SHAWN HAGEDORN: Visionaries needed to help find solutions for unemployment

ANC policies have entrenched the world’s most severe unemployment crisis, yet none of our leaders is floating a high-powered solution. Sometimes it’s not what you know but who you know. 

SA helped shape the childhoods of two of the world’s most visionary entrepreneurs, Elon Musk and Peter Thiel. Their unconventional views about education and opportunity paths for school-leavers reflect how the global economy is evolving.

President Cyril Ramaphosa is said to have discussed SA’s improving prospects as an investment destination when he met Musk last week. Why would Ramaphosa not have solicited Musk’s views on how SA could swiftly create millions of jobs?

The president must have considered asking the world’s greatest problem solver how to solve the most deep-rooted youth unemployment crisis. Yet he might not want to know what is possible because he is keenly aware that his influence within the party is insufficient to deliver the necessary policy pivots.

Suppose Musk and Thiel, along with other leading visionaries with unconventional ideas about education such as Jeff Bezos, said they want to recruit a quarter of our 16-year-olds each year for various digital jobs that can be done from anywhere. How concerned would they be about the obstacles we insist are real?

Musk says video games are effective at building useful skills. Thiel has long advocated for young people to drop out of school and become entrepreneurs. Bezos would be swiftly convinced by Amazon having begun to pursue SA consumers that it would take many decades to pummel our unemployment through growing SA’s meagre disposable income. 

Visionaries who can execute audacious visions need extraordinary situational awareness. While the ANC scores abysmally in this regard, it is not as if our public debates express a keen appreciation of how the global economy has been rapidly evolving since the early 1990s.

It hardly seems likely that Musk was persuaded that investment-led growth could counter the drags created by anticompetitive policies ranging from BEE to localisation regulations. Our disconnects are truly extreme.

Pre-election surveys identified jobs as voters’ top concern, yet the ANC continues to prioritise investment flows. Meanwhile, there are no plausible scenarios where investment-led growth noticeably reduces unemployment in the near- or medium-term. 

Such domestic political-economic disconnects make long-term prospects iffy. The ANC’s rejection of globally determined success drivers is equally brazen and no less counterproductive. 

Our government of national unity has shifted the political landscape without tilting ANC biases. The party remains in charge but it isn’t going to lead. It doesn’t have solutions and if Ramaphosa didn’t ask Musk about jobs this reflects his party’s lack of interest in finding solutions as they invariably require sweeping policy pivots.

Prioritising investment flows has triggered modest policy adjustments and state-owned enterprise performance upgrades. But, as the creation of our government of national unity has not remedied our fraught politics, attracting larger investment flows won’t noticeably mitigate our unemployment crisis, or the perils it portends.

By 2029 we will have had two decades of nearly stagnant per capita GDP growth. Conversely, China has averaged almost 10% annual growth for four decades and despite a shrinking workforce its youth unemployment exceeds 20%. 

Each year the US annual trade deficit funds about $250bn of wages in other countries, particularly China. So, while SA consumers are decades away from being able to support the employment of most jobseekers, this would be a minor task for the global economy.

The era that is now unfolding combines artificial intelligence (AI) with a new Cold War amid declining working age populations in most affluent countries. Combining localisation and anti-competitiveness policies in a stagnating economy with ultra-elevated youth unemployment is particularly crazy when AI, among other tech induced disruptions, greatly favours young employees. 

Meanwhile ANC leaders, among others, promote SA as an investment destination while ignoring the upside value of our youthful labour glut. Our national dialogue must accommodate the views of global visionaries.

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