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ON THE BRINK
SOUTH AFRICA’S POLITICAL
AND FISCAL CLIFF-HANGER
CLAIRE BISSEKER
Tafelberg
To my darling Ashley,
in eager anticipation of your own first book
‘Same old human story
The saddest winds do blow
While we’re trapped in the language of dark history
Underneath a human rainbow’
– Johnny Clegg
Foreword
Claire Bisseker’s On the Brink: South Africa’s Political and Fiscal Cliff-hanger is a very timeous contribution to our national debate.
As Professor Adam Habib says in a passage cited in this book, our economic discourse has taken the shape of a binary adherence to a belief in the free market (and a rigid adherence to the mechanisms thereof) versus a retreat to 1960s Soviet economics, in which nationalisation of industry is seen as a panacea for the economic problems of a developing country. The fact that these are the two dominant models in which South African economic debate now takes place reveals the very poverty of thinking about so vital a national problem.
This book, in clear and concise terms, reflects upon how we have come to this pass and why these two strains of economics are now hegemonic within our public life. As Bisseker shows, this situation is particularly depressing, in that the democratic government after 1994 rose to the extraordinary challenges that had been posed as a result of the mismanagement of the economy by the apartheid government, as well as the levels of corruption and unaccountability that characterised political life prior to 1994.
For example, under the leadership of Trevor Manuel, the debt-to-GDP ratio was halved from over 50% and the country’s finances stabilised. Absent this achievement, interest on debt would have overwhelmed any capacity of the state for reconstruction. Manifestly, this achievement alone was insufficient to solve 300 years of gross exploitation and the racially skewed economy produced thereby.
Hence, the problem that now confronts the country has been its inability to develop a meaningful programme of reconstruction of the economy, which would make 50 million South Africans economic citizens (as opposed to simply political citizens) – and this all within the context of globalisation.
In summary, neither a myopic free-enterprise approach nor a return to the kind of Soviet economics that had such disastrous consequences more recently in Venezuela can solve the fundamental problem: meaningfully growing an economy that benefits all who live in it.
There can be no doubt that perpetuating the profound inequalities of South Africa and the degrading daily reality that confronts historically disadvantaged communities of millions of people (who, sadly, remain presently disadvantaged) is not only immoral, but also unsustainable in the long run if our democratic enterprise is to attain permanent traction.
This book provides an opportunity for deep reflection on these realities and the consequent need to think laterally towards the creation of economic policies that will benefit all in a meaningful fashion rather than just a few.
The task is not to ensure that the demography of the ownership of the economy changes from a few whites to a few black capitalists alone but rather that the levels of inequality and poverty that characterise today’s South Africa are radically transformed, so that we can then truly say South Africa belongs to every single person who lives in this country.
For this reason, this book comes at a most propitious time in our history as we are enjoined to move beyond populist slogans and instead debate how to grow the economy significantly, that is to the 4% to 5% GDP growth rates as promised in the National Development Plan – an achievement that would simultaneously provide a truly meaningful economic stake for all 50 million South Africans.
Judge Dennis Davis
Preface and acknowledgements
I don’t remember much about my interview for a job at the Financial Mail in Cape Town 20-odd years ago, but I do remember the then editor, Nigel Bruce, asking me what the country’s number one economic problem was. Unbeknown to Bruce, there was an illustrated cover of a recent copy of the Financial Mail on the wall behind him. It showed South Africa’s finance minister at the time, Chris Liebenberg, being carted skywards in a hot-air balloon under a headline that suggested that inflation was South Africa’s number one problem.
Still, I answered: ‘Unemployment!’
‘No!’ said Bruce, ‘Inflation!’
I got the job anyway (clinched by my willingness to work for peanuts), but I’m still surprised when the universe tries to nudge me in the right direction, like it did that day. Two years ago, Tafelberg’s Erika Oosthuizen gave me a similar prod when she suggested I write a book exploring whether South Africa was going to go over the fiscal cliff. I demurred, having three kids and a full-time job, but she had planted a seed and when I was subsequently granted a few months of unexpected long-service leave, I took up the challenge.
This book is written in the style of a Financial Mail cover story, which makes it essentially a work of journalism. It contains lots of reportage and direct quotes, but plenty of analysis and opinion too. It’s a style that takes the nub of academic research and blends it with direct interviews with the researchers themselves to make the technical insights come alive on the page. It means that when the author’s opinion is delivered, it comes bolstered by fact, making it that much more persuasive.
Journalist turned author Malcolm Gladwell uses a similar technique in his best-selling books. Like Gladwell, I also cut my teeth as a science writer, which probably explains my attachment to academic research and the pleasure I get from making it accessible to readers.
I would have valued a book like On the Brink when I was an economics student at university. I hope it will help readers make sense of South Africa’s economic decline over the past five years and the country’s failure to get on top of its most pressing problems – unemployment, poverty and inequality. It should leave them with the understanding that these challenges, deep-seated and complex as they are, are not insurmountable with the right economic policies. Therefore, it’s not just a matter of time before South Africa becomes a failed state, though we are skating very close to the edge.
This book would have been impossible to write without the backing of the Financial Mail, which gave me not only time off to write it, but also permission to quote from the publication’s articles. These form the backbone of this narrative. Thanks especially to the editor, Rob Rose, who also generously agreed to write the superb chapter on state capture, despite the many other pressing demands on his time.
Over the past year, I have done more than 15 dedicated interviews for this book. The most substantial were those with Trevor Manuel, Nhlanhla Nene, Lungisa Fuzile, Michael Spicer, Adrian Gore, Nic Borain, Justin Barnes, Rian le Roux and Iraj Abedian. Several other economists have been unstinting in sharing their technical expertise over many years, including Sanlam’s Arthur Kamp, Rand Merchant Bank’s Ettienne le Roux and Deutsche Bank’s Danelee Masia, for which I am exceedingly grateful. Economists tend to get a bad rap for practising their dismal science but I have found them to be consistently the most lucid and perceptive commentators on South Africa’s condition. The last time they were this worried about the state of the economy was during the global financial crisis of 2009.
Trying to predict the end game now, in June 2017, before the ANC’s policy conference, the parliamentary vote of no confidence in Zuma, or the crucial December ANC elective conference is fraught with peril. Zuma has dug in, seemingly impervious to the revelations emerging daily from the Gupta email cache, though the careers of Brian Molefe, Ben Ngubane and Hlaudi Motsoeneng have all bitten the dust in recent days. More dominoes will fall before the end.
Right now it feels as though the country could go either way. It teeters on the brink of making a calamitous mistake. I fear that it