The real summit report

2009-11-21 13:45

THE ANC tripartite alliance, along with the South African National Civic Organisation met at a summit last weekend in Ekurhuleni. The impact of the global economic recession on our own country, the loss of nearly a?million jobs this year, persistent racialised inequality and energy sustainability preoccupied our ­discussions.

The summit also wanted to assess what progress had been made in the implementation of our common, ANC-led April election manifesto and its key priorities, including ­rural development and the transformation of the health and education sectors. The challenges of corruption and of local government were also matters of key concern.

But the reporting on the outcome of the summit in much of the media has often been extremely shallow. “Manuel KOs Cosatu” read one front-page headline. An eminent political commentator disagreed. It was the “left” that had apparently “won”. A second commentator demurred. There was “no policy shift whatsoever”.

For those of us who were there it is hard to recognise the summit we attended in the reports we read.

In fairness to journalists and commentators, in the run-up to the summit some statements from parts of the alliance also helped to muddy the waters. All of this is a great pity.

The key issues discussed at the summit are of importance to all South Africans. They are complex matters. There are not easy answers. It is a discussion for which the alliance is prepared to take a leading responsibility, but it cannot be a discussion we monopolise.

Macroeconomic policy is perhaps the matter around which there has been most confusion. The macro-debate has been with us since at least the unveiling of the Growth, Employment and Redistribution (Gear) macro-policy back in mid-1996.

One of the key problems with Gear was that in line with the dominant global paradigm of the day it focused too much on macroeconomic mathematics to the detriment of the “real” or the productive and service sectors of the economy. This was not accidental.

The prevailing global Anglo-Saxon economic paradigm held that the “real” economy was best left to market forces while governments and central banks had to confine themselves largely to creating investor-friendly macro- conditions. Along with Lehmann Brothers that paradigm has hopefully been blown away in the current global crisis it helped to create.

But already in the early 2000s across the spectrum of the alliance there was a growing awareness that we were neglecting the productive economy. As the reality of persisting crisis levels of unemployment hit home, the ANC at its national general council in 2000, for instance, resolved that “macroeconomic stability was necessary but not sufficient”.

But at that stage microecono­mic policy was dominated by grandiose and misguided arms procurement off-sets and costly vanity projects like the pebble-bed ­modular reactor.

Since that time, and particularly in the last two years, considerable collective progress has been made across the alliance. The progress is well-captured in the declaration of last weekend’s summit, which, among other things, “reaffirmed the commitment to ensuring the vigorous implementation of Nedlac’s framework agreement on South Africa’s response to the global economic crisis”. (Nedlac is the representative and consensus-seeking body acting to reach agreement by negotiation between organised labour, government and business).

The declaration goes on to assert the need “to link our short-term counter-cyclical response with our long-term objectives of transforming the structure of the economy and moving to a different growth path”.

It proceeds to express support for government’s infrastructure investment programme as the “key component of South Africa’s response to the crisis” and calls for an increase in the scale, scope and funding of ­industrial policy.

It is only then, and quite deliberately, that the declaration moves to a brief statement on macroeconomic policy – “the alliance task team on macroeconomic policy must remain seized with reviewing and broadening the mandate of the Reserve Bank”.

In short,we are in agreement across the alliance that the question of macroeconomic policy needs to be aligned with our key microeconomic objectives – in particular, transforming our systemically dysfunctional growth path by placing us on a much more labour-intensive trajectory.

Of course, sober concerns about medium- and longer-term macroeconomic sustainability must always be dynamically factored in. It is not a question of one minister now displacing another minister as “the new economic supremo”. It is a question of fostering a collegial and coherent alignment and strategic discipline across all line departments and other state entities, including the parastatals.

So when the alliance task team on macro-economic policy pursues its work as mandated by the summit it will be informed by several important points of summit consensus.

Firstly, it needs to align its macro-considerations with our infrastructure construction and industrial policy priorities. Secondly, there needs to be a sense of urgency. Thirdly, there is a broad consensus extending far beyond the alliance that the rand is overvalued. But how should or can government actually intervene to correct this?

Fourthly, the task team must assess the current inflation targeting policy mandate of the Reserve Bank. No one at the summit argued that we can simply ignore the dangers of inflation. But is the current target band too restrictive? Or is inflation-targeting itself a problem? Shouldn’t the bank take other critical indicators like employment as key mandates?

And, finally, as it proceeds with its urgent work hopefully the task team and the media will appreciate that the challenges we all face cannot be pigeonholed simplistically into imaginary “lefts” and “rights” or characterised as boxing matches between personalities. 

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