LUKANYO MNYANDA: Twenty years later and the BIG debate rolls on

South Africans and their art of debating.

It really should come as no surprise that while most of the world is horrified at the sight of violence in Ukraine and is calling for the aggressor to lay down its arms, President Cyril Ramaphosa and the ANC see the situation as merely a conflict that needs to be managed through negotiation. It doesn’t matter to them that there’s no moral equivalence between the two sides.

This week, I was also reminded of something else the country has been debating for a long time. I’m told it’s about 20 years, though it feels much longer. That is whether SA can afford a basic income grant (BIG). I remember writing about it when I was starting my journalism career in the 1990s.

There was another debate on this issue this past week, which was one of the more interesting ones that I’ve observed. The irony is that I wasn’t even going to attend given the time and the need to produce a newspaper. It was only after I got a text from one of the people organising the event, who also happens to be a friend, cheekily suggesting that Kgalema Motlanthe wasn’t going to start before I got there.

And I wasn’t going to let a former president down, so I left the paper to finish itself, rushed home and put on a suit. And I’m glad that I did as there were some really intelligent people there. Much of the focus was on whether SA, and the Treasury in particular, has a poverty of ideas. Finance minister Enoch Godongwana would have been unhappy with some of the tone.

The debate often takes a purely emotional and moral nature, with the economics relegated to the margins. Shortly after the budget, I attended a number of functions with the minister, and he took particular offence at the idea that he was “anti-poor” and in turn he accused his critics of being privileged people who merely want to bribe the poor to compensate for their exclusion in the economy.

It's easy to relate to his frustration with the tendency to silence dissenting voices with labelling. As someone who grew up in a township and had to endure schools with broken windows, so we all had to huddle in a corner when it rained, I’m equally  annoyed when a person that had the privilege of growing up in Sandton questions whether I sufficiently identify with “the poor”. And usually my crime is to do what I’ve always done — question the viability of what I otherwise support.

On this particular debate, we haven’t gone far since the 1990s. The difference now is that the levels of poverty and unemployment are much worse. And after the violence and looting that gripped the country in July 2021, the political pressure for it is more intense. There’s also the commodity boom, which has some arguing that a BIG would now be permanently affordable.

What was clear was that nobody questions the moral imperative, and necessity if the society is going to avoid a total collapse, to ensure that people have a minimum income level that at least ensures they don’t starve. Do you do this through handouts or a growing economy that starts to eat away at unemployment?

There are still the old stereotypes and use of the straw man fallacy that says those who disagree are disdainful of poor people, whom they perceive as lazy and likely to waste their “windfall”. Proponents of a BIG still see it as cost free, so they don’t engage with potential trade-offs in any serious way. Why would you if they don’t even exist?

BIG will pay for itself through so-called multiplier effects, they say, as money in people’s hands boosts demand. But then they fail to provide real-life evidence of this having happened in the past. In SA, the period since 2009 points to the opposite. Government debt has exploded, together with unemployment and poverty, and yet we are still expected to accept this idea of these effects as an article of faith.

Those who accept the notion that there’s no such thing as a free lunch asked questions about how it could be funded, assuming the commodities boom won’t last forever. There seems to be a consensus that borrowing to fund consumption would be a bad idea. Higher taxes? This is always a tricky one as one could easily get sucked into a debate about why taking more from the rich could be inappropriate. Unfortunately, the fact that SA has a small and shrinking tax base cannot be wished away.

And then there are more outlandish ideas such as merely getting the Reserve Bank to print money. I’m not an economist but am sufficiently familiar with the rules of demand and supply to get a sense of what would happen should the market be flooded with huge amounts of extra rand. There’s the idea as well that we can simply use our foreign exchange reserves or raid workers’ pensions. What I suspect I’ll never get an answer to is why, if these easy and cost free solutions exist, they’ve never been tried before.

It was asked how viable SA would be as a society if it really managed nothing more than the poor rates of growth forecast by the Treasury. My question is how viable will the country be if it adopts reckless experiments that then lead to the total collapse of the economy. How viable is Venezuela?

But I’m going to take Motlanthe’s advice and avoid talking myself into a depression and be happy that there’s a proper debate going on. Unfortunately, we are not any nearer to an answer.