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Benedict Anderson, author of Imagined Communities, described the elements of Japanese theatre form kabuki as comprising “mysterious silences, lightening changes of mood, terrifying grimaces, spectacular acrobatics and sumptuous pageantry”.
SA’s economic policy debates seem to be caught in a similarly long saga characterised by huge doses of sentimental attachments to a list of priorities and increasingly cynical emotions of whether any of that will be implemented.
Running through these debates of the past few years have been seemingly binary options — initially it was growth vs transformation and, of late, growth vs debt, or more dramatically, a fiscal crisis.
Speaking at a recent conference marking the centenary celebration of the SA Reserve Bank, Prof Stan du Plessis of the University of Stellenbosch reminded us that growth is not a policy: economic growth is the outcome of appropriate macroeconomic policies and measures.
Business Day’s pages have recently been the forum for a debate between some of our leading economic thinkers responding to a speech by former Goldman Sachs executive Colin Coleman. Coleman, in describing SA today as a “two-speed society”, was quite clearly channelling former president Thabo Mbeki’s description of SA as a country of two nations, one black and the other white. The “larger nation of SA is black and poor, living under conditions of a grossly underdeveloped infrastructure” while the latter “is relatively prosperous and has ready access to a developed infrastructure”.
Coleman set out a 10-point economic recovery plan, much of it familiar territory. What did raise eyebrows — very much like actors in a kabuki play — was his argument for a universal basic income grant, but in a “fiscally neutral way requiring large but eminently achievable tax reforms”. He said it should be viewed as an investment, not as an expenditure, suggesting “it may even be SA’s best option for providing short-term economic stimulus during the Covid-19 crisis”.
Thabi Leoka, who serves on the Presidential Economic Advisory Council, came out stridently against any further increase in SA’s debt levels, pointing out that debt is rising, growth is poor and such expenditure is therefore unsustainable. “Though debt in the US, UK and Japan is higher than that of SA, this country’s debt servicing costs are higher”, a function of how ratings agencies view SA, she said.
Leoka suggests talk of the kind of social compact Coleman discusses becomes meaningful only if we address “the inefficiencies in the government that have led to increased poverty and unemployment”, and that “even if the expansion of social support is introduced, the rate of deterioration in services will subtract from the value of such grants”.
Alexander Forbes chief economist Isaah Mhlanga has warned that “eventually, when there is nothing else to be cut, social spending will have to be cut”.
Last week, Michael Sachs of the Southern Centre for Inequality Studies, speaking at a webinar titled “Rebuilding Economies”, hosted by the Gauteng City-Region Observatory (GCRO) and Mapungubwe Institute, pointed out that debt stabilisation will depend on the biggest fiscal consolidation ever.
Sachs argued that if growth accelerates and debt stabilises there will be an urgent need to resolve the debt overhang. This will mean an extended period of deleveraging, wealth taxes, public balance-sheet restructuring and rand asset devaluations.
Mbeki weighed in recently by reiterating the need for a social compact that is implementable, saying this is the first time since SA entered its democratic era in 1994 that society is “speaking in one voice about one thing”.
Notwithstanding their ornate costumes, kabuki plays do explore serious themes of honour, justice and order. Perhaps our economic policy debates could also go back to basics and get serious. How do we meet the basic needs of all South Africans while providing each one of us with a dignified place in society? That surely is the starting point for any social compacting.
• Abba Omar is director of operations at the Mapungubwe Institute.
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