SHAWN HAGEDORN: What BIG debates tell us about dependency on handouts

Our basic income grant (BIG) debates are irrational. They reflect twisted politics dismissing today’s core economic development success drivers.

Rather than endorse deceitfully contrived social justice arguments, we are morally obligated to confront why our BIG debates depict a nation accepting, and thus surrendering — unnecessarily — to a crumbling future.

The ANC has asserted that it is intensely debating the Covid-era grants and has suggested such extensions could be temporary. Rather, we should expect a series of “temporary extensions” alongside the stoking of fear in the build-up to the 2024 election that other parties would cancel the payments. 

Framing the public debates around fiscal and moral trade-offs is a particularly savvy public relations tactic by the ANC. It dilutes the policy scrutiny that idling a majority of young adults should trigger.

As the ANC’s economic stewardship has been so damaging that it is now under pressure to help feed healthy, but unemployed and destitute, young adults, BIG debates should be the ideal club to beat some sense into the party. The country’s declining creditworthiness should further inspire a stinging rebuke of the ANC’s narratives and policies.

Instead, as most analysts and commentators have failed to challenge the ANC’s false framing of the BIG debates around moral obligation versus fiscal prudence, rising commodity demand has provided as much a political as a fiscal windfall.

This is a major public relations win for a governing party unable to adopt desperately needed growth-enabling policies. It allows the ANC to exploit the contorted social justice narratives it weaves. 

The party relies on these narratives to justify the jobs-destroying redistribution-focused policies it needs to fund its patronage-inspired political machinery. 

While the ANC’s DNA lacks the enterprising chromosomes that inspire a builder’s mentality, it is exceptional at exploiting social justice memes to frame issues. Instead of the 1990s political transition leading to the economy being transformed into a dynamic job creating machine, our public dialogues, productive capacities and moral compasses have been anaesthetised by political spin. 

While public sector corruption and incompetence are undeniably very costly, our national conversation routinely underplays the deeper scarring being inflicted across our economy. At this critical juncture our BIG debates evidence a willingness to have most young South Africans become lifelong liabilities, when they should be central to modernising our economy. 

Another ANC public relations coup is that it has persuaded big business and others to play along with their assertion that the economy’s choke point is inadequate investment flows. The world has never been more awash with capital seeking to support viable businesses and projects. 

SA’s domestic economy can’t reward much more additional capital as consumer purchasing power barely keeps up with population growth, while public sector policies and practices block sustainable export-led growth. As dozens of countries have discovered that high growth can be sustained for decades by growing value-added exports, they easily attract abundant capital on attractive terms. 

Once a country reaches SA’s obscene levels of unemployment and poverty, along with our excessive reliance on expensive debt, escaping such mutually reinforcing poverty and debt traps necessitates increasing exports. 

If commodity demand grows the ANC will struggle to expand energy and transport availability. Yet fixing such bottlenecks won’t noticeably improve the labour participation rate. As today’s BIG debates show, it would increase dependency on handouts.

Increasing commodity exports while maintaining the same governing party and policies won’t work. ANC policies, practices and perceptions are all inherently growth retarding. Their ideologies and political machinery preclude it from being able to adopt high growth policies.

We must surge value-added exports to rapidly create jobs. That this basic insight doesn’t feature in our national dialogue sharply undermines the potential for opposition parties to dislodge the ANC. 

Our economy is far too fundamentally damaged for the jobs crisis to be remedied by simply tamping down corruption. Thus, hopelessly unemployed voters can be wooed with subsistence payments.

The many countries that have pummelled poverty through surging value-added exports all bet on the adaptability of young workers. Rarely did they start out being well skilled. Economic development requires policies that spur personal development — particularly among young people.

The ANC’s internal debate over subsistence grants no doubt hinges on whether it believes our mostly unemployed young adults will be beholden to the party on the basis of meagre subsistence payments substituting for jobs. Overindulging redistribution backfires economically and then electorally. Yet such political calculations underplay how idling most young adults devastates the country’s long-term prospects.

Through artful framing of the national dialogue, the ANC exploits historical injustices, and their legacies, to benefit its comrades at the expense of the majority. Such framing excludes not only this era’s high-speed development escalator, integrating into global supply chains, it even blocks adoption of key growth concepts and terms. 

“Diffusion” of knowledge and technology along with “global integration” have displaced assembly lines in driving upliftment. The ANC blocks their use through its relentless referencing of “colonialism” and “imperialism”. 

Conversely, dozens of former colonies have moved on, uplifting billions of people, whereas most young South Africans are to become wards of the state — perhaps in perpetuity.

The ANC’s exploitation of “national unity” is also highly skilled. Unfortunately, it detracts from the reality that we can only achieve adequate growth the same way all successful countries do, by integrating far more intensely into global supply chains. SA had already provided an internationally recognised term for “separateness”. The ANC hasn’t yet coined a comparably popular term for its nationalist isolationism, but it is similarly anti-development.

Our public discourse frequently mixes adulation for national unity with a belief that our young adults are lazy and untrainable. Less than two generations ago most Asians were as poor and poorly skilled as most Africans. The rapid diffusion of technology alongside access to affluent consumer markets expands opportunities.

If there is one thing economists agree on, it is that people respond to incentives. This is irreconcilable with the assertion that subsistence payments to idled young adults can spur economic growth. 

•Hagedorn is an independent strategy adviser.