Note: This article appeared as an Op Ed in Business Day in Jan 2011. Has anything changed as we await his State of the Nation Address in 2012?
"President Zuma's Vision 2011: The Good, the Bad, and the Ugly"
Speaking to the ANC faithful at Polokwane, President Jacob Zuma this weekend articulated in surprising detail the latest thinking about economic growth and jobs at the highest levels of the ANC Alliance. "It's all about jobs" was his mantra, not surprisingly after the SA economy shed a million of them over the last eighteen months. Our 40 % unemployment rate in the US would have put Palin into power and Obama into retirement forever. This time the President wisely avoided making a fool of himself again by promising 500 000 new jobs, as he has done in the past. Now everyone is on board that it is jobs, jobs, jobs. The question of course, is how?
Since the ANC has been in power for seventeen years now, this acknowledgement is a small step towards reality for most ordinary South Africans. That is good. Indeed, there is much in Zuma's speech that builds on Ebrahim Patel's New Growth Path and should not be dismissed out of hand by critics of the ANC, for all its manifold flaws. There is some good; but there are still many bad ideas, and a few truly rotten ones – the good, the bad, and the ugly.
The good. Zuma rightly foregrounds two of the key sectors if the economy that have the greatest potential to create lower skilled jobs, where we have an oversupply of labour- mining and agriculture. The problem is the contradictions between this and actual policies around land redistribution and mining ownership, which Zuma foes not address.
But he can be pragmatic as well. Thus Zuma supports the concept of the unaffordable National Health Insurance (NHI) ideal, but deftly avoids committing to a time scale. He says out loud what we all know – that chronic school underperformance lies predominantly in the hands of teachers' performance or lack thereof at SADTU -controlled schools. But he gives us no guidance on how this will be resolved.
Zuma also resurrects the idea of artisanships, sacrificed at great economic costs at the altar of ANC ideology a decade ago for the wasteful SETAs – which thankfully do not get a mention in this speech. He records the real achievements of the ANC in the provision of housing, water and electricity. Fair enough. He links social grants to developmental requirements, rather than the ANC left's vision of a perpetually dependent, and therefore pliant citizenry. And, perhaps most important of all, the President stresses the need for a new "Pact" between labour, business and government on the economy. This gap should be seized with vigour and rapidly built upon, going well beyond the outworn Nedlac model, if only to get the ANC to accept that you will not have higher levels of economic growth solely by giving in to the demands of one section of stakeholders alone, in this case the labour aristocracy represented by COSATU and the SACP. Let's remember that these two interest groups ( and that is all they are) together represent in membership terms less than 10% of South Africa's population, yet exercise a veto on economic policy within the Alliance.
The bad. Zuma (and many of his Cabinet colleagues) use the undoubted success of the World Cup last year as a repudiation of the complaints that the State in South Africa, far from being developmental is merely incompetent. His argument does not hold water. The State is failing South Africans on a daily basis and we all know it.
In addition, the ANC still wants to have its cake and eat it. They want cadre deployment, but they want effective government. Our experience has shown that from the SABC to SAA it's one or the other, not both. As for the central role of the parastatals, who thinks Eskom, Transnet and Telkom have been doing a fabulous job? There is also no distinction between core and non core activities. So what we get is job sacrificing situations where our coal mines cannot take advantage of the current global shortfall caused by the Australian floods because the state monopoly on railways is still not up to the job -after seventeen years. We missed the whole commodities boom of the last decade because if this, but we don't seem to be seized with any urgency to address it. So here's a case (amongst many) where the State is actively destroying potential jobs. Not to mention the fact that when our apples and coals do reach the ports, they get stuck because of the massive incompetence of the state owned ports authorities and their highly unionised workers, which make SA ports simultaneously among the most inefficient and the most expensive in the world. That too destroys jobs
Also disturbing is what is not said in Zuma's speech. As a leader, his is the responsibility to give guidance on the realities of the world we live in. Yet his acknowledgement of the central role the private sector and the market, however constrained, plays in any economy anywhere in the modern world (even in "market-Leninist " China) is muted. Throughout Zuma's speech remains the deep suspicion of the market in general and of the job creating potential of the private sector in particular– especially when it comes to sustainable jobs – is less than enthusiastic. And the real potential of SMMEs in this equation gets hardly a mention. Nowhere is the ANCs failure to make the transformation from liberation movement to political party more clearly illustrated than in this ambivalence.
The ugly. The ugly parts of Zuma's speech almost always have two ingredients – an overdose of leftist ideology.
As for ideology, what is disturbing in Zuma's speech is the lack of emphases on export led growth – which is powering the economies of both China and Germany as to many to list here. Also of concern is the sinister emphasis towards the end of his speech reflecting the national liberation movement thinking of ANC hardliners on intellectual hegemony and the shutting down of alternative voices in our young democracy? This is what lies behind the media tribunal threats and, in Gauteng, the closing down of freedom of speech even within the Legislature.
It is not true that South Africa supports international best practice on human rights, as Zuma declares. Not with the example of Mugabe on our doorsteps, not with the blind eye we show to Cuba's long term political prisoners. And, in the case of Zimbabwe, there is a real cost which can be measured in terms of real jobs forfeited through the descent into savagery in that country. Zimbabwe used to be an important market for SA goods. No more. That costs thousands of "decent "jobs. All in the name of ideology. You really can't have your cake and eat it, Mr President.
Gavin Lewis is a DA MPL in the Gauteng Legislature.
Monday, January 30, 2012
Thursday, January 19, 2012
The Open Society and Economic Growth
INNOVATION, FREEDOM AND ECONOMIC GROWTH
"I'm in a battle against any system that tries to limit our imagination." This is what China's leading artist, Ai Weiwei told the world media as he was placed under house arrest this month. His wisdom has implications that extend far beyond the arts. In fact, the evidence is mounting that such limits have a real economic cost as well. For the emerging giant that is China the mindset behind Weiwei's persecution may have a cost in economic development that allows the US, with all its current travails, to retain its lead in the global stakes in the longer run.
It turns out that personal freedoms like those guaranteed in South Africa's Constitution it turns may in fact be an essential requirement for higher levels of economic growth in strategic high potential, knowledge-based industries in the future. For a South African government enraptured by uncritical Chinese investors, there is a lesson here that they will miss at their own political and economic peril.
Limits on a free media, censorship of the arts, or prohibitions on the free flow of information, all features of current government policies now under debate in South Africa, could fatally undermine the proposed New Growth Path. This is precisely because of their negative impact on innovation in the industrial sector. The enemy of innovation is not only a shortage of maths and science graduates, but a closed off mind. The closed mind costs jobs. It is as simple as that.
Innovation matters to all economies in the twentieth first century, even North Korea's vestigial one. Whether in Beijing, Boston or Brussels, innovation is a core component of global competitiveness. It is a feature of Minister of Economic Development Ebrahim Patel's new policy proposals.
