I wish I lived in the same country as President Cyril Ramaphosa.
Both our countries have great potential and wonderful people. But in his country the government is charging ahead with progressive, finely-tuned policies that will transform us into a beacon for the mixed economy; a coherent state “crowding in” a dynamic private sector with which it is in close partnership and consensus.
Job creation is on steroids. Soon workers will sit on the boards of all SA companies and there will be harmony and limitless growth. No-one will be left behind.
In my country the president is busy promising his second economic compact in three years. Unemployment is at record levels. Industrial policy is centred on the delusion that we are China circa 1988, about to let loose the might of the market and smash poverty with a mighty right hook.
Ramaphosa was in parliament on Wednesday answering the debate on his state of the nation speech, which he famously started off by proclaiming that “like it or not, it is business, not government, that creates jobs”.
That was a big step for an ANC leader, even though, in interviews afterwards DA chief whip Natasha Mazzone complicated things a bit by telling a TV reporter it was business’s job to create jobs.
Actually, no-one thinks that. What Ramaphosa meant was pretty conventional — given sound and stable policy, the net effect of business investing and making profits was that more jobs are created as a secondary consequence in the swirl of activity, and the taxes those profits attract enable government to provide services to people who need them. Hence, no-one is left behind.
Still, Ramaphosa spent much of the week, yesterday included, dialling his business punt back. Little wonder. The business-not-government-creates-jobs thing drew quick fire from his political allies. So it was back to being a developmental state, partnering with the private sector. What was a statement of fact quietly became a “debate”. That’s as far as the ANC gets. Normality restored.
Ramaphosa kept trying though, and reached out yesterday to China, which under Deng Xiaoping became an industrial giant by setting the private sector and market economy free. The ANC likes China.
But we are not China 1988. Not now, not ever. China grew because of the sheer size of its internal market. Ours is tiny and possibly shrinking. Our private sector does not need to be set free — to an extent it always has been. At best it can be left alone and encouraged to make big profits that can be taxed. What needs wholeheartedly to change is ANC economic policy.
The current obsession with industrial localisation, an interference reinforced yesterday by Ramaphosa, who claimed it was generating jobs and investment, would be almost comical if the results did not threaten to be so tragic. There is no evidence there are net new jobs because of it.
Where companies are investing they are being protected by a stiff and protectionist import regime that will simultaneously drive jobs out of import sectors and raise prices for South Africans. Poultry, textiles and steel are cases in point. That Ramaphosa blithely repeats the story fed to him by his ministers does him no credit.
Localisation is nowhere near succeeding. What he should have done is to try to set the economy on an export drive. Set targets we can all follow and cheer. Hell, if you really want job creation, stop taxing local companies on the profits they make from exports. That’s how India became a pharmaceuticals power. You would make up for lost revenue from the cuts in welfare. He is going to ask business, again, “what do we do with the 11-million people now out of work?” Their answer, surely, has to be fewer rules, less interference, less government, less tax.
But we have no ambition. The almost certain failure of localisation to ignite re-industrialisation here will stain the Ramaphosa legacy much more than the slow pace of his political and institutional reforms. He should take a leaf out of the book of our most successful industrial activity, the manufacture of vehicles. It is a complex, high-end export sector, owned by foreigners. An example right here at home.
Think of any product. Can we get its best manufacturer to come and make it here too? Put simply, where we can we should be driving into export markets. Yes, the oranges to China. The chickens to Saudi, or wherever. Fabulous. A hundred more products and a hundred more markets to go.
And we have to accept that some people are going to be left behind. Michael Sachs, a former director of the budget office in the Treasury, just published an important paper on the proposed basic income grant in which he flatly calculates that “it seems sensible ... to design social policy on the assumption that a large share of workers will remain permanently excluded from formal employment”.
That’s why you need your companies rolling in money. The taxes they pay and the taxes their employees pay keep the state on its feet, helping the poor get great schools and hospitals, great transport and clean water. But now I’m also dreaming...
• Bruce is a former editor of Business Day and the Financial Mail.
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