The world’s largest economy is by far the world’s biggest importer, particularly of manufactured goods, as — unlike the second, third and fourth largest economies — energy is a small component of US imports. Through high volume importing of finished goods the US creates many millions of jobs in other countries.
Since the early 1990s the world’s rapidly developing countries have emphasised value-added exporting to the US. Conversely, most commodity exporting nations are poor. Providing raw materials creates few jobs and places countries at the low-development end of supply chains. SA’s top trading partner is China and, as we pay more for their finished goods than they pay us for commodities, we create Chinese jobs while undermining job creation here.
Governing elites of commodity exporting nations can live sumptuously even if their average citizens remain impoverished. While this was the situation SA needed to escape, our 1990s’ transition was predicated on constructing a formidable constitution. We ignored the upliftment escalators that reduced extreme poverty from 36% of the global population in 1990 to less than 10% 25 years later. Prudent economic policies were eschewed as the ANC morphed from its liberation movement roots to become a patronage network that suffocates our economic potential.
ANC loyalty was originally inspired by liberation goals, whereas today it is purchased through patronage. This deters the party from seeking the compounding development gains offered by competing to add value in global supply chains. However, such costly reluctance has been politically camouflaged by emphasising racial inequality. Now, SA has the world’s highest income inequality — even if white incomes are ignored.
The ANC has showcased its anti-Western biases and it is now using its hosting of the Group of Twenty (G20) to emphasise “solidarity, equality and sustainability”. People are expected to understand these terms with reference to colonial oppression narratives.
Alternatively, and prodded by the re-elected president of the largest economy, leaders of most major economies are pivoting decisively from woke politics towards pragmatic policies. Yet the ANC’s international alignments and rhetoric remain defiant despite the party’s hopes of securing a voting majority with grants being rebuffed. Last year’s voters identified jobs as their top priority.
Our national dialogue is long overdue for a material upgrade. Fellow columnist Peter Bruce recently observed: “There is no serious growth plan, and no-one asks the right questions inside the ANC.” (“Chilling warning from the CEO of Toyota”, January 30).
Big business and the ANC jointly pursuing investment-led growth was only sensible if it provoked the ANC to adopt growth-enabling policies. Instead, ANC policies are now more misaligned with globally determined growth drivers than ever.
President Cyril Ramaphosa lacks support within his party to pursue growth through raising SA’s competitiveness and productivity, as this would require patronage be sharply reduced. As patronage is the glue that unites the ANC’s disparate alignment partners, and Ramaphosa’s primary loyalty is to the ANC, his party’s policies will continue to entrench the world’s most severe youth unemployment crisis.
Donald Trump can empathise with Ramaphosa, as political “insiders” can’t purge patronage. However, the US president has the ultimate “outsider”, Elon Musk, to purge his government’s excessive preponderance of entrenched Democrats.
Trump and Musk want Ramaphosa to propose a commercial, trade-not-aid type of collaboration. Supply chains serving US consumers should access some of the world’s most emotionally intelligent people to make companies that are increasingly reliant on AI more humane.
That many black women in SA have remarkably high emotional intelligence traces to survival pressures as SA has some of the world’s highest incidences of rape and murder. Survival pressures explain many competitive advantages. Japan’s violent history spawned the legendary sword making and metallurgy secrets which informed Japan’s industrial prominence. This began Asia’s phenomenal rise.
New digital jobs require skill sets ranging from rather modest to truly exceptional. To swiftly mitigate our youth unemployment crisis, our school leavers should be digitally integrating into supply chains feeding the US’s enormous import flows. If Ramaphosa were to ask Musk how SA should explore such emerging niches, that could ignite a new beginning here.
• Hagedorn (@shawnhagedorn) is an independent strategy adviser.
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