Being the world’s most woke society threatens our economy and constitution
8 March 2023
If ‘prioritising historic racial injustices to the detriment of developing opportunities’ is a pragmatic description of being “woke,” could any country be half as woke as SA?
Of the sixty countries which account for over 90% of global economic output, none has a youth unemployment rate that is even half of ours. Well over 60% of young black South African adults wanting jobs are neither employed nor in school. After a few years of having never been employed, most will become, in effect, unemployable. Employers will favour more recent school leavers or workers with experience.
As our economic growth isn’t expected to noticeably outpace our workforce expansion rate, those that don't find meaningful employment within a couple years of leaving school, probably never will. Viewed realistically, our youth unemployment statistics do not reflect temporary unemployment but our making what should be our most precious asset, the next generation, stranded assets.
What then are we to make of the ANC’s success at framing our youth unemployment crisis as a moral tradeoff between fiscal rectitude and compassion - as expressed by sub-subsistence payments? Is our accepting such framing not incontrovertible evidence of the country drowning in wokeness?
Our job market for school leavers is far worse than what other societies would tolerate, yet we aren't prioritising it. Nor do relevant indicators suggest noticeable progress anytime soon. Our national discourse and policies prioritise redressing racial inequality while paying lip service to youth unemployment.
Wrong
As someone who has long been publicly auditionting prospective solution paths, I feel that I should share my perspective. Twenty-five years ago I had just completed the CFA curriculum and concluded that what SA lacked was commercially-minded professionals with a thorough understanding of how economic development success factors were evolving.
I believe it was twenty years ago this month that BusinessDay published a brief article summarising my research. The gist was that SA needed to prioritise value-added exporting. That annual growth neared five percent over the next few years seemed to have proved me dead wrong.
We now have more data.
After joining the World Trade Organisation in late 2001, China sharply expanded its infrastructure spending. This spiked demand for many commodities. SA benefited through higher export income, a stronger rand, lower interest rates, higher property prices and a broad expansion of debt-funded consumption.
SA’s growth spurt traced to China’s extraordinary success at value-added exporting fueling its massive infrastructure expansion drive. The common denominator among emerging countries that have sustained high growth over recent decades is much value-added exporting.
In contrast, commodity exporting is a boom-bust proposition which supports patronage while creating relatively few jobs. Rather than spurring job creation, the recent strength in commodity demand expanded our government’s capacity to fund grants and other forms of patronage.
While China’s four decades of phenomenal growth reflects impressive execution of its powerful development strategy, value-added exporting alongside high household savings, the ANC sought to cement its electoral support through expanding reliance on patronage. This spans civil service and union employment as well as tenderpreneurs and grant recipients.
Such widespread patronage is irreconcilable with emphasising value-added exporting and development as it undermines competitiveness and productivity. Perhaps it's counterintuitive but, high household indebtedness mixing with rampant poverty and unemployment increases patronage’s electoral value.
Twenty-first century development differentials among emerging countries largely track the portion of a country’s young workers who add value to exports. Aside from the automotive manufacturing sector, which is highly distorted by political interventions, our anti-inequality policies, such as BEE and localisation, undermine our prospects for meaningful employment via value-added exporting.
Idled young adults
At least a quarter of our currently idled young adults should be employed adding value to exports. As this would support a significantly steeper growth trajectory, employment serving the domestic market would expand accordingly.
Instead, since before our growth spurt of two decades ago, the ANC has sought to grow low-productivity jobs reliant on government funding or regulations. Such patronage maximisation was eventually maxed out as such jobs relied on domestic consumption which had been substantially brought forward through expensive debt - which has subsequently impaired growth.
In effect, we weaponised the sophistication of our banking sector by encouraging consumption at interest rates which undermined household wealth accumulation. Meanwhile, worker productivity stagnated, as reflected by per capita income peaking well over a decade ago.
We have avoided a balance of payments crisis due to high commodity exports mixing with the lack of robust imports due to modest middle class growth from a small base. While we have postponed a debt crisis due largely to prudence during the Mbeki-Manuel era, our cost of capital brakes development.
There are well known remedies for such vulnerabilities as well as for rampant patronage and blatant corruption. However, the brunt of the damage caused by the ANC’s horrific economic stewardship has been inflicted upon unemployed young adults. Countries avoid excessively high youth unemployment as it imperils both economic progress and social cohesion - while being effectively unrectifiable without sustaining high export-led growth.
While we should pummel corruption while purging incompetency and sharply upgrading education outcomes, such successes would be insufficient to materially reduce our youth unemployment. Our gargantuan employment deficit reflects patronage-motivated localisation policies reacting to woefully insufficient domestic purchasing power - which stagnates due to government policies and practices.
Big business’ advocating for investment-led growth provides support for prudent policies. But it hasn’t been effective, and even if its goals were met, the vast majority of our poor and unemployed would remain poor and unemployed.
Patronage leads to localisation
Our political economy’s core shortcoming is that patronage leads to localisation whereas economic growth today is highly dependent on intense global integration. Consequently, our sky-high youth unemployment is becoming entrenched.
The ANC was well positioned to exploit woke-styled dynamics by labelling its patronage as redistribution. It could package its anti-growth, pro-patronage policies as a morally-enthused response to apartheid’s legacy of extensive racial inequality. ANC opponents can now contend that our malaise traces to three decades of corruption and incompetence. Both positions are “woke” in that racial inequality distracts from focusing on solutions.
It is easy to imagine Paul Mashitile and Julius Malema soon running the country and that if elections are held in 2029, they will be a sham. We might then look back and wonder if disaffected voters could have been motivated to vote for centrist parties in 2024.
A low bar to clear
Outperforming the ANC’s horrific economic stewardship is a low bar to clear. Yet materially upgrading the lives of SA’s poor and unemployed would necessitate the relatively rapid creation of millions of jobs. That would require emulating the many high growth economies that prioritise integrating into global supply chains.
During the twenty years since I started advocating for such integration, I’ve written dozens of articles and met with various leaders about how to address our underlying economic structure being non-viable. The closest anyone ever comes to challenging my core contentions is to subtly suggest that our workforce is inferior. Perhaps that is racist or elitist; it is certainly defeatist and misguided.
All societies always have workforce issues. How they manage them determines their future prospects.
Adequate solutions
It is hardly surprising that the apartheid-to-Mandela journey provoked abundant wokeness. But can this explain our national discourse being devoid of adequate solutions?
It remains reasonable to presume that the ANC will dominate the post-2024 government. It is not prudent to casually presume that the Ramaphosa-led team and its successor will seek to jail those most corrupt among them and then accept rejection by voters in 2029. If Malema becomes deputy president, it will be because the ANC needs EFF votes in parliament. His influence would be consequential.
Most of today’s young black South African adults will go through life unemployed, poor and reliant on subsistence payments. Meanwhile, rather than being a contestation of inspiring solutions, our national debates largely feature accusations of racial injustices eliciting countercharges of electing a criminal syndicate.
Free speech and voting are among the most precious of rights. Our conversations are woke to the point that criticisms masquerade as solutions.
