When you join an organisation you are often engulfed by the prevailing ethos. When you leave for reasons of broad and specific unease you can revisit ideas unrestrained by party political considerations, and tease out some of the fault lines.
One of these is the fashionable championing of growth and the use of GDP as a measure. Thomas Piketty has presciently highlighted the associated problem by documenting when returns on capital exceed the growth rate, inequality rises.
First, some upfront observations: the ANC government has run out of cash. All state enterprises need cash injections and now the government needs private sector funding to kick in. The problem is that the private sector is digging in its heels unless it believes the cash injection has a good chance of a positive effect. Enter the DA — as the party of business, white-led as it happens, that believes in economic growth to achieve “a better life for all”.
Erstwhile protagonists in the ANC have found this goal to be elusive while they fostered new elites underscored by disingenuous ideologies and massive corruption. Now the emerging coalition appears to be united in championing business-led economic growth as a panacea to societal ills: “clean up the corruption and power the economy” are the marriage vows of this union. There is, sadly, little investigation of whether economic growth really is a panacea for societal ills.
Moreover, the way we record growth using GDP as a measure does not indicate the value of economic activity, and most measures of growth are not even related to GDP per head. Worse still, few metrics provide any indication of who benefits from that growth.
As former US attorney-general Bobby Kennedy said many decades ago, “GDP counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts jails, napalm, nuclear warheads, and the loss of natural wonder in chaotic sprawl. Yet it does not pay attention to the health of our children, the quality of their education, or the joy of their play... It measures everything, in short — except that which makes life worthwhile.”
International critics of growth as a panacea have cited Ireland as a notable example, where about a quarter of its GDP consists of the profits of multinational corporations recorded in the country. These profits are not attributable to any resident. Thus, GDP growth in Ireland might bring no benefit to its population as a whole, let alone to any individual Irish person. More commonly, GDP growth primarily benefits the already wealthy, making it a particularly poor target for any society.
The focus should be on meeting basic needs for all as the primary objective
What needs to be addressed, and is largely neglected, is the question of needs: clean air, water, good food, warm shelter, health and education are essential for a good life. It’s not a question of lip-service, the mode of delivery must be scrutinised.
It is important to understand that meeting needs does not negate the fulfilment of wants, but there is an order of priority, and as such it can be argued that meeting wants is secondary to meeting needs. GDP does not recognise this fact, and nor does the pursuit of growth. Accordingly the focus should be on meeting basic needs for all as the primary objective. Only then can the meeting of wants, within sustainable limits, be considered.
One of the biggest problems is the move to financialisation, a process whereby financial markets, financial institutions and financial elites gain greater influence over economic policy and outcomes and where a group of people make money without producing anything. When the wealthy “elite” see their growth-dependent incomes and returns on capital diminishing, they may take more from the rest, leading to rising inequality. SA, with the highest income inequality in the world, exemplifies this problem. Sadly, our choices at the ballot box offer no opportunity for a government that can address these realities.
The opposition in SA, accounting for about a third of parliamentary seats, is represented by a venal rump led by Jacob Zuma, a champion of state capture, and Julius Malema’s ostensibly left-wing EFF — implicated in the draining of VBS Mutual Bank, after which its services came to a halt, affecting 15 municipalities. The accounts that were looted belonged to stokvels, burial societies, pensioners and educational investments. This motley bunch, who now constitute the opposition, are ill-positioned to provide honest alternatives to the champions of economic growth.
Many global organisations, alongside academia, economic think-tanks, environmental organisations and charities, advocate new indicators of economic success beyond GDP. However, the “Beyond GDP” movement is unheard of in SA’s political mainstream. A start might be to track how revenue from resource extraction is invested in achieving the UN sustainable development goals (SDGs), particularly in infrastructure, education and healthcare, to ensure long-term economic benefits.
Politicians, supported by government, mainstream media and former ANC supporters now embedded in business, continue to chant the mantra of GDP growth. Meanwhile, most citizens lack adequate access to essential services and necessities, live in rural poverty or in areas defined by apartheid’s spatial planning. The dividends of growth trickle down slowly, and increased taxes to address these issues are seen as a brake on growth.
Unfortunately, these insights have not been addressed adequately. In some countries, this process is already under way. For example, the “Wellbeing Budget” of New Zealand is a method by which national priorities are set and the government’s budget is allocated. It’s time to open this discussion here too.
• Cachalia is a former DA MP and public enterprises spokesperson.
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