On the brink
Authors on their new books: Claire Bisseker chats to Naomi Meyer about Claire's book On the brink in LitNet's ongoing "Just before midnight" seminar.
Claire, you recently wrote a book called On the brink. The primary focus of your book is on the country’s economics. To ask you the question on the cover: How did we land up in this mess, and can we pull back from the brink?
The problem is that the government hasn’t implemented its own good policies – from Asgisa under President Mbeki to the National Development Plan under President Zuma. At the same time, it has introduced policies that have been decidedly bad for growth (like the mining regulations). In the process, it has created so much policy uncertainty and generated so much anti-business sentiment, that it has destroyed confidence and frightened away investment.
The country is now pushing at its fiscal limits, having wiped out nearly all the fiscal progress achieved since 1994. This is mainly because of years of unsustainable spending on a burgeoning but unproductive government in a low-growth environment.
One of the myths I deal with in the book is the idea that fiscal policy isn’t progressive enough, or that the treasury has been too conservative, and this is why inequality, poverty and unemployment remain so high. On the contrary, academic studies have shown that South Africa has had more success using fiscal policy to reduce poverty and inequality than 11 peer countries, including Brazil, Mexico and Argentina.
The problem isn’t that fiscal policy isn’t well targeted at the poor – the targeting is excellent – or even that we don’t spend enough money on things like education – we spend proportionally more than many peer countries which achieve better learning outcomes. The real problem is that the government is useless at turning what little growth and wealth the country has into jobs and well-being. So, bright children remain mired in poverty because the education system fails to confer the social mobility it should.
Can we pull back from the brink?
Clearly, things cannot go on like this.
The only way to stop this slide is to get growth going. South Africa has made so little progress with business-friendly economic reforms, that it has become trapped in a vicious cycle of weak growth and mounting debt.
It is not too late to arrest the slide, but it will require the government to change tack decisively – excise corruption, start implementing pro-growth policies and reform its leadership to inspire confidence.
There are a few reasons why we shouldn’t be utterly depressed:
- Corporates are sitting on a R1 trillion cash pile. Should confidence be reignited, it could unleash a spurt of investment.
- South Africa has a national development plan that has never been implemented but has the support of nearly all political parties and most of civil society. A new leadership should be able to galvanise energy around implementing it.
- Civil society provides a strong, counter-veiling force against corruption and maladministration. A groundswell of opinion is creating pressure for change in the right direction.
- Business and labour are trying to find each other and realise that they will have to do things differently if South Africa is to achieve inclusive growth.
The country is at a crossroads, would you agree? What critical questions need to be addressed, apart from economic issues?
Yes, right now it feels as though the country could go either way. It teeters on the brink of making a historic mistake. Many of the ingredients for a catastrophic collapse are already in place. The economy is in a dangerous downward spiral, and only an extraordinary political resolution will be able to change its trajectory.
Politically, South Africa’s future is impossible to call, since many plausible outcomes can be imagined. But, for the economy, the future really is binary. Only two outcomes are really possible – a good one or a bad one – because if the economy is not moving forward convincingly, it is in decline.
With a population growth rate of just under 1,7% and massive youth unemployment, muddling along with very low or stagnant growth means that the average person’s quality of life will decline. Social and fiscal pressures will continue to mount. After a while, all South Africa’s credit ratings will be junked, even if the ANC does not tack left towards more interventionist and populist policies.
The economic solutions are actually quite straightforward and proven. They have been shown to work time and again around the world. But, actually implementing them has become essential.
There is no escaping the conclusion that if the government wants to improve social and economic outcomes, it is going to have to reignite business and investor confidence and improve the quality of its spending. This comes down to improving the quality and accountability of the people employed in government, which in turn hangs on the quality of leadership.
The overarching solution to South Africa’s current crisis is honest, authentic leadership – not just by the government, but by business, labour and civil society, too.
If the current government stays in power, we’re in for a very tough time. But, if we had a sea change, under the leadership of someone constructive and positive the economy could fly.
In your opinion, what can ordinary citizens do to make this country work?
There is power in civil society when people unite and demand change. There are several broad social initiatives that are coalescing around the country’s constitutional values, and they should be supported and defended at all costs.