Realigned DA could lead the way to prosperity as ANC overdoses on transformation
Neither a national election nor its aftermath have produced a workable growth plan despite poverty and unemployment rising to politically combustible levels — as fiscal capacity to mitigate hardships contracts.
Might an official opposition party sensitive to, but not subservient to, racial politics be just what the country needs? Might the most plausible path towards broad prosperity begin with a freshly reconceived DA channelling its intellectual dynamism to become a shrewd street fighter?
Elsewhere, economic policy updates rarely follow from morally laced debates. They are usually imported. Global integration defines this era as much as tech does. Policy updates of prosperous and emerging nations are mostly provoked by regional and broader competitive pressures. For SA to provide this region with an economic role model, our policymakers would need to import and implement winning ideas from global overachievers. This doesn’t happen, as race-based politics direct economic policymakers to focus domestically.
The ANC’s disparate constituencies are united by their shared enthusiasm for transformation-focused policies. The 1990s transition was also premised on transformation. Such policies are justified morally, politically and socially, but, as with many remedies, overreliance provokes toxic overdosing. Growth-focused policies can pummel poverty but this requires prioritising competitiveness and global integration. This hinges on dismantling counterproductive transformation indulgences. The ANC exhibits little ability to prune its huge patronage machine, which is intertwined with its transformation initiatives.
Thus there are no growth plans, and real incomes stagnate. White politicians arguing that overprioritising transformation entrenches poverty invite being labelled insensitive and self-serving, if not racist. Helen Zille appears to have learnt this from the repercussions of her 2017 tweets regarding colonisation.
The core blockage is the prioritising of transformation ahead of growth
Zille has bounced back and her decision to spotlight poverty is spot on.
The DA must follow its pivoting away from racial quotas by downgrading debating in favour of doing. Other regions of the world are nearing eradication of large clusters of poverty. The obstacles to decreasing SA’s poverty are policies that presume economic forces can be manipulated to accommodate historic redress. Rather, transformation regulations are wealth-transfer taxes. Like all taxes, excessive reliance becomes counterproductive.
SA’s era of electoral majorities is probably closing. The DA had been positioning itself largely as the service-delivery party that pays homage to racial preferences. In future elections that lack an outright winner, a freshly focused DA with a record of service delivery and reducing poverty should be an attractive governing partner as voters sour on endless performance shortfalls alongside discredited ideologies.
The DA showcases its sophisticated debating skills excessively. It should focus more on why none of SA’s leaders can articulate a high-growth plan. The core blockage is the prioritising of transformation ahead of growth. As ANC policies have triggered unnecessary transformation-vs-growth trade-offs, to regain momentum the DA should be seen as the party that knows how to spur inclusive growth and is doing it.
SA’s long-term growth and living standards will be inadequate to avoid political upheaval if the country doesn’t integrate far more meaningfully into the global economy. Unduly prioritising transformation retards global integration. Whereas the global economy can employ most of SA’s unemployed, the capacity of the stagnant domestic economy to absorb more low-skilled workers is between nearly nil and negative. Greater global integration would also spur knowledge updates unleashing needed productivity gains.
SA’s horrific education outcomes narrow employment paths. Yet technological advancements open opportunities to employ young minds in new and exciting ways. Global integration and creative domestic problem-solving suffer from overprioritising transformation objectives. The way forward is to focus on value-added exporting with creative entrepreneurs finding clever ways to tap stranded aspirations and global supply chains.
The DA, which advances such paths in the Western Cape, should prioritise expanding such paths.
Fighting poverty also requires understanding the economics of low-income and lower-middle income households. As important as job creation is to alleviating poverty, household economics offers much scope for the DA to expand its electoral support through improving living standards. Lower-income households addicted to expensive consumer debt chokes middle-class growth. This has helped provoke strikes and protests going back at least as far as the Marikana tragedy.
If the government succumbs to an IMF restructuring, the shareholders of formal sector lenders would be vulnerable to lower-income household debt being systemically “reprofiled”. Rather, everyone would benefit from the government and lenders co-ordinating to reduce risks and expenses, before passing gains to consumers.
Lenders benefit from households growing net assets. Sustaining a healthy growth trajectory that steadily diminishes poverty is as doable as it is urgently required. Irrespective of which political party unlocks such solutions, such redress of historical injustices should be welcomed as an effective form of transformation.
• Hagedorn is an independent strategy adviser