Perhaps Not An Interruption: Zumanomics.

 

Why is ruling-class propaganda so feeble and witless? If the Creator were in charge, ruling-class propaganda would be powerful enough to fool everybody all the time. But, so accustomed have the ruling-class propagandists become to having total control of the media, and to their policy of repeating their lies endlessly without challenge, that they no longer put any real effort into their work.

 

Raymond Parsons, editor of Zumanomics and an Extraordinary Professor of blablabla at the University of Pretoria (extraordinary because he is unqualified) quotes The Economist gleefully on why nobody should expect economists to know what they are doing:

 

 

 

“Thanks to [World Bank reports], economists now know much more about what does not work [about national economic development]. But it is not so clear they understand any better what does.”

 

 

 

Think about that quote for a moment. Imagine applying it to civil engineers. “Thanks to [some or other reports], civil engineers now know much more about why bridges fall down when they are built. But it is not so clear they understand why bridges sometimes remain standing.” If you heard that, would you ever want to go over a bridge again? Especially when you checked and found that the “reports” were essentially advertisements for Balderdash Bricks and Crumbly’s Concrete. Then imagine that Raymond Parsons thinks that this is an appropriate quote to stick in a book written by a bunch of economists writing on South Africa’s national economic development after 2009.

 

Natural conclusion: if these guys are in charge (and obviously they want to be), we are doomed.

 

But let us be fair, and take a closer look at what is being said. These people claim to be the best and brightest of South Africa’s economists. Most of them are professors of economics (or “development studies”) at major South African universities. Incidentally, many are simultaneously directors of companies. (Parsons got his Professorship on the strength of his control of the South African Chamber of Business.) This is rather like making druglords Commissioner of Police, which would at least cut out the middleman if you believe what they say about Selebi, but let it pass.

 

Du Toit and Van Tonder try to tell us how South Africa can improve its economic performance. Well, that’s a fair thing to talk about. I mean, isn’t that what we want? They present a vast array of tables and graphs depicting past economic performance which make things look pretty good, but they say it’s not so good. Maybe they’re right, but it would be nice if they said why. (Since the graphs are in colour but are reproduced in black and white, they’re pretty hard to read. Maybe that’s the idea.) They say, for instance, that the fact that jobs were being lost before 1999, but then started to be created at an erratic but rapid rate, isn’t good enough. Maybe not, but why not? Don’t say. They ask why people did not get jobs, and come up only with a series of “structural impediments”  which, oddly, does not happen to mention the obvious fact that there were insufficient jobs to be had. The only real suggestion they make is that employers should have more right to fire people and to make people work longer hours — neither of which proposals seem guaranteed to increase employment!

 

The article, in short, is a useful source of information if read carefully, but the authors seem incapable of usefully interpreting it. (For instance, in complaining about the growing cost of foreign goods transport, they manage somehow to fail to notice that this is directly consequent on the privatisation of South Africa’s merchant marine.) They also say at one point that foreign exchange controls (which they don’t like)keep interest rates low, and at another point that overly high interest rates discourage investment. It seems that Du Toit and Van Tonder didn’t read their own article. Maybe wisely so.

 

Du Toit and Van Tonder seem geniuses, however, next to Nokaneng and Harmse’s comparison of South Africa with East Asian economies. They compare South Africa under the ANC with East Asia after 1984 (and, mostly, after 1997). South Africa had just emerged from a catastrophically mismanaging regime which did not prioritise real economic or human development. Many of the East Asian countries had emerged from such conditions decades earlier. What is more, while the KMT and Park regimes in Korea and Taiwan were even more murderously repressive than the apartheid regime in South Africa, the Asian regimes actually strove to develop their whole nations, whereas the South African regime was interested chiefly in preserving minority privileges (and was busy fighting foreign wars as well as a civil war). What’s more, of course, most of these East Asian states enjoy docile workforces, having murdered or jailed all their radical worker leaders decades ago and bloodily intimidated the labourers into submission to sweetheart, state-run unions. This is not quite practical in contemporary South Africa.

 

Apples with oranges? Of course, but Nokaneng and Harmse are so busy pointing out that South Africa isn’t up there with Korea that they fail to notice the worthlessness of the comparison. In their table, the only state which is really comparable with South Africa is the Philippines, where, economically, South Africa does pretty well by comparison (we also grew better than Malaysia and Singapore, surprisingly) although our literacy is much worse (possibly this is a misprint, as in the body of the text they contradict the figure) and our life expectancy is still worse (can anyone out there say “AIDS”? Nokaneng and Harmse can’t).

