Picture: THE HERALD/MIKE HOLMES
Picture: THE HERALD/MIKE HOLMES

Claude de Baissac’s excellent article refers (“South Africans are getting poorer each year — and more desperate”, November 23).

Economics 101 talks of the factors of production, including investment, energy and human capital. Each is a constraint, a limiting factor. The problem is that for there to be economic growth none of these constraints should be biting. Unfortunately, all three are biting, or close to biting, in SA. That means all three have to be resolved for there to be material economic growth.

Our government has been spending resources on consumption (including welfare payments) for good reason: citizens are destitute. Unfortunately, this is unsustainable. The crowding-out effect (coupled with unbridled corruption) on infrastructure investment (including power stations and the grid) and education means the can is just being kicked down the road.

This strategy has bred the chickens that are now coming home to roost: expect more years of low growth and repeated July riots.

Unpicking the growth rate during the Jacob Zuma years will quickly show that debt-fuelled stimulus hid the reality. Now we have all three constraints biting at once. As they will all take years to fix we better start, sooner rather than later!

Greg Becker
Via BusinessLIVE

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