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South Africa is making a 'historic mistake'

18 Oct 2017 at 18:01hrs | Views
Proponents of the mantra of "radical economic empowerment" have found a new argument to the question whether it would destroy the South African economy as has happened in Venezuela and Zimbabwe: black South Africans might suffer for a while, but they will then rise as fully empowered and in charge of the economy.

It is a seductive but false and dangerous argument.

What if that "while" lasts for years, even generations?

The former obersturmfuhrer of the SABC, Hlaudi Motsoeneng, made this same argument last week to justify the financial damage his decisions had inflicted on the corporation: they would only lead to a short term suffering, then Nirvana will arrive.

It's not a bad analogy. Surely Hlaudi's empowerment of local artists and production houses through his 90 percent local content quota was a noble move?

Well, yes, but it also led to a loss of hundreds of millions in revenue and now the SABC has the begging bowl out for another taxpayer bailout, or those artists and studios won't get paid.

Who can contest the statement that South Africa needs drastic changes to alleviate the stark and unsustainable inequalities and injustices of the past?

If only it was as simple as that.

As Gavin Hartford, struggle strategist and key player in the trade union movement over a long time, wrote this week: "The politics of the kleptocracy has traction. Their plan has meaning. It's called radical economic transformation (RET).

"It sings in the ears of the restless black middle-class outsiders. It sings in the ears of the mid to senior state functionary and the SOE company officer in a tender committee and the office of every councillor in every municipality.

"When you spice it up in anti-colonial and race hate talk it rings loud in the experience of many millions of poor people too."

The populist leaders of Venezuela and Zimbabwe, the late Hugo Chavez and the almost-late Robert Mugabe, both used the same argument around 2000: nationalise left and right, control everything tightly and grab people's possessions and land to empower the masses and after a short period of suffering all will be in heaven.

Both of them used a version of our "white monopoly capital" as a bogeyman.

Seventeen years later both these countries are on their knees.

Five out of the twelve million remaining Zimbabweans go to bed hungry; the state uses 97 percent of its revenue to pay salaries; unemployment stands at 90 percent; life expectancy has lowered to about 45 years; more than nine out of ten villagers across the country live on less than one dollar a day; 72 percent of the population live below the nation's poverty line. Zimbabwe imports 80% of its food needs.

In Venezuela the gross domestic product had declined by a third; inflation is around 700 percent; continuous mass protests have turned violent; and according to a state survey the average citizen now weighs 8,2 kg less than a decade ago – and not because of a new healthy lifestyle.

For both countries, especially their poor, Nirvana looks much more unattainable than it did when radical economic transformation was implemented there.

A recent report by AfrAsia Bank and New World Wealth found that Zimbabweans are now the continent's poorest people, while they were in the top three in Africa in terms of wealth per capita in 2000.

Moreover, both Zimbabwe and Venezuela experienced a mass exodus of citizens to neighbouring states in reaction to the economic collapse, something that can't happen in South Africa.

South Africans, apart from a handful of very wealthy and/or highly skilled people, have nowhere to flee to.

A former Venezuelan cabinet minister and nowadays a prominent economist at Harvard, Ricardo Hausmann, believes South Africa is in the process of making a "historic mistake".

Hausmann, a long-time adviser to South Africa's national treasury, said in an interview with Business Day after a recent visit that he was shocked by the magnitude and overtness of corruption.

He said the creation of white monopoly capital as a scapegoat was based on a "fundamental lie" and was "super-counterproductive".

It was dangerous, he said, because it put the accent on the firms that exist when the problem is the firms that do not yet exist that need to employ the millions of unemployed South Africans.

The discourse of "it is our time to eat", said Hausmann, wants to redistribute that which exists already and won't create wealth.
With the RET mania dominating inside and outside the ANC and with a finance minister whose favourite adviser teaches Venezuela economics, it appears inevitable that South Africa is indeed going to make that "historic mistake".

It could end up being a case of all the king's horses and all the king's men that couldn't put Humpty Dumpty together again.

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