The South African government already recognises this. The emphasis it places on our nascent space strategy, the various industrial incentives now and in the past, and the work of the Department of Science and Technology (DST) and state agencies such as the Council for Scientific and Industrial (CSIR) underscore the awareness of the importance of applied innovation to productivity leaps and to economic growth. Government worries about Research and Development (R&D) expenditure, a key performance indicator for innovation in industry (it's at R21 billion a year here, or 0.92% of GDP, and should be at least double that- as Patel points out). Recently government launched another initiative in this direction, the Technology Innovation Agency (TIA), with R410 million in state funding to back innovators with commercially viable ideas, under the auspices of the DST.
As noted historian Prof Niall Ferguson of The Ascent of Money fame recently reminded us ( FT. blogspot.com), entrepreneur-driven innovation is what sparked the Industrial Revolution of the twentieth century have had a similar origin and effect. Economic ingenuity, Ferguson concludes, is at the heart of rising living standards and economic growth, both then and now.
Nobel Prize winner and economist Robert Solow comes to similar conclusions about the impact of radical, or "transformative", innovation on economic growth, wealth creation and new jobs. Indeed, examples of radical innovations are all around us, many spawning entirely undreamt of industries of their own. The Internet, eBay, Google, Facebook, Twitter, genetic sequencing, cell phones, nanotech, and iPods are all examples of innovation at work. A whole new vocabulary is being written as these products and analytic tools are snapped up by eager consumers around the world. But not one of them has emerged from a closed society.
Which Chinese innovations of the last twenty years have grabbed global branding attention, for instance? The question answers itself. Open societies, it emerges , have an economic value that creates entirely new industries employing hundreds of thousands, even millions of people worldwide, in jobs people just a few years previously had no earlier conception of . Just think of the diversity of jobs created directly and indirectly by the cell phone industry, for instance. They all, in various ways, have contributed to rising standards of living, despite complaints of information overload. And in an era acutely aware of limited natural resources, there is no resource as infinitely renewable as innovation, the product of the open, freed and ever- curious human mind.
Countries such as South Korea and Singapore, two of the favoured Far East "dragons" so admired until very recently for their rapid growth rates, have become increasingly aware of this emerging constraint on their own growth prospects into the future. In Singapore, for instance, questions are being asked at the highest level why in a country with some of the best science and maths school outcomes in the world, far superior to the products of United States (US) schooling, the rate of innovation is so much lower than in the US. A simple examination of the number of internationally recognised patent rated by country bears out the truth of the observation. The US currently files six times the number of international patents the Chinese do. It also adds the further irony that while it might seem clever to produce cheap knock off copies of the inventions of other societies, in the long run this path is a dead end. Moreover, another feature of free societies, the rule of law, emerges as a vital component of innovation in industry, because it protects patent rights.
There is another problem, and it is specific to formerly colonised societies that impede innovation. It is perhaps best summarised in Prof David Landes' seminal work, The Wealth and Poverty of Nations. There he argues that "nothing is more dilutive to drive and innovation than a sense of entitlement...which fatally erodes ' the need to learn and do'". Combine that with steps towards a more closed society and all the good intentions of the technocrats are undone. We have indeed met the enemy, and he is us, as Pogo said.
From an entirely different angle, that of Arab societies comes another indicator of the link between intellectual and artistic freedoms in democracies and innovation in industry. A United Nations Development Programme (UNDP) study ("The Arab Knowledge Report", UNDP, Oct.2009) reinforces the argument. Stating that knowledge, freedom and development are inextricably interlinked, the Report attributes the poor economic development indices of many Arab societies to the absence of democracy in those countries. It states that "freedom of thought, expression and political participation are primary components of the enabling environment that contribute to the enhancement of knowledge performance" and higher levels of economic growth.
Which way will South Africa move in the next few years? In the direction of authoritarian state capitalism or that advocated by the UNDP? Whatever is ultimately decided a move towards closing off freedoms and access to information will have economic costs in terms of growth and jobs forfeited in the future.
It is interesting in this regard that other African countries are eclipsing South Africa in terms of the free flow of information. While an ineffectual ICASA attempts the Solomonic and interminable task of adjudication between rival elites claiming preferential access to the right to supply information, Kenya has this year ensured affordable access for its citizens to the global broadband network. This brings connectivity, television and voice communication to its citizens in a public private partnership that will help create the enabling environment for innovation in that country. It is something South Africa is apparently unable or unwilling to do. We will pay the price.
(Note: This article appeared as a Business Day op ed, 27/1/11)
"I'm in a battle against any system that tries to limit our imagination." This is what China's leading artist, Ai Weiwei told the world media as he was placed under house arrest this month. His wisdom has implications that extend far beyond the arts. In fact, the evidence is mounting that such limits have a real economic cost as well. For the emerging giant that is China the mindset behind Weiwei's persecution may have a cost in economic development that allows the US, with all its current travails, to retain its lead in the global stakes in the longer run.
It turns out that personal freedoms like those guaranteed in South Africa's Constitution it turns may in fact be an essential requirement for higher levels of economic growth in strategic high potential, knowledge-based industries in the future. For a South African government enraptured by uncritical Chinese investors, there is a lesson here that they will miss at their own political and economic peril.
Limits on a free media, censorship of the arts, or prohibitions on the free flow of information, all features of current government policies now under debate in South Africa, could fatally undermine the proposed New Growth Path. This is precisely because of their negative impact on innovation in the industrial sector. The enemy of innovation is not only a shortage of maths and science graduates, but a closed off mind. The closed mind costs jobs. It is as simple as that.
Innovation matters to all economies in the twentieth first century, even North Korea's vestigial one. Whether in Beijing, Boston or Brussels, innovation is a core component of global competitiveness. It is a feature of Minister of Economic Development Ebrahim Patel's new policy proposals.
The South African government already recognises this. The emphasis it places on our nascent space strategy, the various industrial incentives now and in the past, and the work of the Department of Science and Technology (DST) and state agencies such as the Council for Scientific and Industrial (CSIR) underscore the awareness of the importance of applied innovation to productivity leaps and to economic growth. Government worries about Research and Development (R&D) expenditure, a key performance indicator for innovation in industry (it's at R21 billion a year here, or 0.92% of GDP, and should be at least double that- as Patel points out). Recently government launched another initiative in this direction, the Technology Innovation Agency (TIA), with R410 million in state funding to back innovators with commercially viable ideas, under the auspices of the DST.
As noted historian Prof Niall Ferguson of The Ascent of Money fame recently reminded us ( FT. blogspot.com), entrepreneur-driven innovation is what sparked the Industrial Revolution of the twentieth century have had a similar origin and effect. Economic ingenuity, Ferguson concludes, is at the heart of rising living standards and economic growth, both then and now.
