MAMOKETE LIJANE: Let’s not reduce debate to callous rich versus supporters of the poor

In response to a Twitter post by Princeton economics professor Atif Mian showing that injections of foreign money into the Afghanistan economy failed to translate into sustainable growth there, I extrapolated that — as in the Afghan example — increasing consumption via cash transfers in SA without equal attention to productivity enhancement would not raise sustainable GDP.

Mian made the point that raising spending power in Afghanistan without an associated increase in productivity led to a spending boom that vanished as soon as the aid money dried up. A tweep pushed back at my inference. He said comparing social transfers in SA to aid transfers in Afghanistan was like comparing apples to oranges. My reply? They are both fruit.

Mtho, another tweep, asked what then would help people in poverty in the short term while those in lofty offices (his words) debated how best to increase GDP. I replied that poverty alleviation is fundamentally a long-term project linked to GDP. He asked what should be happening to poor people now while we work on long-term solutions. I replied that poor people should continue to do what they have been doing to date.

Mtho was appalled by what he interpreted as my lack of concern for marginalised South Africans. What I actually meant was that poor South Africans should continue to receive grants from the existing system, which has been augmented by the temporary relief in response to Covid-19. But Mtho perceived my lack of support for a basic income grant (BIG) as a lack of support for social support. He couldn’t be further from the truth.

This past weekend I was a panellist on Redi Tlhabi’s The Big Debate show. I was introduced as “the voice of business”. I was not 100% comfortable with that introduction, but as I would colloquially say, “Whatever”! Tlhabi’s position was overwhelmingly in support of BIG.

She put forth that income support had been shown to be beneficial in relieving the negative effects of poverty in places as far away as Brazil and as near as Kenya. The same studies had been done in SA with respect to the country’s existing social support programme, and they showed the same results. Why was the discussion on BIG negating the fact that SA already has 18-million grant recipients? This number has just gone up by 11-million with the temporary social relief of distress grant. But I digress.

Narratives are important and locating the question in the wrong nexus can greatly influence how subsequent conversations evolve. Why are we debating whether we should have a social support programme instead of the actual question, which is how much more social support the state should provide, which brings in the question of affordability, and to whom, which brings in the question of universality.

Who are the “rich” in “lofty” offices? I asked Mtho when he spoke about taxing the rich and disciplining capital. Personal income taxes make up anything between 30% and 40% of revenue in any given year. Mtho might not be aware of this, but he is “the rich” who will be taxed. He might also be quite sad to know that, via his pension fund and other savings, he is also “capital”. It is regular, everyday South Africans who would pay for the BIG, either directly or via expenditure foregone elsewhere.

There are immense complexity and diversity in the arguments both for and against BIG, but all these get buried when we reduce the conversation to a contest between callous rich people and benevolent supporters of the poor. We must push back against the half-truths, omissions and intellectual dishonesty, which colours how we engage with the tough choices of our time.

This goes beyond BIG to all other policy debates. We come from different intellectual traditions, have different backgrounds and have different prescriptions for how to proceed. However, we must first accept that we all want South Africans to thrive.

• Lijane works in fixed income sales and strategy at Absa Corporate & Investment Banking.