At the moment, the Congress of South African Trade Unions’ leadership, impatient for anything which could distract their membership from their corrupt betrayal of everything the workers have ever desired and their theft of their members’ dues to finance the luxurious lifestyle of the thugs and fascists of the Communist Party — but the Creator digresses — is busy denouncing Trevor Manuel.
The substance of the denunciation is easily summed up: none. Rather, what they say is that he is rich and serves rich people (which is, of course, true) and that his economic policies have not helped the poor (which is false, but contains a small grain of truth). Therefore he must be got rid of.
What all this means is that apart from distraction, which COSATU’s leadership finds so important, there is also another issue, namely, the fact that when the Zuma gang first fired Manuel in September they were ordered to withdraw this by big business. They are planning to get rid of Manuel at some stage — preferably before the forthcoming election, because Manuel might make public criticisms of their manifesto pledges which could weaken their position in that election. (One thing which the Zuma gang are good at is ensuring that their enemies are outside the tent pissing in; Luthuli House is now completely awash with urine, and the smell would be horrible if the stench of corruption there were not so all-pervasive that it overwhelms everything else.)
But none of this smearing has any real substance, for it is all about politics and appearances and pretense. Unless anyone presents an alternative to Manuel’s economic policies through which these policies can be meaningfully critiqued, none of this abuse matters a tinker’s cuss. No such alternative has been worked through apart from a few rhetorical flourishes. It seems that the people abusing Manuel are not concerned with such things because what is important is not to discuss the future economy of South Africa, but rather to find someone to blame for the current problems faced by the people, and the future ruination of the fiscus.
Let’s rather consider what Manuel did before considering what should be done in the future. Manuel is as overpraised by some as he is slated by the South African Left, invariably on foolish grounds, but there is a reality out there which needs to be attended to.
In reality, Manuel pursued a very simple agenda, which was easily followed: keep the budget deficit low. This goal was pursued for two separate reasons. With a low budget deficit, international credit ratings agencies would give South Africa a good rating and therefore foreigners would want to invest money and thus boost economic growth. Also, a low budget deficit meant that proportionately more money could be spent on activities rather than on debt servicing — whereas a high budget deficit raised the possibility of the kind of debt trap which Zimbabwe plunged into.
This was a prudent agenda, but it had disadvantages. The most obvious one was that on the occasions where South Africa got a good credit rating, it still did not get substantial foreign investment. This was because foreigners wanted to invest elsewhere, where the likely profits were higher (even though this was often not the case). Cutting the budget deficit meant restraining public spending. Of course, Manuel could have increased taxes, but since he wanted to attract foreign investment he wanted to represent South Africa as a low-tax environment, competing with the many other low-tax environments in the world. In this he failed. Also, depending on foreign investment meant that Manuel could not afford to impose the exchange controls which might have prevented capital flight and thus ensured more domestic investment.
Also, the problem was that this was ultimately a non-Keynesian approach, or seemed to be. South Africa was economically under-active. Therefore, arguably, what was needed was to borrow a lot of money and pour it into stimulating demand. Manuel was afraid of doing this because he feared that this would not promote economic growth sufficiently (the massive budget deficits of the early 1990s had failed to stimulate growth). During the GEAR period (1996-2002) when the deficit was particularly being slashed, Manuel was thus probably right to fear excessive borrowing.
However, after the GEAR period, when economic growth took off, this fear seemed less valid. Certainly, social spending increased. However, it could not make up for the damage done by half a decade of curbs — partly because so much social spending was going into the inflated salaries of civil servants. Also, there was a great deal of corruption and waste across the board which meant that increased spending was not as successful as it ought to have been.
But this was not altogether Manuel’s fault. He was providing the money; it was not his fault alone that corruption and waste had not been reduced. This problem seems to have been partly inertia, and partly the weakness of central government. For whatever the reason, central government was reluctant to mobilise the public against poor “service delivery”, and without broad public campaigns, it was difficult to legitimate campaigns against corrupt provincial and local authorities.