Nobel Prize winner and economist Robert Solow comes to similar conclusions about the impact of radical, or "transformative", innovation on economic growth, wealth creation and new jobs. Indeed, examples of radical innovations are all around us, many spawning entirely undreamt of industries of their own. The Internet, eBay, Google, Facebook, Twitter, genetic sequencing, cell phones, nanotech, and iPods are all examples of innovation at work. A whole new vocabulary is being written as these products and analytic tools are snapped up by eager consumers around the world. But not one of them has emerged from a closed society.
Which Chinese innovations of the last twenty years have grabbed global branding attention, for instance? The question answers itself. Open societies, it emerges , have an economic value that creates entirely new industries employing hundreds of thousands, even millions of people worldwide, in jobs people just a few years previously had no earlier conception of . Just think of the diversity of jobs created directly and indirectly by the cell phone industry, for instance. They all, in various ways, have contributed to rising standards of living, despite complaints of information overload. And in an era acutely aware of limited natural resources, there is no resource as infinitely renewable as innovation, the product of the open, freed and ever- curious human mind.
Countries such as South Korea and Singapore, two of the favoured Far East "dragons" so admired until very recently for their rapid growth rates, have become increasingly aware of this emerging constraint on their own growth prospects into the future. In Singapore, for instance, questions are being asked at the highest level why in a country with some of the best science and maths school outcomes in the world, far superior to the products of United States (US) schooling, the rate of innovation is so much lower than in the US. A simple examination of the number of internationally recognised patent rated by country bears out the truth of the observation. The US currently files six times the number of international patents the Chinese do. It also adds the further irony that while it might seem clever to produce cheap knock off copies of the inventions of other societies, in the long run this path is a dead end. Moreover, another feature of free societies, the rule of law, emerges as a vital component of innovation in industry, because it protects patent rights.
There is another problem, and it is specific to formerly colonised societies that impede innovation. It is perhaps best summarised in Prof David Landes' seminal work, The Wealth and Poverty of Nations. There he argues that "nothing is more dilutive to drive and innovation than a sense of entitlement...which fatally erodes ' the need to learn and do'". Combine that with steps towards a more closed society and all the good intentions of the technocrats are undone. We have indeed met the enemy, and he is us, as Pogo said.
From an entirely different angle, that of Arab societies comes another indicator of the link between intellectual and artistic freedoms in democracies and innovation in industry. A United Nations Development Programme (UNDP) study ("The Arab Knowledge Report", UNDP, Oct.2009) reinforces the argument. Stating that knowledge, freedom and development are inextricably interlinked, the Report attributes the poor economic development indices of many Arab societies to the absence of democracy in those countries. It states that "freedom of thought, expression and political participation are primary components of the enabling environment that contribute to the enhancement of knowledge performance" and higher levels of economic growth.
Which way will South Africa move in the next few years? In the direction of authoritarian state capitalism or that advocated by the UNDP? Whatever is ultimately decided a move towards closing off freedoms and access to information will have economic costs in terms of growth and jobs forfeited in the future.
It is interesting in this regard that other African countries are eclipsing South Africa in terms of the free flow of information. While an ineffectual ICASA attempts the Solomonic and interminable task of adjudication between rival elites claiming preferential access to the right to supply information, Kenya has this year ensured affordable access for its citizens to the global broadband network. This brings connectivity, television and voice communication to its citizens in a public private partnership that will help create the enabling environment for innovation in that country. It is something South Africa is apparently unable or unwilling to do. We will pay the price.
(Note: This article appeared as a Business Day op ed, 27/1/11)
Tuesday, January 17, 2012
Why the DA Rules in Midvaal
LOCAL ECONOMIC DEVELOPMENT AND THE MIDVAAL MODEL
By Tim Nast and Gavin Lewis.
We are not doing the right things to make Gauteng grow to its full potential. Yet much of what is so urgently needed is not complicated, does not require costly five year plans, or even much more money. Nowhere is this more apparent than in the sphere of local; government.
Local economic development (LED) lies at the heart of the effective functioning of the local government sphere. Without the additional resources that arise from LED there is little room for local development. In turn this undermines the sustainability of a healthy, developmental sphere of government, whose success or failure most immediately affects the lives of ordinary South African.
The problem we currently face, and which helps account for the epidemic of local government breakdowns across South Africa, is the bald fact that LED is failing disastrously.
The reasons for this failure are not hard to find. They include the creation of unrealistic expectations about what LED can provide, a preference for quick wins that forgo sustainability in favour of one off distributions of goods and materials to a favoured few in a favoured location. It results in projects ( from bead-making and other crafts to hydroponics experiments) that peter out after a few months. It creates the idea that ward councillors are dispensers of patronage and jobs (albeit temporary) for those in the community that support them. And it creates a "quick fix" mentality that is at odds with the longer term vision that underlies sustainability.
This is why we have Multi-Purpose Centres that often stand largely unused.. This is why farming coops are set up without any thought as to who will buy those products, and at what price. After a few months the taps are stolen, as are the wheelbarrows and spades. This provides (very expensively) a one off cash boost to those that appropriate it - but no sustainable development. The day the government turns off the spigot, the project collapses.
Experience shows that real LED, by contrast, only occurs in South Africa when it is private sector driven. The truth is that government cannot create "decent" jobs, as government itself concedes. The Expanded Public Works Programme is not a sustainable development initiative leading to decent jobs. It is a charitable handout. EPWP (or its variants) have a role to play. But they must be understood for what they are .
This is not to say that there is no role for government in LED. LED has an essential part to play in local government, if this important sphere of delivery directly to the citizens is to be sustainable at all. The fact that so many local authorities are in a crisis because they are not sustainable under current constraints should bring no comfort to anyone. And since LED is not something that automatically happens in isolation, clearly there must be ways of using local resources to extract maximum local benefit.
What then can be done?
The experience of the Midvaal municipality, the only one in Gauteng province governed by the DA, contains some constructive practical examples of both the limits and the real possibilities of LED. In brief, there are three Commandments : 1.Get the basics right and working. 2. Slash all unnecessary expenditures on "nice to haves". 3.Keep your town neat and tidy and safe.
Expanding on this, In Midvaal local government sees its role in LED as the following;
1. Efficient service delivery, driven by capable employees.
2. Recirculating the local rand spend locally as far as is sensible, by requiring municipal contractors to purchase from local suppliers and use local labour,(bearing in mind cost constraints).
3. Build into performance management targets for municipal staff requirements for the employment of local low and unskilled local labour wherever feasible.
4. Procure locally where possible (e.g. plumbing supplies, electrical goods).
5. Require banks that wish to do business with the municipality to have at least a branch (not just an ATM) in that municipality, employing people that spend locally and making for business convenience.
6. Outsource non-essential services to local private sector SMMEs and coops (e.g. laundry, catering).
7. Keep the town a place where people – and investors- want to live in it and raise their families there.
What local government cannot promise is to create sustainable ""decent work ". For the rest, it is as simple, and as difficult, as getting the basics right.
