SA`s disconnects – OPINION | Politicsweb
Shawn Hagedorn |
02 December 2022
Shawn Hagedorn says our domestic economy would need to be a third larger to tame unemployment crisis
Crumbling economic prospects should have caused an electorally inspired policy revamp in 2019. Instead, our current president has tinkered at the edges of his predecessor’s patronage leviathan while amplifying its ill-effects through embracing localisation. This begs the question: If the economically marginalised don’t vote to oust the ANC in 2024, are they being irrational?
Purging corruption and cadre deployment would spur broad economic benefits yet the early advantages would predominantly accrue to private-sector taxpayers. Service delivery would improve but most of today’s poor and unemployed would remain poor and unemployed.
Our domestic economy’s best case labour absorption potential will remain woefully inadequate through mid century. Reversing the policies and practices which preclude steady growth in incomes will take time and it won’t be sufficient. This helps to explain why high growth countries prioritise value-added exporting.
As overcoming our volume of poverty and unemployment through domestic-led trickle-down development would, at best, take many decades, voter apathy by the poor in the absence of a workable high-growth plan is rational. In effect, their message is, ‘If you want our electoral support, show us how we will get jobs and escape poverty.’
A country’s long-term prospects today are highly correlated with the proportion of its young adults who add value within global supply chains. This country scores horrifically in this regard while, consequently, being an extreme outlier regarding poverty and unemployment.
Only Djibouti, a troubled country of barely a million people, has a higher rate of youth unemployment than SA. Other countries go to great lengths to avoid high youth unemployment as it entrenches so much economic destruction and political instability.
The ANC has succeeded at ducking responsibility for our obscene level of youth unemployment by framing it as a moral obligation to fund subsistence payments despite the need for fiscal rectitude. Others have, in effect, simply written-off a majority of the next generation due to the failures of our education system.
Given these circumstances, we shouldn’t be surprised by the electoral effectiveness of the ANC’s massive patronage machine. The electoral support that it buys is largely immune to evidence depicting rampant corruption and the unaffordable costs of cadre deployment. Meanwhile, millions of poor, unemployed adults reasonably conclude that no-one has their back so they stay home on election day.
Our political dialogue is still largely shaped by the ANC and its acolytes emphasising the legacies of historic injustices. Responding with well-founded accusations of corruption further centres our political discourse around ethical debates. Technical considerations central to designing workable solutions are then dismissed using criteria shaped by politically-distorted values.
The electorates of underperforming countries in other regions tend to be influenced by successful neighbours. Both our policies and political debates ignore the choices that have been plunging global poverty in recent decades.
Jacob Zuma’s imprudence was so reckless that it has inspired the impression that corruption is an existential threat to our society. Perhaps. Yet many countries with similar or worse corruption ratings have long been outpacing us economically. Conversely, no successful economy employs anything resembling our grossly ill-conceived localisation policies.
Corruption and cadre deployment undermine the core interests of taxpayers outside of the ANC’s patronage club, with the poor and unemployed suffering disproportionately. Their employment and upliftment prospects cannot be materially improved without integrating a far greater portion of our young adults into the global economy.
By blaming our extreme youth unemployment on dreadful education outcomes, we ignore the powerful role of on-the-job learning while greenlighting the ANC’s localisation policies. The apathy this breeds among millions of economically marginalised non-voting adults is further spurred by the ANC’s opponents tacitly accepting the party’s framing of the youth unemployment crisis in terms of fiscal capacity to fund subsistence payments. This is keeping the ANC in power notwithstanding their economic stewardship being remarkably awful.
Increasing a domestic economy’s capacity to absorb labour ultimately relies on growing per capita income. Ours peaked in 2011 and it is expected to slip further. It is not a coincidence that Zuma’s ascendancy to the presidency corresponded with the beginning of our economic decline. It does not however logically follow that dismantling the ANC’s massive patronage would be sufficient to fix the economy.
Our stagnating domestic economy would need to be at least a third bigger, and rapidly expanding, to tame the unemployment crisis which is degrading the lives and hopes of most young South African adults. Rather than acknowledging this, President Ramaphosa creates false hopes around investment-led growth while embracing “localisation” policies. This discourages investors by pummelling growth prospects while spurring animosities with neighbouring countries.
Most of the ANC’s governance shortcomings could be rapidly remedied by electing competent, well-intentioned leaders. The titanic exception is our youth unemployment crisis. Even if, contrary to expectations, the youth unemployment rate declines, localisation policies ensure that the average age of younger adults who have never been meaningfully employed will ratchet upward. This equates to wholesale economic sabotage.
Our national dialogue reflects expectations that we must fix our politics before we can fix our economy. Yet we expect the poor and unemployed to vote out a party focused on redistribution when none of the other parties has a credible plan to surge employment and upliftment.
Polls suggest the ANC won’t be vacating the Union Building in 2024. If this happens in 2029 and a highly competent government reverses all, or most, of the ANC’s anti-growth policies and practices, most of the heavy lifting will still need to be done by people and organisations far removed from national government. It will then be obvious that such efforts should have been enthusiastically initiated many years earlier.
It is not rational for the unemployed to support political parties that believe employment growth must be dependent upon, and proportionate to, broad economic growth. We must disconnect those two critical objectives and pursue them independently. SA’s economic growth has lagged the pace of labour force expansion for over a decade with no end in sight.
Creatively designed jobs fairs are among the myriad options for matching SA’s school leavers with international online employers. Such job creation avoids dependence on investor enthusiasm for SA or the growth rate of our economy.
Such solution-focused initiatives are, however, directly at odds with the ANC seeking to expand reliance on the state. The sooner we begin to show what is possible, the sooner a majority of voters will demand sweeping changes.