Unemployment, poverty and inequality are macroeconomic policy issues. For various reasons, ANC conferences always dodge these issues and never spell out the macroeconomic policy tools that will be used to address them.
The party’s neoliberal establishment has perfected the art of shutting down debates and suppressing internal democracy. They patronise and gaslight delegates with lectures about how the economy works.
Some delegates do not feel confident to talk about the economy. Others do not understand why the macroeconomic policy framework is so important. It is a set of ideological — not technical — assumptions that determine what is possible.
For example, SA has had a tax-to-GDP ratio of about 25% for a quarter of a century. If it had the same ratio as Poland’s 35% there would be an extra R600bn available. Obviously this cannot happen in one year. But there can be gradual increases that are designed not to undermine the need for a fiscal stimulus.
As blogger Buddy Wells always points out, the Reserve Bank can finance economic development. It can also eliminate the Eskom debt, capitalise development finance institutions and help to establish the state bank that ANC branches have repeatedly said they want.
SA’s debt-to-GDP ratio of 70% is not high by international standards, even when benchmarked against similar upper middle-income countries. SA Inc has a vast public sector balance sheet that has assets of about R3.9-trillion. This includes assets of R2.6-trillion at the Public Investment Corporation (PIC), foreign exchange and gold reserves of almost R1-trillion and cash balances of R289bn at the end of March.
The PIC, the asset manager of the Government Employees Pension Fund (GEPF) and the Unemployment Fund (UIF), has purchased government and state-owned company bonds worth R800bn. The GEPF accumulated a surplus of R470bn — R52bn a year — between 2013 and 2021. The UIF spent R60bn from its surplus assets to pay people who were temporarily unemployed due to the lockdowns.
Over the next three years it will accumulate surpluses of R17bn a year and increase its surplus to R132.9bn by 2025. There is no need for such obscene surpluses. A different set of assumptions about the role of the Reserve Bank, the size of SA’s debt and the use of the SA Inc balance sheet can dramatically change the macroeconomic policy framework.
ANC conferences are a waste of time for anyone who follows macroeconomic policy because they never discuss such issues, and nothing ever changes. The party suppresses the will of its branches and gives no explanations to them for why it cannot implement previous resolutions.
This means ANC resolutions are just suggestions. In 2017, ANC branches resolved to nationalise the Bank. Since then the party’s establishment has lied to its members that nationalisation is unaffordable. It has never explained why it cannot start a state bank by merging African Bank and Postbank.
But nationalising the Bank would be the easiest thing to do. If the government made an offer to shareholders with a large premium, most would probably accept. The last time I looked, nationalising the Bank would cost as much as the average house in Hyde Park.
If shareholders do not accept the offer there would be a proper explanation to ANC branches, and it would be the end of the story. The debate would then move to macroeconomic policy issues such as the need to change the Bank’s mandate to target growth, employment and inflation.
The Bank’s recent decision to hike interest rates by 75 basis points to 5.5% was a futile attempt to address a supply-side shock due to rising fuel and food prices with a blunt instrument that will further reduce demand in an economy that is on its knees after stage 6 power blackouts.
• Gqubule is research associate at the Social Policy Initiative.
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