Things such as water and electricity supply are also important, but much of this is beyond the control of a single municipality, falling to the Province instead. Province wide to maintain and extend infrastructure shifts extra uncosted burdens onto municipalities that do their maintenance, so that (for example) sewerage gets diverted from other areas less well governed, overstraining the few functioning systems. In Gauteng the provincial authorities are in a permanent cash flow crisis, and late payments destroy struggling SMME start-ups, and undermine municipal viability when running larger capital projects. All these constraints inhibit further development in the sub region, because new projects require services that are either collapsing or nonexistent – such as sewerage. And at the local government level, the small things that do make a difference – [proper signage for tourists, traffic lights that work, regularly resurfaced roads, electricity substations that do not constantly teeter on the verge of explosion, replacing transformers that have long passed their sell buy date, leading to regular blackouts and shutdowns) – all are neglected in favour on non essential "nice-to-haves", such as marketing and tourism promotion , overseas travel, and national pavilions.
As a direct result, starting with LED at the bottom, every years the Gauteng Provincial government's own statistics show that this province, still the" engine of Africa" in our promotional brochures, is steadily falling behind the growth rates of provinces such as the Western Cape. At current rates, in a few years it will be Lagos, not Johannesburg, which will be the economic engine of Africa, followed closely by Cairo. The "engine of Africa" boast will go the same way the claim ( until recently ) that we had "the cheapest electricity in the world".
As for investment, it is the quality of local government services can in fact make all the difference. In 2009-2010 one of the biggest foreign investments attracted to South Africa was the new, greenfields Heineken factory. A R 3.5 billion investment, it is now creating 2 500 construction jobs, 220 permanent direct jobs, and over 200 local indirect jobs ( all "decent jobs") , Heineken had a choice of locating next to a major Metro, or Midvaal. They chose Midvaal. Why?
1. The Midvaal executive made themselves available to the Heineken executive on their private lines 24/7 to deal immediately with any problems that arose. The Metro did not.
2. The (multi-party) Midvaal Council was prepared to delegate to the mayoral committee to meet at 24 hours notice at any place convenient to Heineken to resolve urgent concerns. The Metro was not.
3. Midvaal made sure that all the nitty gritty issues, such as rezoning, were speedily addressed and resolved to deadline, working the system to achieve the outcomes needed, and not simply referring people back to "the rules. For Midvaal, the priority was the investment, not the convenience of municipal officials or the sanctity of the rule book and a 9-5 working day.
4. For Heineken, all they needed from Midvaal in terms of investment support (on which the Gauteng province otherwise spends millions) was accurate data suited to their businesses needs, as defined by themselves.
5. Heineken now has a direct line to the Major and the Municipal Manager.
6. Midvaal was able to make decisions quickly. The Metro demanded three months notice, and could in any case be overruled by the provincial ANC leadership. Midvaal, admittedly a smaller municipality, needs 24 hours. Midvaal deals with rezoning applications within 6 months. The Metro takes up to three years.
In return for this no frills common sense approach. Midvaal was rewarded with nearly 3000 decent sustainable jobs. This is a LED success story, creating a better life for all its citizens.
As a result, when the Gauteng City Region Observatory recently produced a quality of life survey of all Gauteng municipalities, it showed, amidst considerable publicity, that Midvaal was the only municipality in the entire Province where the majority of the inhabitants, black and white South Africans together, were happy with the standard of local government services. It is not rocket science.
( Tim Nast is DA Mayor of Midvaal. Gavin Lewis is a DA MPL and a development analyst.)
( Note; This article first appeared in Business Day, 22/7/10. The DA retained Midvaal in the 2011 elections).
By Tim Nast and Gavin Lewis.
We are not doing the right things to make Gauteng grow to its full potential. Yet much of what is so urgently needed is not complicated, does not require costly five year plans, or even much more money. Nowhere is this more apparent than in the sphere of local; government.
Local economic development (LED) lies at the heart of the effective functioning of the local government sphere. Without the additional resources that arise from LED there is little room for local development. In turn this undermines the sustainability of a healthy, developmental sphere of government, whose success or failure most immediately affects the lives of ordinary South African.
The problem we currently face, and which helps account for the epidemic of local government breakdowns across South Africa, is the bald fact that LED is failing disastrously.
The reasons for this failure are not hard to find. They include the creation of unrealistic expectations about what LED can provide, a preference for quick wins that forgo sustainability in favour of one off distributions of goods and materials to a favoured few in a favoured location. It results in projects ( from bead-making and other crafts to hydroponics experiments) that peter out after a few months. It creates the idea that ward councillors are dispensers of patronage and jobs (albeit temporary) for those in the community that support them. And it creates a "quick fix" mentality that is at odds with the longer term vision that underlies sustainability.
This is why we have Multi-Purpose Centres that often stand largely unused.. This is why farming coops are set up without any thought as to who will buy those products, and at what price. After a few months the taps are stolen, as are the wheelbarrows and spades. This provides (very expensively) a one off cash boost to those that appropriate it - but no sustainable development. The day the government turns off the spigot, the project collapses.
Experience shows that real LED, by contrast, only occurs in South Africa when it is private sector driven. The truth is that government cannot create "decent" jobs, as government itself concedes. The Expanded Public Works Programme is not a sustainable development initiative leading to decent jobs. It is a charitable handout. EPWP (or its variants) have a role to play. But they must be understood for what they are .
This is not to say that there is no role for government in LED. LED has an essential part to play in local government, if this important sphere of delivery directly to the citizens is to be sustainable at all. The fact that so many local authorities are in a crisis because they are not sustainable under current constraints should bring no comfort to anyone. And since LED is not something that automatically happens in isolation, clearly there must be ways of using local resources to extract maximum local benefit.
What then can be done?
The experience of the Midvaal municipality, the only one in Gauteng province governed by the DA, contains some constructive practical examples of both the limits and the real possibilities of LED. In brief, there are three Commandments : 1.Get the basics right and working. 2. Slash all unnecessary expenditures on "nice to haves". 3.Keep your town neat and tidy and safe.
Expanding on this, In Midvaal local government sees its role in LED as the following;
1. Efficient service delivery, driven by capable employees.
2. Recirculating the local rand spend locally as far as is sensible, by requiring municipal contractors to purchase from local suppliers and use local labour,(bearing in mind cost constraints).
3. Build into performance management targets for municipal staff requirements for the employment of local low and unskilled local labour wherever feasible.
4. Procure locally where possible (e.g. plumbing supplies, electrical goods).
5. Require banks that wish to do business with the municipality to have at least a branch (not just an ATM) in that municipality, employing people that spend locally and making for business convenience.
6. Outsource non-essential services to local private sector SMMEs and coops (e.g. laundry, catering).
7. Keep the town a place where people – and investors- want to live in it and raise their families there.
What local government cannot promise is to create sustainable ""decent work ". For the rest, it is as simple, and as difficult, as getting the basics right.
