From betrayal to solutions

26 January 2023

Objectively discussing SA’s politics and economics with a new acquaintance is awkward. The nagging temptation is to connect by making judgemental assertions that are expected to align with the other person’s sentiments. From there, we can easily fall into the pattern of validating each other by vilifying others. 

Validating through vilifying is hardly unique to SA, yet ANC leaders betraying national interests to favour the party and self-enrichment intensifies its appeal. Meanwhile, our declining prospects make indulging such judgements increasingly unaffordable.

Our 1990s political transition was an emotional rollercoaster which seemed to transport us to moral high ground. We now find that greed-induced betrayal has left us dangling on rickety rope bridges, with broad prosperity amid political stability becoming more distant than ever.

Planning

The closest thing we have to an agreed plan is pursuing investment-led growth. But this is neither genuine nor adequate. Business leaders naturally advocate for investor-friendly policies and, as the ANC is desperate for cash to feed its massive patronage network, their leaders say what they think investors want to hear. Meanwhile, the ANC’s policies and practices are profoundly anti-growth.

As a consequence, our youth unemployment crisis has become far more threatening than SOE incompetence, or economic stagnation. Whether spurred by investment mobilisation or a commodities boom, there is no plausible path to noticeably reducing our bulging unemployment through domestic growth. Nor is time on our side.

Threat magnitude

It is difficult to convey the magnitude of the threat posed by our youth unemployment fiasco or how far we are from overcoming it. The health threat equivalent would not be Covid but rather a rampant AIDS epidemic. 

Our underestimating the threat of massive youth unemployment is not unlike the western reaction to AIDS in the mid-1980s. Judging behaviours distracts from objectively unpacking granular details. This hinders appreciation of the dangers compounding during the long incubation period before symptoms begin to truly devastate lives and communities.

Physically healthy, economically hobbled

A key difference with the AIDS epidemic SA has endured is that our chronically unemployed will be physically capable yet economically hobbled. Opportunities to provoke social unrest will multiply.

Development goals and commercial objectives should naturally align. Unfortunately, the contours of our politics are shaped by social justice perspectives which our ruling party’s electoral strategy exploits while promoting widespread patronage.

All the while, declines in communication and transport costs have spurred tremendous upliftment elsewhere through previously low-skilled workers integrating into global supply chains. For emerging economies, this has become the economic equivalent of achieving a functioning public health system.

Greater integration

Pursuing investment-led growth should be a subset of a high-growth strategy. SA cannot possibly sustain high growth without vastly greater integration into the global economy. Instead, as global economic integration is irreconcilable with patronage politics, we have localisation and labour policies which have caused a level of entrenched youth unemployment too extreme to be meaningfully mitigated by domestic growth. 

A good diet promotes good health but it won’t counter a viral epidemic as diabolical as AIDS. Strong domestic growth is as desirable as a healthy diet but it can’t counter an ailment as severe as our youth unemployment crisis. 

As our economic growth trajectory barely exceeds our workforce’s growth rate, the youth unemployment rate isn’t likely to noticeably improve in the next few years. But even if the rate drifts lower, the situation will significantly worsen. 

When people reach their late twenties without ever having been meaningfully employed, their prospects are permanently downgraded. This now happens to hundreds of thousands of South Africans each year.

While a few individuals will beat the long odds stacked against them, most will experience employers routinely passing them over in favour of younger or more experienced applicants. As this portion of the population bulges, social stability becomes ever more brittle. 

By 2029, what should be propelling productivity, the younger segment of our workforce, will have been hollowed out. Given the frustrations this will cause, instigated uprisings, resembling those of July 2021, could swiftly morph into an insurrection. 

If our democracy survives such turmoil, leading to a constructive 2029 pivot, the challenges will be vastly more demanding than what today’s opposition party supporters envisage. It will then be obvious that youth unemployment has long been a far greater threat than SOE incapacity or sluggish GDP.

Various alternative scenarios involve rigged elections or a “suspended” constitution. In difficult times, societies have often warmed to authoritarianism. Our 2020 Covid lockdown was initially met with widespread support. How bad would crime and social unrest have to be to justify “temporarily” invoking martial law? Would rising violence and lawlessness not favour the ANC? If we can’t design solutions for our current set of challenges, how will we catch-up as they hectically compound?

Plausible scenarios

Twenty years ago, China’s booming export-led industrialised economy incited a commodity boom leading to five years of roughly five percent annual growth in SA. Commodities-led growth could once again boost our economy - even without SOE upgrades, if prices spiked sufficiently. Yet multiplier effects from commodity exports are exaggerated.

Recent experience has shown that surging commodity prices provides fiscal space to expand patronage via increases in basic income grants while only marginally expanding employment.

Validating our many serious gripes through vilifying horrific politicians must not blind us to fresh possibilities. Our perilous youth unemployment crisis can only be remedied by emulating, with South African innovations, the many successful emerging countries whose growth relies on adding value to exports destined for high income nations. 

We must not write-off most of our young workers. On-the-job training remains paramount while  remedial education options have never been more robust. 

Making economic solutions conditional upon ousting the ANC from the Union Building is not a plan. Indulging such thinking increases the risks that the ANC will rid SA of constitutional pretensions.

By 2029 over half of our young adults will have become permanently marginalised - even if the overall rate of youth unemployment gradually ratchets lower, which is a best case scenario. This risks provoking far more crime and mayhem than our current SOE difficulties cause.  

Declaring martial law to avoid an unfavourable election outcome is an old trick. Western governments would vociferously object. Sanctions could follow. Does this help to explain the ANC’s aligning with autocratic regimes such as Russia and China?

Talk of fixing the economy or surging job creation once the ANC is ousted implies that these tasks are responsibilities of our national government. Thankfully, impressive efforts in the Western Cape to combat national governance shortcomings, like loadshedding, aren’t put on hold until the ANC departs the Union Building. Rather, prompt private sector and individual initiative are encouraged.

While much trust has been betrayed, vilifying those responsible mustn’t distract from urgently advancing solutions.