Perhaps the problem was also that at provincial and municipal level it was easier to mobilise mass support than at national level. In 2006 councillors were organising “service delivery protests” to get themselves popularity; Matatiele and Khutsong demonstrate how easy it is for local leaders to persuade the public to pursue self-destructive local campaigns for dubious paranoid goals. Indeed, the whole Zuma campaign was based partly in this. However, perhaps the problem may partly be traced back to a distinct elitist flavour to Mbeki’s — and most of the ANC’s — preferred politics.
In any case, Manuel accomplished much and probably did as well as could be done before about 2004, but after this his accomplishments looked less impressive simply because the need for action was so great, while (partly because of the civil war in the ANC figureheaded by Zuma) the performance was so unsatisfactory. However, the problem is not simply that Manuel is still there, still doing the same things — the real problem is that the other preconditions for economic growth along with social development and wealth redistribution are not being met. Throwing more money into the economy has the potential to be helpful, but only if other things are done as well, and unfortunately these other things are politically sensitive, which running up a huge budget deficit is not. (Paradoxically, cutting the budget deficit has proved to be much more politically harmful.)
Controls on consumer imports are necessary to ensure that the money introduced in the economy is spent locally (and also to reduce the import deficit to manageable proportions). However, such controls will be frowned upon by the World Trade Organisation (which wants us to buy as much as possible from Western countries). More to the point, rich South Africans would hate having to pay more for their precious consumables, or worse still, not being able to get them at all. Many retailers would hate having to sell South African goods (the potential profits would be lower, for the prices would be lower). In many cases, furthermore, there is no domestic producer, and no prospect of one developing, since local manufacturing is not developing significantly. Therefore these controls would be problematic.
Controls on the movement of currency is a natural corollary to import controls. At the moment South Africa’s trade deficit is funded by foreign currency inflows. If we did not have a deficit we could curb currency movements. This could then keep money in the country, which is better than allowing it to leave without hindrance and depending on unreliable funding from foreigners. If South Africa were awash with investment capital it would be much more likely that some of that cash would be spent on building local production — especially with a guaranteed market and restricted competition. However, the rich believe that sending their money abroad is the royal road to greater wealth, and therefore they have fought fiercely for the lifting of exchange controls, and would fight still more fiercely against their reimposition. Zuma’s clique appear to be even more subservient to, and terrified of, the ruling class than Mbeki’s clique — which means that getting rid of Manuel is not going to bring any kind of real benefit for the wider economy.
But then that means that measures have to be pursued to promote domestic production — both manufacturing and agriculture. Not only do there have to be subsidies for manufacturing (and probably for agriculture too), but there have to be arrangements for marketing the manufactured goods and the agricultural products. Otherwise the whole process would be too risky — too much money would be wasted on failed projects. The government would need to get involved in the development process directly, to ensure that projects worked efficiently and sustainably. The ruling class wouldn’t like that — especially because their desire would be for quick money, even if this were unsustainable and failing in the long run.
But developing production would be useless unless transport and communications arrangements were efficient and widespread. Also, the skills shortage could cripple such developments. Crime could be a crucial handicap. All in all, then, not only do these things need to be done against the wishes of the ruling class, but also the education, policing, prisons and even the health care crises need to be dealt with — all of which are problems which are predominantly caused by bad management, weak personnel management especially, and distorted priorities. (The rich want to see their children educated, their own interests served by the police and the justice system, and their own health care attended to.) What’s more, there’s the electricity and water crisis, the environmental crisis, the housing crisis — all these could blow up at any time, and can be lumped under the issue of infrastructure. All these need to be integrated into the other problems.
What we need is a carefully worked-out ten-year national plan for developing our capacities in every way. The Mbeki government never really came up with this, which is one reason why Manuel was not as successful as he could have been. There is, however, no sign that the Zuma government even knows that this is a problem. (Naturally, nobody outside the ANC is talking about such things, because, as pointed out above, the ruling class hates plans like plagues, since any planning would take authority and even wealth away from them.)
But instead we are told that any problems are Manuel’s fault. Or Mbeki’s fault. Or the fault of some other carefully demonised individual. And the solution is not policy development, management or planning — the solution is to give all power to some carefully deified individual. Our health-care system is in crisis, sure. But the real problem with our country is that our political doctors are sick, sick, sick deep down inside. The rest of us, admittedly, are also sick — of them.
But, apparently, not quite sick enough.