Things such as water and electricity supply are also important, but much of this is beyond the control of a single municipality, falling to the Province instead. Province wide to maintain and extend infrastructure shifts extra uncosted burdens onto municipalities that do their maintenance, so that (for example) sewerage gets diverted from other areas less well governed, overstraining the few functioning systems. In Gauteng the provincial authorities are in a permanent cash flow crisis, and late payments destroy struggling SMME start-ups, and undermine municipal viability when running larger capital projects. All these constraints inhibit further development in the sub region, because new projects require services that are either collapsing or nonexistent – such as sewerage. And at the local government level, the small things that do make a difference – [proper signage for tourists, traffic lights that work, regularly resurfaced roads, electricity substations that do not constantly teeter on the verge of explosion, replacing transformers that have long passed their sell buy date, leading to regular blackouts and shutdowns) – all are neglected in favour on non essential "nice-to-haves", such as marketing and tourism promotion , overseas travel, and national pavilions.
As a direct result, starting with LED at the bottom, every years the Gauteng Provincial government's own statistics show that this province, still the" engine of Africa" in our promotional brochures, is steadily falling behind the growth rates of provinces such as the Western Cape. At current rates, in a few years it will be Lagos, not Johannesburg, which will be the economic engine of Africa, followed closely by Cairo. The "engine of Africa" boast will go the same way the claim ( until recently ) that we had "the cheapest electricity in the world".
As for investment, it is the quality of local government services can in fact make all the difference. In 2009-2010 one of the biggest foreign investments attracted to South Africa was the new, greenfields Heineken factory. A R 3.5 billion investment, it is now creating 2 500 construction jobs, 220 permanent direct jobs, and over 200 local indirect jobs ( all "decent jobs") , Heineken had a choice of locating next to a major Metro, or Midvaal. They chose Midvaal. Why?
1. The Midvaal executive made themselves available to the Heineken executive on their private lines 24/7 to deal immediately with any problems that arose. The Metro did not.
2. The (multi-party) Midvaal Council was prepared to delegate to the mayoral committee to meet at 24 hours notice at any place convenient to Heineken to resolve urgent concerns. The Metro was not.
3. Midvaal made sure that all the nitty gritty issues, such as rezoning, were speedily addressed and resolved to deadline, working the system to achieve the outcomes needed, and not simply referring people back to "the rules. For Midvaal, the priority was the investment, not the convenience of municipal officials or the sanctity of the rule book and a 9-5 working day.
4. For Heineken, all they needed from Midvaal in terms of investment support (on which the Gauteng province otherwise spends millions) was accurate data suited to their businesses needs, as defined by themselves.
5. Heineken now has a direct line to the Major and the Municipal Manager.
6. Midvaal was able to make decisions quickly. The Metro demanded three months notice, and could in any case be overruled by the provincial ANC leadership. Midvaal, admittedly a smaller municipality, needs 24 hours. Midvaal deals with rezoning applications within 6 months. The Metro takes up to three years.
In return for this no frills common sense approach. Midvaal was rewarded with nearly 3000 decent sustainable jobs. This is a LED success story, creating a better life for all its citizens.
As a result, when the Gauteng City Region Observatory recently produced a quality of life survey of all Gauteng municipalities, it showed, amidst considerable publicity, that Midvaal was the only municipality in the entire Province where the majority of the inhabitants, black and white South Africans together, were happy with the standard of local government services. It is not rocket science.
( Tim Nast is DA Mayor of Midvaal. Gavin Lewis is a DA MPL and a development analyst.)
( Note; This article first appeared in Business Day, 22/7/10. The DA retained Midvaal in the 2011 elections).
Monday, January 2, 2012
Populism:Dead-End Politics
(Note: in 2011 the ANC Youth extolled Venezuela as one of the model states SA should aspire to.Should we copy it ? )
Africa's Venezuela? Populism in South Africa
By Gavin Lewis
It was the former Minister of Public Enterprises, Barbara Hogan, who in late 2010 verbalised the fears of some regarding rising populist rhetoric within the ANC. Without moral leadership the alliance, Hogan said, faced a real danger from authoritarian populism and that this was something that we should be very worried about.
Indeed, the ANC Youth League has earmarked the leading advocate of populism in the modern world, Hugo Chavez's Venezuela, as one of its role models for the future of this country. And there is much in the rhetoric around the will of the people and about nationalisation uttered by media-hungry Julius Malema to remind listeners of the key elements of populist ideology. Because Malema is usually a mouthpiece for other factions within the ANC, such fears have some merit.
Populism differs in detail from country to country, but has at its core certain common emphases. First, it calls for a radical redistribution of resources to "the people". It is the politics of the crowd, mobilised with emotive rhetoric to intimidate adversaries. Second, it champions a charismatic leader who epitomises the "will of the people" and leads the movement. Third, it venerates the state as omniscient, omnipotent and always benevolent. Fourth, it needs a hated "other" to thrive – whether George Bush, US imperialism or globalisation, and it often calls on a mythical glorious history to obscure its contradictions (Bolivar).
This heroic narrative enables the populist leader and his followers to hide or even justify the long term pain that the short term gain of this political philosophy inflects on the very people it was supposed to benefit. It is aggressively working class in tone and contemptuous of the market and orthodox fiscal and monetary disciplines. It also assumes a single national identity and a single will of the people, embodied in the leadership. Therefore any criticism of and opposition to the Leader is regarded as morally depraved and all means to eradicate it are justified as rooting out treason ( similar to North Korea).
Latin American has the longest and most instructive history of populism in power. Most famously, populism received its fullest expression in the Argentina of the Peronist era, with Evita Peron as its emblematic figurehead. It lives on in Bolivia, in vestigial form in Argentina, and of course in Venezuela, and affects politics in the entire sub-continent.
As for populist economics, they impoverish the very people they are said to serve, and the only real beneficiaries are the new elites . Venezuela is instructive in this regard. Despite being a petro-state in an era of high energy prices, Chavez's interventions have not led to higher levels of economic growth – although they have succeeded in lifting many urban people out of absolute poverty through increased social grants. Populism thrives on dependency.
But there is a cost. Venezuela now has an inflation rate of 30% and rising, its oil production under state control has declined by a third, foreign investment has gone, the Venezuelan currency has devalued considerably and the economy has contracted nearly 6% over the last two years. These are direct consequences of simplistic, reckless economic policies. As Prof Francisco Rodriguez, a former ally of Chavez wryly points out, Chavez has achieved the almost impossible in economic terms of running a budget deficit (bloated by heavy military spending) at a time of an oil price highs.
In real terms wages are now are lower than before Chavez's rise to power, crime rates are at record highs (internationally benchmarked), the new elites are as corrupt as the old, the judiciary has been thoroughly co-opted using political appointees, and free press is under heavy assault. The president has not infrequently resorted to bypassing multiparty democratic institutions through rule by decree.
