FOCUS ON GROWTH
Inverted economy twists SA against itself and fails to grow middle class
Policymakers resist growth strategies of top economies and favour redistribution ahead of competitiveness, writes Shawn Hagedorn
SA has reached a "truth or consequences" juncture where improving economic outcomes requires the country’s economic dialogue be upgraded to grasp the big picture. Among the concepts central to policy debates that are perilously misunderstood are: "middle-class growth" and "financial repression". Many countries have sustained rapid middle-class growth in recent decades by maintaining high household saving while steadily expanding jobs through growing value-added exports. SA’s 1990s transition entrenched a political party entrusted to achieve broad prosperity through legislative means. The resulting policies and practices have been dismissive of the truism that savings and consumption must be balanced at the household level to achieve sustained middle-class growth. As SA’s legislative powers are bounded by its borders, its economic policies have similarly been excessively inward-focused and thus unworkable. For the vast majority of the poor to transition to middle class was always goi...
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