On cue, at 12h25, just five minutes before President Jacob Zuma was due to give an economic briefing at Tuynhuys, the wind picked up in the parliamentary precinct and it started to rain. Cold drops in spring. Was the grey, leaden sky, I wondered, a portent from the gods about ill economic news? Had the presidency conspired with the meteorologists to provide the right sky-canvas for gloomy news? After all, don’t heads of state only brief about the economy in times of crisis or if there is to be a dramatic change in economic policy? Were the apostate Mbeki-ites to be cast into the wilderness where there is only “wailing and gnashing of teeth?” Was Trevor Manuel packing his boxes at the Orwellian-sounding ministry of planning? Were we about to cast off the remnants of the wicked “Washington Consensus” and don the sackcloth of true socialism?
I doodled on my notepad in anticipation. “Borrowing will have to rise sharply … ” “Things are tough, but not that tough. But we have tough times ahead of us,” the Delphic president solemnly informed the privileged briefing session of opposition leaders. George W Bush could not have said it better. The president approvingly quoted Business Day’s lead story that the business index (the composite leading indicator) points to South Africa beating “recession this year”. I wonder if Mr Zuma had read the entire article. About three-quarters of the way in, Investec Group economist Annabel Bishop is quoted: “The SA government is not providing timely enough assistance to prevent domestic job and company losses and the taxpayer base is dwindling as a result. Rising welfare needs are contributing to growing fiscal deficit and this will persist.” Bishop’s critique is spot on: Zuma’s task is to reconcile the harsh realities of the free market in a global downturn with the social democrat inspired aims of the Constitution.
The minister of finance, Pravin Gordhan, said with some credibility in his medium-term budget policy statement: “Budget deficits have increased in many countries across the world, but our fiscal response to the economic downturn is one of the largest. Whereas in other parts of the world spending is being cut and projects cancelled, we are able to continue our investment plans, because we entered the economic downturn with a budget surplus and a healthy fiscal position. And whereas the response in other countries has been dominated by financial transfers to banks and other businesses, our spending growth is strongly driven by real physical investment — road and rail construction, new power stations, housing, water and sanitation systems.” This is part of the jigsaw. The ANC also has to attack “perks and privileges” — and do it with political gusto. I can hardly believe I am writing this, but “bravo Blade Nzimande and Jeremy Cronin!” for saying so. But we all know in our heart of hearts — communists, conservatives, liberals, government and opposition — that to cut through the structural conditions which causes large-scale poverty and inequality (SA has just overtaken Brazil in this index), a fundamental reconfiguration of our taxation and labour system is at hand. Gordhan did not broach this, but to all intents and purposes, elegantly restated the government’s existing position. Mr Zuma’s problem is that every economic project has a political fuse, and the right solutions are likely to be electoral kamikaze.
As for my temporary disappointment of the lack of a “Big Bang” announcement, to be fair these things never quite live up to their billing. In 1997 I watched the newly minted former prime minister Tony Blair from the Strangers Gallery in the House of Commons purring like a feline when his iron chancellor aka Mr Prudent, Gordon Brown, announced the five economic tests to be assessed before the United Kingdom joined the euro. My grasp of the “dismal science” has always been tenuous, but even as a twenty-five year-old-wet-behind-the-ears intern in the halcyon days of New Labour, I wondered what was so special about the number five. Why not ten economic tests or, better still, the Torah’s perfect seven, I wondered? Well, Britain never joined the euro and we all know what happened to poor old Mr Prudent. And these brilliant men, in the end, like their South African sister party in Socialist International, never did settle how to square the Darwinian free-market with human-rights inspired social democracy. They thought they had. Then it unravelled. So, the liberal/social democrat in me rises, what is Mr Zuma’s offer? Where is the robust championing of the public services? Or do we, like conservatives, “know the price of everything and the value of nothing?” Where is the praise for the value of those things we buy together through our modest taxes? Where is the reminder that government is not a conduit of the free market but the symbol of our collective endeavour?
Outside of perhaps SEZ’s (Special Economic Zones) within the Peoples Republic, there are NO “harsh realities” of the ‘free market’ in operation anywhere.
The United States, so vaunted as the primary manifestation of ‘the capitalist free market’ is the largest most heavily regulated economy to survive in the modern world, with massive increases in the socialization thereof, and further increase in welfare statism being intended by the Obama administration.
Regulatory interventions, state sponsored enterprises, protectionism, the promotion of special interests, the arbitrary expansion of the money supply (debt) and control of interest rates by government fiat, have absolutely NOTHING to do with a free market.
The “green shoots of recovery” is a bizarre delusion of Keynesian economics, where one borrows, spends and consumes oneself out of debt.
The idea of government ‘stimulus’ which is nothing more than the inflationary expansion of credit, (for government pals at everyone else’s expense) is what causes the so called ‘business cycle’ of booms and busts in the first place.
The latest round of bailouts threatens to drive the US dollar into hyperinflation, which, being the world’s ‘reserve’ currency is everyone’s problem.
If you’re not concerned about value for money, let government enjoy a monopoly in providing a ‘service’ since they need not concern themselves with what a free market would sustain.
If government embarks upon activity which would otherwise bankrupt a private business, it is of no social benefit for the state to continue doing the same at public expense.
jon
“Mr Zuma’s problem is that every economic project has a political fuse, and the right solutions are likely to be electoral kamikaze.”
That applies to Obama, Brown, Sarkozy, Merkel, Rudd, Mugabe, Castro, King Mswati, Our own Kim Jon il by the ‘Indian ocean’….In fact, any other Political leader knows that.
I just dont even understand why everything has to be specifically about Zuma, whilst the thing you’re on about occurs anywhere else in the world.
So much obsession