Economy in crisis

2017-09-21 06:00

THERE have recently been numerous calls, from a particularly wide spectrum of voices, calling for an entirely different overhaul of the economy. Whether you call it radical economic transformation or just simply a new plan to resolve joblessness and poverty, what many commentators are calling for now is an entirely different economic model to be introduced.

What these voices of nearly all political persuasions have in common is a view that the current economic policies, even excluding the government’s and ANC’s own goals, are no longer sufficient to generate the wealth that is required to address poverty and unemployment.

One such commentary was from the Pietermaritzbur­g Agency for Community Social Action (Pacsa), which said last week that “the paralysis and denial of the economic crisis must stop. The crisis is untenable”.

Commenting on Statistics SA data that shows that 9,3 million people are unemployed, Pacsa said: “We are not just failing to create jobs, we are actually shedding jobs in these, the most productive sectors of our labour force (people aged 25 years to 44 years). Our economic crisis is deepe-ning.

“We have to find a different economic framework that has the possibility to pay all workers a living wage ..., but which would also stimulate greater local economic activity,” Pacsa wrote.

Some of its proposed interventions include dismantling structural and racial wage inequality, capping and pushing down maximum wage levels, increasing social grants and creating a broader social security network.

Also recently, this newspaper was privy to an off-the-record analysis by an international lender that showed that the much-vaunted National Development Plan (NDP), the cornerstone of government economic planning that was introduced in 2012, even if fully implemented from now, would not be able to meet its targets of cutting poverty, unemployment and inequality by 2030.

This is because of the little progress made on the NDP so far, and the really anaemic growth since then. It is another clear, if not more objective, indication that our economy is simply not working.

On-campaign presidential hopeful Nkosazana Dlamini-Zuma also said last week that maintaining the status quo in the economy will lead to instability.

She has backed radical economic transformation, the left-leaning economic rhetoric being championed by her former husband, throughout her campaign, even though nobody can quite define what these words actually mean yet.

Another voice calling for massive economic change recently was Moeletsi Mbeki, author and well-known political economist, who spoke at the KZN Lean Conference in Hilton last week.

One of his most interesting remarks, I felt, and one which I believe the Democratic Alliance should pay some heed to in its campaign to remove President Jacob Zuma, is that even if you do remove corrupt ANC government leaders, the party’s policies will not change — we will simply have new ANC leaders doing the same things in government.

There is no way to change the current economic trajectory of the country without voting out the ANC. This means we can expect the economy to remain weak until at least 2019, when the next general election will take place.

The only other party that has proposed some form of alternative economic policies that might be acceptable to investors and voters, and which might persuade the private sector to increase its investment in South Africa, is the DA.

The DA policy proposals, as taken from its website, include better fiscal management, boosting tourism, making it much easier to create and run small businesses, greater labour-market flexibility and addressing government economic policy uncertainty.

But while these all sound like great ideas that are in line with my own market economy biases, I am not sure they will be enough to boost economic growth substantially in 2020, or in the years thereafter, to start making a dent in poverty and unemployment.

It is already unaffordable for most unemployed people to take transport to an urban area to look for a job. Do we have until 2020 to wait for change?

For me, it is still incredibly strange to encounter senior-ranking government employees who talk about the notion of making a profit as if it were the embodiment of all evil. What has become clear is that debating politically outmoded strategies such as outright control of the productive sectors, or unbridled capitalism, is a waste of everybody’s time.

We no longer have the luxury of long fireside chats by ageing revolutionaries.

The ship is sinking. It is an emergency. All efforts need to be focused on creating sustainable work for more people, fast.

This can only happen by making it easier for companies to provide that work, and for companies to be able to make a decent profit for doing so, so that they keep growing and creating more jobs.

Also, when the government does finally take some investment-friendly steps, business leaders need to be able to shed past prejudices and negative views about investing here. It is in these circumstances that the profit motive becomes the big enabler.

In the meantime, an apolitical, technical team needs to be formed to ascertain, in a few months, what is working in the world of fast-growing economies right now, and how this can be adapted and copied in this country.

Then we implement those policies, without fear or favour, right here, right now.

• Edward West is the business editor at The Witness.


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