Pravin Gordhan - a Socialist of Sorts?

2017-02-27 13:44

I must confess to having been disappointed at Pravin Gordhan, our finance minister last week. It had nothing to do with his 2017 budget, which was sound, skillfully presented and as one might expect from him. It was what he said afterwards that concerned me: when he exposed his socialist colours and became less distinguishable from the tripartite hoi polloi – that mediocre and inept herd of parasites with whom he consorts in parliament and the corridors of power.

It also exposed his limitations as an economist.

And since he is by far the best they have - the only one who, out of principle shows the finger to corruption and stands firm against the unfolding economic collapse of South Africa’s parastatal corporations (think SAA, nuclear deals etc) - the prognosis is bleak.

Although Gordhan defended the need to speak to the ratings agencies (Standard & Poor's, Fitch and Moody’s) when he was chastised for eroding national sovereignty by a parliamentary committee, his comments were, to me, concerning. He referred to “a different” way ahead, hinting at economic compromises populist in nature and therefore undoubtedly harmful in the long term.

Talk of “a new economic model that will lead to a different approach to restructuring the economy” is also a warning light that immediately suggests populism, economic vicissitude and flabby goal setting. On the one hand he conceded that low economic growth would “not be helpful in achieving consensus” but on the other failed to address its ultimate causation – the dysfunctional architecture of our job market, trade union power, appalling state education and governing party values.

He makes thing even worse when he says that growth without transformation would only reinforce inequitable patterns of wealth. The smart response to that statement is - “so bloody what”?

Growth is needed for its own sake in order to create jobs and expand opportunities. Only one hidebound by a socialist mindset would address “inequitable patterns of wealth” – which is doubly alarming in the role of someone whose job is to protect the public purse in a nation with the world’s highest level of unemployment (see Economist Magazine).

He continued - “We should be talking about the political economy of the different situations in which we find ourselves and the politics of the day, as you can see in the western part of the world, has a key influence over economic policy choices that countries are making.”

Apart from the unhappy grammar and logic - and assuming he was accurately quoted – there are other factors at work.

His veneer of financial rigour, cultivated over years in the role of finance minister seems to be peeling away as he blurs political agendas with the very different imperatives of a growth economy.

It seems to escape him that equality is a mirage and the Gini Coefficient (that default measure of “inequality”, which he presumably studies) is a ruse. I pointed this out in a previous post, where I suggested that the pursuit of a falling Gini Coefficient can be – as in our case - akin to stealing the family silver whilst pretending normality (see November 2014 post

So Gordhan’s economic acumen is at best questionable and falls sadly short of what the nation really needs. To be fair to him, it is just possible that he is currying favour with the looney left as a precautionary alternative to the Zuma inspired expropriation of the nation’s income sources for own gain. Who can tell?

Gordhan was correct in pointing out that by Britain and the US breaking ranks in the global order (with the Brexit and Trump votes) the rules are different now - but they should in no way effect us.  Of course, globalization – and its concomitant preconditions of free markets, inclusivity, mobility of resources (including labour and intellectual talent) and less rigorous national institutions – has been compromised and a backlash in favour of nationalistic sentiments is both clear and possibly overdue But these setbacks will be costly to implement and unlikely to be sustainable in the long run. After all, globalisation has been unfolding since before the Voyages of Discovery in the 15th and 16th centuries.

It is unlikely to stop now.

Further, to liken our situation to those of advanced nations with high per capita incomes and a surplus of human, intellectual and social capital is misleading and ill advised. The pursuit of equality in our context is a toxic red herring because growth is all important and enlarging the cake is far more important than fighting over crumbs.

Gordhan, of all people should know this.

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