Imagining an effective national dialogue

The wisdom of hoping to inspire a robust national dialogue through former presidents and scholars provoking debates is itself quite debatable. SA’s elites have always wanted to believe they know what is best for the nation’s poor. Evidence to the contrary litters the nation. A majority of South Africans were poor in 1994. This will still be true when ballots are cast in 2019. Lacking the knowhow to spur growth and jobs, SA’s elites continue to indulge their crippled notions of social justice.

Despite exiting the 20th century with political momentum, along with a well re-positioned brand, SA’s economic transformation never took hold. Integrating into the 21st century global economy is now looking ever more elusive. SA’s fading generation of thought leaders helped to deliver an impressive constitution while rejuvenating supporting institutions, not a modest feat. Social justice will however continue to elude SA in the absence of sustained economic momentum.

The aftermath of SA’s mid-1990s political changeover was greeted by unsupported optimism and intellectual indulgences. As Asians escaped poverty by the hundreds of millions by choosing to compete on the world stage, SA’s national dialogue and economic policies focused on the country’s politics and history. This showcased the perceived wisdom of the nation’s diverse social justice experts while crowding out pragmatic economic debates.

Turning further in this direction is the last thing the country needs now. Instead, fresh thinking is required to address how the global economy is pivoting in ways detrimental to SA’s positioning.

Last month the world’s most valuable listed company vowed to remove mining from its supply chain. This is one among many milestones evidencing a major global shift away from extraction in favour of renewables and recycling.

SA’s 2019 national elections will be preceded by a decade of no growth in per capita income. Meanwhile the nation’s asset base is losing relevance while its liabilities compound. There are no compelling growth models on offer. This reflects a national dialogue disconnected from 21st century realities.

Prior to last year’s municipal elections, SA resembled a one party state outside of the Western Cape. Previously the ruling party could reasonably presume its liberation credentials would deliver a national electoral majority. Many ANC voters have been set adrift. The 31 March cabinet shuffle provoked outward displays of disunity amid the ANC upper echelons. May Day crowds in Bloemfontein signalled that SA's ruling party can no longer assume the ongoing support of their traditional constituents.

With the hopes of less skilled workers declining, their political support becomes more responsive to shrill messaging. Donald Trump and Julius Malema have built political constituencies not unlike how a furniture company carves out a niche based on tastes and income levels. Such campaigners develop slogans based not on their personal convictions, or perceived solution value, but rather on crowd appeal.

Over-emphasising redistribution has been politically irresistible yet economically debilitating. Given SA’s resource wealth and history of oppression, over reliance on redistribution - in lieu of focusing on competitiveness and global integration - also provided ever expanding pathways to hijack government levers for personal gain.

SA’s political elites and intellectuals routinely framed economic issues within political and intellectual contexts while input from commercial-minded voices was stifled. Then, when SA’s CEOs came to the fore in response of Finance Minister Nene being axed, it soon became apparent that, while their input was commercially solid, creative ideas to achieve adequate poverty alleviation were lacking.

SA’s credit rating wasn’t downgraded just because Pravin Gordhan was fired. SA’s economic trajectory is not sustainable. The desperately needed ability to blend commercial and political imperatives has not been developed. Thus political calm is eroding.

As growth becomes ever more elusive while liabilities compound, redistribution options, along with patronage paths, are narrowing. The Zuma camp has not however given up. Rather they have moved the public debate toward increasing black ownership and control. The “White Monopoly Capital” and “Radical Economic Transformation” memes are central to this campaign.

Why has such messaging not been overwhelmed by the ongoing examples of cronyism devastating SOEs?

Firstly, SA’s political debates lack grounding in commercial and economic development basics. Neither the country’s well-meaning intellectuals nor its business CEOs demonstrate fluency in how economic development factors are evolving in ways which severely complicate SA’s challenges.

Just a few decades ago most of the world’s wealthiest people made their money over a lifetime building resource extraction or real estate companies. That is, they gained the ownership rights over land and resources which had existed for aeons. Today, young adults like Mark Zuckergberg invent intangibles which significantly change over a billion lives.

The Economist recently ran a cover story around how data is now more valuable than oil. The global economy is shifting decisively toward information-driven, services-led growth.

A second factor which has aided the “WMC” and “RET” campaigns is that low-income voters have been reluctant to connect the dots. This could now change quickly. Little formal education is required to understand how patronage deprives the poor to benefit the connected.

A third, and particularly critical, factor is that SA’s various elite factions have bought into the common western bias of prioritising income equality ahead of poverty alleviation. Asians have proven far less vulnerable to this insidious conceit.

Historical equivalents to such unchallenged - and clearly misguided - examples of international groupthink are rare. One that is ironically pertinent is the belief in the original version of mercantilism: purloining the precious metals of distant lands.

Just as SA’s prospects are constrained by prioritising equality ahead of poverty alleviation as the global economy shifts to services-led growth, when the industrial era was dawning, the UK’s prospects initially were restrained by favouring mercantilism ahead of industrialisation.

Abducting other people’s gold and silver didn’t make European nations wealthier. It had the effect of inflating their currencies. Back then, only elites had influence. It took a Scottish professor of moral philosophy, writing one of the most influential books ever, “The Wealth of Nations”, to persuade King George III to support industrialism over mercantilism. The British benefited enormously.

SA’s intellectuals have favoured howling against income inequality rather than labouring to achieve high volume poverty alleviation. This was politically plausible when SA’s poor instinctively supported the ruling party.

Community grounded politicians can now gain support among low income voters by comparing RET to SOE abuses. This would resemble Malema’s successes through exploiting Zuma’s corruption vulnerabilities.

RET rhetoric, along with SOE realities, should soon become far less politically viable. SA’s poor need new leaders who will prioritise sustainable jobs ahead of crony appointments. Whether such next generation leaders prefer twitter, placards, or shouting, it is their voices which should gain much prominence amid a more pragmatic national dialogue.

Hagedorn is an independent strategy adviser

@shawnhagedorn