Waking up to coalition politics
As the likelihood of a 2019 national coalition government is flipping from exceedingly unlikely to highly probable, the national policy dialogue must be updated - and upgraded - urgently. The ANC’s leadership has considered the party’s national majority immutable and their stultified policy making has been largely unresponsive to the broad economic deterioration it has provoked. The ruling party’s recent conference, confirming policy paralysis, was not an aberration for the party, or SA.
The current election path will not provide mandates for necessary policy shifts. The lead-up to the 2019 ballot will pit pithy populist sloganeering against anti-corruption vitriol. The current path tempts a national coalition government inclined toward lowest-common-denominator compromises.
That the country transitioned to a legitimate democracy peacefully was truly impressive. But perceptions that the ANC, or SA generally, is expert at managing social justice challenges are invalidated by more than half the population being extremely poor with poverty becoming increasingly entrenched. There are deep disconnects and misunderstandings which neither the ANC nor SA’s national dialogue are facing.
World Bank’s data show extreme poverty has declined from 35% of the global population, when the Berlin Wall fell and Mandela was released, to just under 10% today. Pivoting from communism was very effective at advancing social justice through achieving sustained economic growth. By contrast, SA has failed to transition its economy from growth reliant on resource exports into a sustainable jobs creating machine. Voters must now freshly query why SA is so different from prosperous countries.
The many nations which have achieved broad economic prosperity in recent decades have emphasised global integration. The ANC, correctly, sees the party’s legitimacy as being tied to its, now deteriorating, social justice credentials. That the ANC sees global integration as contrary to advancing social justice is tragically wrong.
The crux of the problem runs deeper. SA has never produced a government adept at reconciling social justice objectives with global realities. Under the ANC the country’s policies have been inward, incoherent, and ineffective. Even worse, virtually all of SA’s political discourse is perceived through victim-versus-villain prisms. This precludes the coordination needed to achieve broad competitiveness. Also, victim politics had historically reinforced the ANC’s legitimacy and this is now reversed.
The ANC’s economists are hopelessly unrealistic. Economists and thought leaders from the private sector and NGOs have, for the most part, focused narrowly reflecting the presumption that the ANC’s national majority was unassailable. It has suddenly become time to freshly replumb the basics.
Encouragingly, a coalition government would have a good chance of tamping the political exploitation of historical injustices simply through agreeing a well-reasoned core goal. The wording should resemble: ‘To rapidly expand SA’s sustainable black middle class.’ This would make it possible to break how policies cause SA’s dysfunctional politics and bleak economics to reinforce each other.
There has long been very broad agreement around the need to increase SA’s black middle class. However, including the terms “sustainable” is a much needed game changer as it impedes political gaming of the economics.
If the ANC, and the country, had agreed in the 1990s to focus on tracking sustainable black middle class growth, the political imperative of advancing social justice would have folded into a coherent set of economic policies. SA’s economy and politics would now be vastly more robust. Prioritising black middle class expansion is far more purposeful than fixating on overcoming inequality - a multigenerational objective.
Social justice misconceptions have crowded out acceptance of guiding economic principles, such as “the greatest good for the greatest number” and “highest and best use”. This invited cronies to create a broad patronage network using unsustainable jobs to cement patron loyalties. Just as dangerously, it perpetuated the false belief that SA can choose to engage the world sporadically and on its own terms.
Opportunistic politicians are tempted to twist social tensions in ways which preclude economic success. The ANC exploited its hegemony of the social justice space to its own detriment. The same fate awaits a post 2019 coalition government if the national dialogue doesn’t develop a working understanding of how social justice, politics, and economic development must be harmonised.
If broad political support is achieved, through a national coalition government, for prioritising the expansion of SA’s sustainable black middle class, economic development challenges will become manageable. However, for over twenty years, the ANC has owned the policy making space while aggressively discouraging outside input. SA’s economic development challenges are complex while its knowledge base is remarkably inadequate.
As business leaders have recently, and reluctantly, sought to find a policy voice, they have been undermined by little understanding of the nuances of 21st century economic development drivers. Public and private sector leadership skills and knowledge bases differ. This is particularly true in SA’s case as the country has never had a political dispensation which curtailed a majority of South Africans being extremely poor.
While SA’s national dialogue needs to confront a multitude of economic development misunderstandings, two stand out.
First, the country is not suffering from a lack of investment so much as the economy is unable to access adequate purchasing power. There are no plausible scenarios whereby SA achieves broadening prosperity without surging exports of value-added goods and services.
Government policies have marched the economy into a cul de sac. That so many households are overly indebted while the workforce is so poorly skilled cannot be fixed by modest interventions. This should help clarify why the unifying goal needs to be expanding SA’s sustainable black middle class. Today’s weak domestic consumption demonstrate how policies which spurred unsustainable growth were counterproductive.
The lack of adequate purchasing power is a severe impediment. Efforts to, say, increase productivity can now easily backfire. Most developed and emerging countries have displaced massive numbers of farmworkers through mechanisation. Productivity then increases but this only leads to a general increase in living standards if there is access to sufficient purchasing power that the displaced workers find employment elsewhere, probably in or near cities.
The rise of Asia would have been far slower if western purchasing power had not been accessed. The pace also benefited from integrating into global and regional supply chains which accelerated diffusion of industry knowhow.
Second, government interventions to advance social objectives, such as poverty alleviation, are not effective in the absence of meaningful economic growth. The vast majority of proposed remedies are of little relevance without reasonable growth.
Both of these key points highlight the need to focus on expanding SA’s sustainable black middle class. A coalition government would offer potential for a fresh start but as George Harrison cautioned, “if you don't know where you are going, any road will take you there.”
Shawn Hagedorn is an independent strategy adviser