 

They end up by summing up the decisions made at the Polokwane Conference: sustainable growth, an industrial strategy, a “focus on creating decent jobs”, and empowering those previously excluded, such as women. They describe this carbon copy of ANC policy since 1996 as a “new approach”. People who cannot remember the past are not to be trusted to predict the future.

 

Stan du Plessis praises inflation targeting — the Reserve Bank’s policy of jacking up interest rates whenever inflation rises above a certain level. He says that inflation targeting is a good thing, because when Sweden abandoned it in 1937, the result was disastrous. To be precise, Sweden, after fifty years of stellar development into the economic powerhouse of Northern Europe, suffered economic crisis in the 1980s and Du Plessis says that this was because, er, it abandoned inflation targeting in 1937. One hopes that du Plessis’s office has thick rubber walls.

 

Du Plessis does make the valid point that virtually all criticism of inflation targeting is made by people who don’t understand inflation targeting. (Actually, most economic critics in the Tripartite Alliance appear to be people who can’t even read the label on a cornflakes packet.) But the fact that idiots oppose a policy does not make it a good policy. He argues that inflation targeting is not a “blunt tool”, because it has not, he says, done as much damage to the national economy as some people think. Unfortunately, the mere fact that hitting someone with a stick does not crush their skull, does not mean that being hit with a stick is good for the brain. What we need to hear is whether inflation targeting works in reducing inflation. He actually asks the question “Does inflation targeting actually work?”, and then fails to answer it.

 

Instead, Du Plessis manages to show that monetary policy has had virtually no effect on the economy at all. If that is really the case, then why bother to talk about it? Why not talk about the threat to our national security posed by the fairies at the bottom of my garden? Why does Du Plessis insist that inflation targeting is under threat from Zuma, and must be defended at all costs? Possibly Du Plessis, resident of Stellenbosch, cannot handle imbibing large quantities of the local export product . . .

 

Iraj Abedian and Tania Ajam, in their review of fiscal policy, actually provide a mildly interesting analysis. Their contention is that South African fiscal policy between 1994 and 2008 was reasonably successful, which is not exactly a unique notion. They provide a table of state expenditure and revenue over this period (partly interesting because it is clear that the decision to push the fiscus into deficit in 2009 had been made well in advance). They also provide useful tables of revenue sourcing 1988-2009 (showing, interestingly, that revenue from company tax grew slightly while revenue from VAT shrank — that is, that the tax system became slightly more progressive, despite tax cuts) and of provincial expenditure. These tables bear out their contention; interest service spending fell while other spending increased, which seems a good sign, all in all. The tables are also extremely useful as information sources.

 

Abedian and Ajam then point out that there are potential problems ahead. South Africa is committed to increased social spending, but in the current economic crisis, revenue growth will stall, meaning that the budget deficit will grow, which is potentially problematic. They argue that South Africa does not have the capacity to be a “developmental state”, particularly because of incapacity at municipal level — which is at least plausible, though something could be done about this. They also argue that spending alone, unless structural economic problems are resolved, does not truly solve problems — they note, interestingly, that inequality shifts between 1995 and 2005 were highest among whites, coloureds and asians, and lowest among africans — particularly interesting in view of claims that inequality has been driven by a growing black middle class which is blamed for almost all ills. Unless one does something about these inequality shifts, which exist in spite of social grant spending and other welfare, one is not really achieving anything. This sounds reasonable.

 

They conclude by proposing more spending on infrastructure, but also on improving the management of establishments such as schools and reducing money wasted on perquisites for managers and other unproductive state spending. They feel that in the long run this would be more productive than giving the money to the poor, because improved infrastructure would ultimately benefit the poor more. Maybe. It’s a story, anyway, and something which could be debated.

 

De Lange and Seymore argue that South Africa needs a better trade and industry policy, but since they don’t say what it should be, apart from suggesting that there is a need to support potential successes and not support potential failures, we have a problem; also, they seem to have a mental block about supporting things which might succeed in the future but aren’t succeeding now.

 

Robbins says that there is a spatial dimension to industrial policy and national competitiveness, which sounds very well, but apart from saying that there needs to be a better policy on spatial development than now exists, all the Robbins has to say is that things as far as possible need to be decentralised rather than centralised — which is problematic if provincial leadership is corrupt and municipal leadership is incompetent, but Robbins doesn’t discuss such things.

