the most marginal and vulnerable citizens for it to meet the requirements of fiscal morality.

It is a profoundly moral document that has increased the funding pocket for all our developmental priorities from education to health and, most importantly, employment.

Never in post-apartheid South Africa have the jobless come to set the tempo of a budget as they do in Budget 2011.

I also want to introduce into my understanding of the Budget the economics of kindness.

To what extent does it strengthen the bonds of solidarity that keep the wolf from so many doors?

Ignore the cacophony who scream “welfare state” and appreciate instead that expanding social grants to well over 15 million people is going to be tremendously difficult to sustain over the medium term. Consider, for example, that there are only 12 million employed people and that almost three quarters of personal income-tax revenues are paid by about three million of those.

But if you tally the social wage, we live in an era of the economics of kindness.

The Budget is not a neutral document in the hands of an expert juggler.

Instead, it is a profoundly political document that symbolises a nation’s priorities and states clearly in whose interests it acts.

Finance Minister Pravin Gordhan’s philosophy is that of progressive pragmatism, so this is not a populist budget as Cosatu will tell you over the next week.

He did not tamper with the inflation target nor did he ride up the deficit to levels demanded by the trade unions, yet he produced a progressive document.

He held firm to the view that a wage subsidy, though vehemently opposed by the unions, is a way for the millions of young people who are locked out of the economy.

As South Africans we cannot, in good conscience, allow an economy of outsiders and insiders to continue.

Unless government is not allowed to bring the outsiders into the tent of prosperity, South Africa’s future is not writ large nor bright.

Cosatu’s critique of the Budget is an insiders’ lobby for self-interests and, in that sense, it is neither kind, moral nor progressive.


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