Populism may seem democratic in rhetoric but it is profoundly undemocratic in effect and the concept of a single people's will or uncritical national consensus is profoundly illiberal, in the true sense of the world. Hence international commentator Fareed Zakaria's description of real existing populism as "illiberal" democracy. It comes in both left and right wing forms and it emerges from a common set of events, some of which can be discerned in recent South African politics:
• Prolonged economic recession and unemployment on a substantial scale
• A demand for a state-led stimulus that plays down the inflationary dangers of deficit financing
• High inequalities within society
• Political parties and civil societies that are weak, or have weak leaders
• Pressure for a rapid redistribution of wealth
• A preference for nationalisation
• A dependent, politicised civil service
• High levels of popular anger at corruption.
While all of these tendencies can be found in our contemporary debate, South Africa is not Venezuela. Nor does it have the usual populist state apparatus of a strong politicised army – unlike Zimbabwe, for instance. As yet, the existence of a justiciable, supreme written constitution and of the institutions that support it remains for a bulwark against Chavezian style populism in South Africa.
But the troubling rhetoric of populism is loud enough for Barbara Hogan to hear, and elements of it are seductive to new elite who would gain from direct personal self enrichment (dressed up as the will of the people via charismatic interlocutors). While populist tendencies, however inchoate, were suppressed during the Mbeki era, they have emerged vociferously after the Polokwane dethroning, alongside the better known nationalist and socialist wings of the party, but with a much greater emphasis on the materialist aspect of things – reflected in the behaviour of the bling elites in our cities. To put it coarsely, it's about money and who gets it.
The language of populism is antithetic to multiparty democracy and a rights-based culture, and it is uniformly economically catastrophic in outcome. Thus allegations that populism is on the rise in South Africa should be taken seriously as a real threat to our young democracy and its constitution and a warning that we need to fiercely defend our hard won democracy.
The constitution is our fortification against dictatorship and economic collapse.
And we must not be naïve about the state. It is not some inherently benevolent free-floating entity that exists in its own right. Instead it exists as the manifestation of, and the servant of, the freely expressed will of its citizens, expressed through a free and fair vote, monitored by a free press, and buttressed through institutions independent of the state.
Hogan was right to sound the alarm bells. They toll for all of us
(Note: This article first appeared in the Mail & Guardian, 11 June 2011)
Africa's Venezuela? Populism in South Africa
By Gavin Lewis
It was the former Minister of Public Enterprises, Barbara Hogan, who in late 2010 verbalised the fears of some regarding rising populist rhetoric within the ANC. Without moral leadership the alliance, Hogan said, faced a real danger from authoritarian populism and that this was something that we should be very worried about.
Indeed, the ANC Youth League has earmarked the leading advocate of populism in the modern world, Hugo Chavez's Venezuela, as one of its role models for the future of this country. And there is much in the rhetoric around the will of the people and about nationalisation uttered by media-hungry Julius Malema to remind listeners of the key elements of populist ideology. Because Malema is usually a mouthpiece for other factions within the ANC, such fears have some merit.
Populism differs in detail from country to country, but has at its core certain common emphases. First, it calls for a radical redistribution of resources to "the people". It is the politics of the crowd, mobilised with emotive rhetoric to intimidate adversaries. Second, it champions a charismatic leader who epitomises the "will of the people" and leads the movement. Third, it venerates the state as omniscient, omnipotent and always benevolent. Fourth, it needs a hated "other" to thrive – whether George Bush, US imperialism or globalisation, and it often calls on a mythical glorious history to obscure its contradictions (Bolivar).
This heroic narrative enables the populist leader and his followers to hide or even justify the long term pain that the short term gain of this political philosophy inflects on the very people it was supposed to benefit. It is aggressively working class in tone and contemptuous of the market and orthodox fiscal and monetary disciplines. It also assumes a single national identity and a single will of the people, embodied in the leadership. Therefore any criticism of and opposition to the Leader is regarded as morally depraved and all means to eradicate it are justified as rooting out treason ( similar to North Korea).
Latin American has the longest and most instructive history of populism in power. Most famously, populism received its fullest expression in the Argentina of the Peronist era, with Evita Peron as its emblematic figurehead. It lives on in Bolivia, in vestigial form in Argentina, and of course in Venezuela, and affects politics in the entire sub-continent.
As for populist economics, they impoverish the very people they are said to serve, and the only real beneficiaries are the new elites . Venezuela is instructive in this regard. Despite being a petro-state in an era of high energy prices, Chavez's interventions have not led to higher levels of economic growth – although they have succeeded in lifting many urban people out of absolute poverty through increased social grants. Populism thrives on dependency.
But there is a cost. Venezuela now has an inflation rate of 30% and rising, its oil production under state control has declined by a third, foreign investment has gone, the Venezuelan currency has devalued considerably and the economy has contracted nearly 6% over the last two years. These are direct consequences of simplistic, reckless economic policies. As Prof Francisco Rodriguez, a former ally of Chavez wryly points out, Chavez has achieved the almost impossible in economic terms of running a budget deficit (bloated by heavy military spending) at a time of an oil price highs.
In real terms wages are now are lower than before Chavez's rise to power, crime rates are at record highs (internationally benchmarked), the new elites are as corrupt as the old, the judiciary has been thoroughly co-opted using political appointees, and free press is under heavy assault. The president has not infrequently resorted to bypassing multiparty democratic institutions through rule by decree.
Populism may seem democratic in rhetoric but it is profoundly undemocratic in effect and the concept of a single people's will or uncritical national consensus is profoundly illiberal, in the true sense of the world. Hence international commentator Fareed Zakaria's description of real existing populism as "illiberal" democracy. It comes in both left and right wing forms and it emerges from a common set of events, some of which can be discerned in recent South African politics:
• Prolonged economic recession and unemployment on a substantial scale
• A demand for a state-led stimulus that plays down the inflationary dangers of deficit financing
• High inequalities within society
• Political parties and civil societies that are weak, or have weak leaders
• Pressure for a rapid redistribution of wealth
• A preference for nationalisation
• A dependent, politicised civil service
• High levels of popular anger at corruption.
While all of these tendencies can be found in our contemporary debate, South Africa is not Venezuela. Nor does it have the usual populist state apparatus of a strong politicised army – unlike Zimbabwe, for instance. As yet, the existence of a justiciable, supreme written constitution and of the institutions that support it remains for a bulwark against Chavezian style populism in South Africa.
But the troubling rhetoric of populism is loud enough for Barbara Hogan to hear, and elements of it are seductive to new elite who would gain from direct personal self enrichment (dressed up as the will of the people via charismatic interlocutors). While populist tendencies, however inchoate, were suppressed during the Mbeki era, they have emerged vociferously after the Polokwane dethroning, alongside the better known nationalist and socialist wings of the party, but with a much greater emphasis on the materialist aspect of things – reflected in the behaviour of the bling elites in our cities. To put it coarsely, it's about money and who gets it.