 

Van Aardt tells us that there is unemployment because people don’t want to work. If they live in households earning more than R2500 a month, why should they work? If they are getting social grants, why should they work? The natural conclusion is that we should starve the little bastards out by taking away their social grants and their welfare, and slashing the wages of those in employment, and thus force them to take those jobs which Van Aardt obviously believes exist, even though he provides no evidence for this. Basically, this is psychopathic economics of the Norman Tebbit/Margaret Thatcher school.

 

Van Aardt does provide some interesting tables (showing the remarkable growth of employment under the ANC). He concludes that if only there were less “labour market rigidity” (that is, more capacity for businesses to fire people and slash their wages) then there would be 6 million more people employed. He has no evidence for this; he has a line on a graph (actually, the area under the line) which he thinks represents this 6 million people, but even if they exist there, he has no evidence that their condition would change if businesses were more able to fire people or if wages plummetted. He concludes by talking excitedly about how Chinese wages are from a third to a twelfth of South African wages and therefore we must slash wages and cut back on social grants and import lots of clever immigrants (encouraging immigration might reduce unemployment, but it seems a little roundabout). In the end, Van Aardt does us a favour by showing what is really going on in this book and what the bulk of business economists really want to do to the country.

 

Akinboade, Tokwe and Mokoena discuss health care and conclude that despite lots of spending it isn’t doing a very good job, which is not exactly unusual — but they don’t really suggest any solutions to the problem. Tough on the trees that died to produce these pages.

 

Adam Habib writes a mass of vacuity about the politics of the transition from Mbeki to Zuma which fails to say whether anything is good or bad. He does suggest the introduction of a “pluralist labour system” like that in the United States or in South Africa in the 1980s — that is, dramatically weakening the trade unions. Hmmm. He also talks about a “robust civil society” — actually pretending that the PR-focussed, overpaid stuntmeisters of our “civil society organisations” in South African society somehow had positive political consequences. Such bullshit ought not to baffle anybody’s brains. He also talks about a “strategic foreign policy”, saying that South Africa should abandon links with poor countries and instead start sucking up to rich ones. As with Van Aardt, it’s clear to see where Habib is pointing; the bizarre thing is that Habib is clearly a crony of people like Cronin, and his positions are largely endorsed by COSATU and the SACP — that is, this right-wing position is likely to be a major part of Zumaism. Well, we can’t say we weren’t warned — although Habib is so vague and so overweeningly concerned with representing himself as a Very Important Clever Person that it is easy to miss the corrupt, evil force which he is serving.

 

Then comes the Voice of the Editor, Raymond Parsons himself, and here, luckily, we can’t miss the evil at all. Parsons says that the current economic policy — Asgisa — is quite all right. However, Asgisa depends too heavily on the state, which is regulating things too much. The state needs to help private enterprise, and not the other way around. Back in the 1920s, says Parsons, perhaps the state was needed to help social development, but certainly not now (naturally, he doesn’t say why). Why does SARS work well, but not the education sector? (Can it be because SARS is a lot easier to run, and is also centrally administered? Parsons does not pursue the question.)

 

Admittedly, he suggests that people should read their ruddy documents. Fair enough. Then he says there should be more public-private partnerships, which seems like a catastrophic plan. Then he says that local government needs to be improved (he doesn’t say how). Then he warns against collectivism, claiming that state involvement is getting worse in almost everything. In response to this, he says, “take up the cudgels vigorously, especially through organised business, on behalf of broad business interests”. So, in short, Parsons’ real message is that any change must be what is good for big business. They must have a bigger say in government.

 

Like they don’t have too big a say already.

 

So, what is striking about this book is how unintelligent it is. Even the relatively good bits, like Abedian and Du Toit, are interesting largely because they provide data; they don’t do anything interesting with the data. The positive messages are blindingly obvious. On the other hand, the book is riddled with ridiculous advice which has nothing to do with hard data, but rather with the corporate and class interests of the authors. The authors seem to assume that everybody will skip the boring bits, cut to the conclusion, and go “Aaaaaah!” with delight at hearing that their class interests are being served, while setting back in an easy chair with a Laphroig and a Romeo y Julieta.

 

Maybe the rest of us ought to get on with more important stuff; the scary thing is that if Habib is anything to go by, this is probably where a lot of Zuma’s advisers are at, straight from the Network Cigar Lounge.

 

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