SHAWN HAGEDORN: SA’s policy landscape a good place for faux PhDs to hide

Those who want to pretend they have a doctorate should, like a certain high-profile director now under fire, choose international economics and work in SA. They’ll get away with it, because our policy debates take little notice of how the global economy has evolved. 

Most high-profile economists focus on capital markets, where the central challenge is the pricing of securities. While this adds much value by improving capital allocation, pricing securities is quite different from developing effective public policy. 

Despite our many competent capital market economists frequently providing valuable insights, they don’t offer workable solutions, as their protocols and tools are designed to improve returns on capital. Though our obscene level of entrenched youth unemployment reflects negatively on labour economists, this is somewhat unfair as this crisis traces to policies dismissive of globally determined success requirements. 

We need more and better international economists working with development experts to design policies that stoke commercial fervour alongside robust job creation. Instead, our debates exacerbate identity politics while indulging “flavour of the day” faux solutions. 

Rather than pursuing sustained high growth through global integration, our public and private sector leaders have prioritised investment-led growth. This was expected to better align policies with commercial realities. Instead, as with overfishing in a lake, the negative effects have compounded.

Labour and development economists should have been shouting that this narrow path was always about rewarding capital, not labour. This should then have spurred international economists to spotlight how our policies are inversions of those common to this era’s many successful emerging economies. 

Speaking at the recent World Economic Forum (WEF) about the Brics bloc, finance minister Enoch Godongwana said: “Our economies, particularly SA, have been heavily dependent on the West, so a delinking for us is quite critical; in other words, changing trading patterns.” Yet this disregards how SA’s unemployment crisis traces to policies that preclude this era’s core development catalyst: value-added exporting.

Today’s many rapidly advancing nations integrate a substantial portion of their young workers into global supply chains. Whereas nearly all countries engage in the struggle to achieve this, SA’s policymakers and business leaders routinely reject the challenge. Our patronage-minded political elites frame policies around injustices at the expense of competitiveness, while most business leaders risk being replaced if they disappoint investors. 

Our elites rejecting global economic realities causes a majority of SA’s “born free” adults to become permanently marginalised. This burgeoning generational chasm is articulated by teenagers snarling, “I don’t care about past injustices, I just want a job.” In lieu of the prospects and dignity that jobs provide, most are expected to express electoral gratitude for sub-subsistence grant payments. 

Another way of assessing our policy debates is to consider billionaire entrepreneur Elon Musk’s preference for drilling down to first principles. What should the primary objective of our economic policies be? The ANC is very effective at framing issues around injustices, and its go-to economic injustice issue is inequality. 

SA is easily among the world’s most unequal countries in terms of income and wealth. And we also have the highest youth unemployment. Yet we have nothing that resembles a solution for either. 

Focusing on inequality has benefited the ANC politically while justifying policies that sustain patronage and undermine job creation. Our national dialogue sidesteps this fundamental truth by dancing — sometimes prancing — around it. 

We won’t meaningfully reduce inequality without first making abundant progress at reducing youth unemployment. Yet it is delusional to think we can noticeably reduce youth unemployment in SA while disdaining the central success factor common to high-growth economies: integration into global supply chains. The ANC categorically rejects this path, as evidenced by its antibusiness and anti-Western policies.

People shouldn’t misrepresent themselves. Nor should any of us condone our elites pretending they’ve achieved the expertise to frame our challenges, let alone solve them.

• Hagedorn (@shawnhagedorn) is an independent strategy adviser.