The language of populism is antithetic to multiparty democracy and a rights-based culture, and it is uniformly economically catastrophic in outcome. Thus allegations that populism is on the rise in South Africa should be taken seriously as a real threat to our young democracy and its constitution and a warning that we need to fiercely defend our hard won democracy.
The constitution is our fortification against dictatorship and economic collapse.
And we must not be naïve about the state. It is not some inherently benevolent free-floating entity that exists in its own right. Instead it exists as the manifestation of, and the servant of, the freely expressed will of its citizens, expressed through a free and fair vote, monitored by a free press, and buttressed through institutions independent of the state.
Hogan was right to sound the alarm bells. They toll for all of us
(Note: This article first appeared in the Mail & Guardian, 11 June 2011)
Sunday, January 1, 2012
Prospects for the SA Economy 2011/12
SOUTH AFRICA'S ECONOMY: PROSPECTS
Anyone talking about the SA economy will know that the bad news sometimes seems relentlessly gloomy. So here's some room for cheer this holiday season.
The good news is that, formidable though our economic problems are, none of them are insuperable. There remains no reason why, with political will and common sense, we cannot still turn this economy around and restore South Africa's image as the shining city on a hill for Africa, and indeed, in the world.
Our problems are indeed worrisome. In brief, they include an unemployment rate of 25 % of adults (actually 37% if you include discouraged work seekers), and for young South Africans, 49% plus. The government's 5 million jobs target for 2020 assumes a growth rate, according to the Development Bank of Southern Africa ( DBSA) of 8% plus. Our current growth rate is just below 3%, and likely to remain not much above that to at least 2013 – assuming the Euro (ironically another project of the Left in Europe) does not collapse and damage our export markets.
High unemployment plus irresponsible populist statements and rigid trade unionism have all combined to create such policy uncertainty that Moody's Investors Services recently downgraded SA's A3 local and foreign currency debt from stable to negative. It's not a train smash, but it is a red flag. At the same time we are running a Budget deficit of 5.5%, with government debt at 40% - not bad compared with, say, Greece, but an indication that the years of strict Reserve Bank and national macroeconomic caution that did so much to shelter us from the 1999 world financial collapse have been used up.
Welfare cannot be expanded much more unless the sources of finance – taxation –are increased. Since South Africans are already heavily taxed, directly and (increasingly) indirectly, the only real solution is economic growth and job creation (the two are not necessarily the same). There is very little left to redistribute, despite what Julius Malema says – and nationalisation and its compensation costs will lower, not increase, the tax revenues that sustain social welfare, and, with it, social peace. What we are spending is going on consumption, not capital investment. That is why President Zuma declared late this year that "We can't be a welfare state" ( social grants go to 15.2 million South Africans, according to National Treasury, while 13 million work).
In addition, inflation is creeping up again, impacting negatively on consumer debt and household spending power.
South Africa has lost one million formal sector or "decent" jobs in the past two years. We cannot go on like this for much longer.
So what is to be done?
The recently released analyses of both the DBSA and Trevor Manuel's National Planning Commission show ways out of our crisis. So too does the work in progress that is the Democratic Alliance's 8% growth project, due to be released in the next year or so. The new emphasis is on the priority that is job creation. There are areas where all three roadmaps agree that things can be improved, even as there are areas of disagreement. Encouragingly, none of these remedies require rocket science, or even much more money.
For instance:
- Stopping the drain of R30 billion a year that is being lost through state corruption (according to the Special Investigation Unit (SIU)). This means applying the rule of law.
- Accepting the primacy of the private sector as the entity that creates jobs, when allowed to do so. The public sector is already bloated besides being, in general terms, overpaid compared to private sector workers. This does not mean that there is no role for the state. But it does mean that the state must stop intervening where it lacks the capacity and the competence to do so. Also allow more competition with public monopolies from the private sector. Just compare Telkom with the cell phone companies to see how this unleashes jobs and improves people's lives.
- Continue breaking up private sector de facto monopolies (which will also improve SME prospects and keep food prices down). It's not just government that can be greedy.
- Shift the economic debate from redistribution to production, from welfareism to entrepreneurship, with the focus in on growing new business. Combined with a new attitude towards entrepreneurship, we can focus on the empowered individual rather than on dependency . The state has too many capacity gaps to be an adequate substitute for private initiative and risk taking.
- Supporting entrepreneurship seriously, effectively and by using suitable incentives, including tax incentives. This means making SMEs competitive, not forever dependent on state largesse. This means mentoring, it means finding new markets, it means making entrepreneurship part of life skills training, involving the private sector in actually running the training, growing your own timber for local governments via proper apprenticeships (see below).
- Fixing the biggest disgrace of all, the public education system. This means teachers in class, on time, sober and teaching, a return of strict school inspectors, and empowering and appointing strong school principals – and making them accountable. Teach kids the skills that are in demand in the marketplace.
- Improve access to markets, including Africa, without neglecting traditional markets. This means making sure our economy is globally competitive and further liberalising exchange controls so as to sustainably firm the rand.
- Fixing logistics, especially transport and broadband. Again, bring in the private sector (concessioning), increase competition, commercialise the ports, and appoint executives on merit, not for their political connections.
- Ensuring an increased and reliable supply of affordable energy and, increasingly, clean water.
- Clearing up policy uncertainty that detrimentally affects major traditional sectors of our economy that are labour intensive, especially for unskilled and semi skilled workers, namely mining and agriculture. We have missed the benefits of two commodity booms in a row, and will miss the food production boom of the future, if we don't bring policy certainty here and focus on production, not just redistribution. Policy certainty helps investor confidence, and SA needs private sector investment at 30% of GDP pa, not 19% as at present –despite historically low interest rates.
- Reviving private sector skills training and apprenticeships. Abolish the slow, often corrupt SETAs, use incentives for the private sector and the parastatals, link training to jobs.
- Addressing labour regulation and ending the trade union veto on modernising the economy, improving education, and accommodating youngsters entering the job market- as the NDP advocates. This cannot be a root and branch assault on hard won worker rights, but instead a negotiated adjustment to meet the jobs priority.
- Addressing critical skills shortages. We are still too suspicious of skilled immigrants despite the global race for talent. Steve Jobs would in all likelihood never have got past our Home Affairs department if he had decided to move here.
- Giving, as the DA 8% Project points out, the poorest people access to their dead capital by allowing communal land tenure in the former homelands to become individual title deed ownership, suitable for collateral for bank loans for family advancement.
- Introduce the youth wage subsidy, or some variant of it, and link it to on the job experience.
- Apply good governance.
- Slash red tape.
- Drop the proposed ban on labour brokers, who provide an essential link between job seekers and the labour market, as UCT's Prof Haroun Bhorat has conclusively shown. Literally thousands of jobs are at risk.
- Bring down crime much more. It hurts black owned SMMEs the most, amongst other things.
Is any of this impossible? The answer must be "no".
