Shadowboxing for jobs and economic growth

This entry marks the first of my revived, renamed blog. Yes, future missives of mine will henceforth be fired off under the title, “Chequered Reality”. Because I am a pessimist? No. Because I believe that advocacy on economics is something best rooted in reality, rather than the insular vacuums that the policy wonks love to cook it up in, or the contorted and unrealistic bargains that our political leaders (so often bereft of vision, courage or political capital) sometimes produce.

To demonstrate my intent with this introductory reality check, I would like to take you, the reader, back to early 2009, when a group of prominent South African thinkers embarked on a futures study entitled “The Dinokeng Scenarios”. They posited three national scenarios with the view to 2020, suggesting South Africa’s economy will not grow sustainably if our citizenry does not remain engaged enough to ensure the effectiveness of our state machinery.

One of the scenarios, entitled “Walk Behind”, speculates on such an eventuality in a context that is not too far removed from our current development path. It imagines a state that assumes both leadership over and the management of the economy; in which state planning and co-ordination is seen as key mechanisms for accelerating development and service delivery and, where the governing party will champion far-reaching interventions in the economy that will draw momentum both from international trends and national support born out of fear for the potentially devastating effects of economic crisis.

The Executive was indeed expanded along these lines after the 2009 elections, with economic policy formulation, state planning and co-ordination now politicised to new heights in newly-created ministries. Parliamentary oversight and institutionalised social dialogue (through Nedlac) have not deepened accordingly.

The Dinokeng team held that if we were to continue in such a way, private initiative and civic zeal would be crowded out by the state, which in turn could see our debt levels forced much higher and result in an increasingly defensive and autocratic state. In other words, if political parties and social partners (labour, business and civil society) are unable to deepen their participation, we could easily approach in reality, the story of the frog that obliviously keeps sitting in the saucepan while the water gets hotter and hotter.

So when do we jump, do I hear you ask? I tend to think that in these volatile times you may find yourself very easily jumping out of the frying pan and into the fire, but enough of the cookery analogies for now.

See, further rounds of above-inflation wage settlements for public-sector workers could well see our debt levels soar past the tepid 40% of GDP that it was expected to settle at by 2015. This need not necessarily be the end of the world, but it may very well be the end of our struggle to win the war against poverty and job creation if we don’t look at alternative ways to ease pressure off the fiscus. A great example of how this can be done is by vastly increasing the comparatively miniscule 3% to 5% of the R846 billion in planned infrastructure spending to public-private partnerships.

Will it be easy? No, it won’t. But that is exactly the message here. There is no easy comfort, but some comfort such a step will certainly bring. For one, it will encourage the private sector to be much more competitive and proactive in pursuing the opportunities that exist in the provisioning of quality services and infrastructure to the people of our country. This can free up the government to concentrate on critical issues that have kept international investors from investing in job creating-concerns that will grow the economy and lift the poor off welfare support; critical issues such as universal access to justice, primary education, basic healthcare and housing.

Is it possible for us to edge in this direction now? Yes we can!

If we are to have more government involvement in all sectors of our society, then we need to do it by ensuring greater depth in the oversight of government activities, whether it be through politics, through social dialogue or through public protests when our oversight institutions let us down. The private and the non-profit sectors will have to take on leading roles, for if we were to have a government less intent on playing economic leader and manager at the same time, that void would have to be filled by business and civil society. And they would have to know enough to do it responsively and innovatively, so the shadowboxing may as well start now.