Our octopus state is strangling economy by refusing to let go – BizNews, 19 August 2015

ALTHOUGH the African National Congress (ANC) does not share President Jacob Zuma’s complacency about the economy, it shows little sign of the rethinking needed to reverse the country’s downward slide. With a tweak here and there, its remedy is more of what has caused many of our problems in the first place: policies aimed at radical economic transformation during the second phase of the national democratic revolution.

By John Kane-Berman 

Although the African National Congress (ANC) does not share President Jacob Zuma’s complacency about the economy, it shows little sign of the rethinking needed to reverse the country’s downward slide. With a tweak here and there, its remedy is more of what has caused many of our problems in the first place: policies aimed at radical economic transformation during the second phase of the national democratic revolution.

The ANC admits in its series of nine discussion documents for its national general council meeting in October that the national democratic revolution is in "grave danger" from "money politics", violent conflict among tripartite alliance partners and other factors. But it also says "market capitalism" and "neoliberal ideology" have "lost their shine", so that the "balance of forces" has shifted in favour of "social transformation".

Other documents are less alarmist in tone. Some acknowledge SA’s worsening economic indicators, deteriorating fiscal position, dysfunctional state-owned enterprises, and the need to remove obstacles to private investment. But all of the documents share an enduring faith in the wisdom of an omnipresent state to drive development.

Tourism is thus seen as a labour-intensive sector with great potential for job creation, but the "paramount" intervention envisaged is "transformation".

The document on economic transformation admits that the Industrial Policy Action Plan "has not gained traction". But there is no suggestion that we should give up on this type of planning.

Priorities for increasing investment include "deepened localisation", raising mining investment, "leveraging" state mineral and other rights, accelerating land reform, implementing special economic zones, and "crowding in" black industrialists. If all this were done, we are told, investment would rise from 19% to the targeted 30% of gross domestic product.

There is clearly no enthusiasm for deregulation, privatisation, liberalisation, reforming industrial relations or guaranteeing property rights. Moreover, ANC secretary-general Gwede Mantashe said after a party lekgotla last month that the "strengthening of the state-owned mining company should continue as part of the objective to intervene in the mining industry and thereby radically transform the mining landscape of this country" — something the ANC has already done, to the detriment of the mining industry and the country.

The documents devote 18 pages to arts, culture and sport — all of which are "terrains of struggle". The labour market gets less than a page of the more than 200.

"Full employment" is cited as a key objective, but there is no mention of even the limited liberalisation envisaged by the National Development Plan (NDP) adopted nearly three years ago. Whereas the NDP acknowledged that the labour market "locks out new entrants", the discussion documents see a national minimum wage as a means of reducing income inequality but avoid even asking whether this might continue to lock out new entrants.

The documents claim that child support grants have increased the "employability" of South Africans, but do not explain why 65% of 15-to 24-year-olds are jobless or why unemployment continues to rise.

The NDP promised regulatory reform to "boost mass entrepreneurship" among small and growing businesses to generate the 11-million additional jobs required to reduce unemployment to 6% by 2030. The discussion documents voice no such enthusiasm for entrepreneurship.

We are told that "at the core of the ANC’s economic mandate" is "radical transformation of the economy" by an "effective state" for "inclusive growth".

The track record of 20 years of transformation is a deficient state and exclusive growth. The authors of the documents know this.

But they are a long way from allowing liberal pragmatism to replace socialist ideology.

Read the article here

• Kane-Berman is a consultant at the South African Institute of Race Relations

 

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