It is indeed possible, if we adopt Deng Xiaoping's approach (the one that did more than anything else to lift China from the ranks of the world's poorest nations to a global economic superpower in one generation). It was Deng who, rejecting ideological straightjackets on economic thinking in China, coined the phrase: "It does not matter whether the cat is brown or white, so long as it catches mice".
Amandla Ngawethu! We are not helpless victims of our past or of our present.
(Speech delivered to Union of Jewish Women, Nov 2011)
Anyone talking about the SA economy will know that the bad news sometimes seems relentlessly gloomy. So here's some room for cheer this holiday season.
The good news is that, formidable though our economic problems are, none of them are insuperable. There remains no reason why, with political will and common sense, we cannot still turn this economy around and restore South Africa's image as the shining city on a hill for Africa, and indeed, in the world.
Our problems are indeed worrisome. In brief, they include an unemployment rate of 25 % of adults (actually 37% if you include discouraged work seekers), and for young South Africans, 49% plus. The government's 5 million jobs target for 2020 assumes a growth rate, according to the Development Bank of Southern Africa ( DBSA) of 8% plus. Our current growth rate is just below 3%, and likely to remain not much above that to at least 2013 – assuming the Euro (ironically another project of the Left in Europe) does not collapse and damage our export markets.
High unemployment plus irresponsible populist statements and rigid trade unionism have all combined to create such policy uncertainty that Moody's Investors Services recently downgraded SA's A3 local and foreign currency debt from stable to negative. It's not a train smash, but it is a red flag. At the same time we are running a Budget deficit of 5.5%, with government debt at 40% - not bad compared with, say, Greece, but an indication that the years of strict Reserve Bank and national macroeconomic caution that did so much to shelter us from the 1999 world financial collapse have been used up.
Welfare cannot be expanded much more unless the sources of finance – taxation –are increased. Since South Africans are already heavily taxed, directly and (increasingly) indirectly, the only real solution is economic growth and job creation (the two are not necessarily the same). There is very little left to redistribute, despite what Julius Malema says – and nationalisation and its compensation costs will lower, not increase, the tax revenues that sustain social welfare, and, with it, social peace. What we are spending is going on consumption, not capital investment. That is why President Zuma declared late this year that "We can't be a welfare state" ( social grants go to 15.2 million South Africans, according to National Treasury, while 13 million work).
In addition, inflation is creeping up again, impacting negatively on consumer debt and household spending power.
South Africa has lost one million formal sector or "decent" jobs in the past two years. We cannot go on like this for much longer.
So what is to be done?
The recently released analyses of both the DBSA and Trevor Manuel's National Planning Commission show ways out of our crisis. So too does the work in progress that is the Democratic Alliance's 8% growth project, due to be released in the next year or so. The new emphasis is on the priority that is job creation. There are areas where all three roadmaps agree that things can be improved, even as there are areas of disagreement. Encouragingly, none of these remedies require rocket science, or even much more money.
For instance:
- Stopping the drain of R30 billion a year that is being lost through state corruption (according to the Special Investigation Unit (SIU)). This means applying the rule of law.
- Accepting the primacy of the private sector as the entity that creates jobs, when allowed to do so. The public sector is already bloated besides being, in general terms, overpaid compared to private sector workers. This does not mean that there is no role for the state. But it does mean that the state must stop intervening where it lacks the capacity and the competence to do so. Also allow more competition with public monopolies from the private sector. Just compare Telkom with the cell phone companies to see how this unleashes jobs and improves people's lives.
- Continue breaking up private sector de facto monopolies (which will also improve SME prospects and keep food prices down). It's not just government that can be greedy.
- Shift the economic debate from redistribution to production, from welfareism to entrepreneurship, with the focus in on growing new business. Combined with a new attitude towards entrepreneurship, we can focus on the empowered individual rather than on dependency . The state has too many capacity gaps to be an adequate substitute for private initiative and risk taking.
- Supporting entrepreneurship seriously, effectively and by using suitable incentives, including tax incentives. This means making SMEs competitive, not forever dependent on state largesse. This means mentoring, it means finding new markets, it means making entrepreneurship part of life skills training, involving the private sector in actually running the training, growing your own timber for local governments via proper apprenticeships (see below).
- Fixing the biggest disgrace of all, the public education system. This means teachers in class, on time, sober and teaching, a return of strict school inspectors, and empowering and appointing strong school principals – and making them accountable. Teach kids the skills that are in demand in the marketplace.
- Improve access to markets, including Africa, without neglecting traditional markets. This means making sure our economy is globally competitive and further liberalising exchange controls so as to sustainably firm the rand.
- Fixing logistics, especially transport and broadband. Again, bring in the private sector (concessioning), increase competition, commercialise the ports, and appoint executives on merit, not for their political connections.
- Ensuring an increased and reliable supply of affordable energy and, increasingly, clean water.
- Clearing up policy uncertainty that detrimentally affects major traditional sectors of our economy that are labour intensive, especially for unskilled and semi skilled workers, namely mining and agriculture. We have missed the benefits of two commodity booms in a row, and will miss the food production boom of the future, if we don't bring policy certainty here and focus on production, not just redistribution. Policy certainty helps investor confidence, and SA needs private sector investment at 30% of GDP pa, not 19% as at present –despite historically low interest rates.
- Reviving private sector skills training and apprenticeships. Abolish the slow, often corrupt SETAs, use incentives for the private sector and the parastatals, link training to jobs.
- Addressing labour regulation and ending the trade union veto on modernising the economy, improving education, and accommodating youngsters entering the job market- as the NDP advocates. This cannot be a root and branch assault on hard won worker rights, but instead a negotiated adjustment to meet the jobs priority.
- Addressing critical skills shortages. We are still too suspicious of skilled immigrants despite the global race for talent. Steve Jobs would in all likelihood never have got past our Home Affairs department if he had decided to move here.
- Giving, as the DA 8% Project points out, the poorest people access to their dead capital by allowing communal land tenure in the former homelands to become individual title deed ownership, suitable for collateral for bank loans for family advancement.
- Introduce the youth wage subsidy, or some variant of it, and link it to on the job experience.
- Apply good governance.
- Slash red tape.
- Drop the proposed ban on labour brokers, who provide an essential link between job seekers and the labour market, as UCT's Prof Haroun Bhorat has conclusively shown. Literally thousands of jobs are at risk.
- Bring down crime much more. It hurts black owned SMMEs the most, amongst other things.
Is any of this impossible? The answer must be "no".
It is indeed possible, if we adopt Deng Xiaoping's approach (the one that did more than anything else to lift China from the ranks of the world's poorest nations to a global economic superpower in one generation). It was Deng who, rejecting ideological straightjackets on economic thinking in China, coined the phrase: "It does not matter whether the cat is brown or white, so long as it catches mice".
Amandla Ngawethu! We are not helpless victims of our past or of our present.
(Speech delivered to Union of Jewish Women, Nov 2011)
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