President Cyril Ramaphosa is in a virtual cabinet lekgotla with his colleagues, their directors-general and provincial premiers this week to get final approval of his much-vaunted economic recovery programme.
It should not be problematic — there is little reform in the plan other than the pain ministers will already be expecting from big cuts to their departmental budgets as the finance minister tries to get the national debt under control.
But as Ramaphosa’s enemies in the party begin to feel the proximity of the law running down corrupt officials and their political bosses, they are desperate — making threats and floating alarming stories of imminent arrest so as to mobilise whatever support there may be left. Ramaphosa must move swiftly.
He already has close ministers aligned as he seeks final approval for his plan and, for the most part, you can expect the cabinet to simply wave it through. He wants to launch a stream of infrastructure projects, reignite local manufacturing, create jobs to make all this inclusive, and get both energy and digital communications functioning properly again — all, it needs to be said, with the state at the centre, or at the top. Not necessarily running everything but getting its way nonetheless.
In approaching this, Ramaphosa, a big fan of Franklin Delano Roosevelt, US president from 1933 until he died in 1945, is channelling Roosevelt’s famous “New Deal” — a series of institutional reforms covering finance, farming and labour, and often credited with dragging the US out of the depression after the 1929 Wall Street crash.
In the president’s mind, we are in the same position now that America was in 1933. We are on our knees. We have the highest unemployment numbers in the world and our national debt is crippling. It’s time for a New Deal.
Except that is not accurate. SA 2020 is not America 1933 and Ramaphosa needs to be careful not to make some serious errors of judgment. First, it isn’t at all clear that the New Deal did revive the US. The turnaround in performance after Roosevelt took office in 1933 was so quick it cannot possibly be ascribed to his mere presence in the White House. The economic cycle played a hand, just as it did later in the 1930s, when the cycle turned down again.
What really saved American industry, or made it, was the start of World War 2. With huge spending on armaments and millions of soldiers shipped to Europe and the East, so many people found jobs that the US was for a few years literally fully employed.
And that’s the important thing here. While we may like to think we are at war with the coronavirus, experience tells us that economies in the wake of disease and plagues are exhausted and spent. There’s no gas left in the tank. Economies after real wars (for the winners) are pumping and full of confidence. Not for nothing did the US dominate the industrial world from 1945 until Donald Trump was elected in 2016.
So real introspection is required, perhaps especially as the cabinet meets to rubber-stamp the recovery plan. For a start, it doesn’t look much like the New Deal in detail. Roosevelt, for instance, thought there was too much competition and sought to stifle it. Here, trade, industry & competition minister Ebrahim Patel, arguably Ramaphosa’s closest economic policy ally, is determined, through the plan, to enhance competition. In the US, Roosevelt balanced the budget by sharply cutting public sector pay. We won’t.
In the US, Roosevelt sought to create jobs, just as we do. But the effort largely failed until the world went to war. The thing is that, as was the case in the US, results were uneven there and will be here. And politics always intervenes.
I guess the important thing is to tell no lies, especially not to yourself. But minister in the presidency Jackson Mthembu told my television set on Wednesday the lekgotla is to be about getting the economy recovering from the coronavirus. And Ramaphosa said much the same after an ANC national executive committee (NEC) lekgotla over the weekend.
“We emerge from this NEC lekgotla firmly resolved that the new economic strategy must focus both on recovering from the damage caused by the pandemic and fundamentally and radically restructuring the economy to become more inclusive. It is our commitment as all South Africans to tackle underdevelopment, unemployment poverty and inequality, which Covid-19 has so starkly exposed,” he said.
If you start a plan, though, by deliberately distorting its genesis, what hope can there be for the plan itself? Covid-19 was a final stake in the heart for our economy but the ANC, as Ramaphosa knows, had brought the economy to its knees long before Covid. So, lie to yourselves if you must, but not to the rest of us. The lockdown did as much, if not more, to expose inequality as the virus did.
Roosevelt started his New Deal with a clean slate. Ramaphosa decidedly does not have one. Roosevelt gave himself 100 days to ram through key reforms. Ramaphosa is achingly slow. He cannot even agree to stop senior politicians doing business with the state. He first needs to consult.
For this to work, Ramaphosa has to take the whole country with him, and so far in this regard, he isn’t doing a very good job.
• Bruce is a former editor of Business Day and the Financial Mail.
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