LETTER: Poor government the main cause of our economic misery

The recent World Bank report bewails the stagnant economies and inequality in SA and other Southern African countries, and says they need to place more emphasis on early education, health care and land resources (“Give serious thought to the World Bank’s recommendations on inequality and policy failures”, March 15). 

Unfortunately, the World Bank failed to address the main cause of SA’s economic misery: abysmally poor government. The ANC seems to have no understanding of or interest in economic growth. Its policies of increasingly draconian racial engineering stifle growth. Nary a word on this from the World Bank.

The good news is that we are in a fortunate position. It is possible for SA to have rapid growth while reducing the Gini coefficient. Usually, as in post-Mao China, poverty reduction goes with rising inequality. The reason we are different is that, unlike China, our poverty is not due to low wages but (insofar as a third of adults is concerned) to no wages.

If we were to grow at 5% and the skilled minorities were allowed to fully engage in government and large companies, their income would fall, not rise. Due to race laws, they are forced out of the major components of the economy but do well on the periphery as entrepreneurs and consultants.

Nor would the poor fall behind were we to adopt a competitive labour market as a prerequisite for rapid growth. Unlike in China, where the poor benefited only slowly from rising wages, rapid growth in SA would, in a sense, produce an infinite rate of wage increase as the unemployed would earn the minimum wage from a base of zero.

We are lucky. We can have our economic cake and eat it. We can have rapid growth with rising equality. We need the government to get out of the way.

Willem Cronje, Cape Town

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