The economy and the myth of the silver bullet

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This week Statistics South Africa released its latest GDP report, showing that the economy had grown by 0.4% in the first quarter of this year. To state the obvious, it is a profoundly disappointing outcome because it is as good as zero in light of very high unemployment.

The theory is that when the economy expands, more jobs are created. In our case, even when you discount the two years when the world was in the grip of the Covid-19 pandemic, it is clear that our economy has been stuck for more than a decade.

Some in the commentariat like to blame the two main macroeconomic management agencies in the country, the South African Reserve Bank and the treasury. They propose, without saying so openly, that if the Reserve Bank were to keep interest rates low regardless of inflation, then the economy would grow faster.

In the case of the treasury, they feel that it is not borrowing enough, and that a combination of the two interventions would lead to jobs fireworks as the economy goes into overdrive.

Of course, a few of the disciples of this message are close to or have historical links to the ANC. Blaming either of the two agencies, whose officials are also appointed by the ANC government, enables them to employ a well-worn trick, which is to pretend that the management of the political economy is just fine. Instead, there are remnants of “anti-progressive” forces in policymaking who, for some odd reason, want to prolong the suffering of their own people.

I call this “the theory of witchcraft”, and it is enormously addictive. 

One of its pillars is the belief that spiteful capitalists (large businesses) are not investing in the economy because they want the government to fail. The capitalists I know will go as far as supporting a brutal dictatorship if they can continue making a profit. The idea that capitalists, whose very existence is about money and wealth, choose to walk away from money for political reasons is not based on reality.

The reality is that there are no witches controlling policymakers to keep the nation in hunger and suffering. If there are any witches, they operate in plain sight in the form of politicians who, ultimately, determine what the country in which we want to build an economy looks and feels like. And they have been doing a terrible job of it for nearly two decades.

For example, the government and parliament made a choice not to provide Transnet with additional funding even though its problems are choking the economy and driving up inflation. In its wisdom, or lack thereof, the cabinet’s budget sub-committee deliberated and decided to provide additional funding to SAA instead.

And thus the minister of finance, Enoch Godongwana tabled it before parliament in February. Had we had politicians who were either willing or able to challenge the budget, instead of approving it as a matter of course, they would have asked questions about this and refused to approve it. That never happened, and is probably never going to happen as long as we have the same breed of politicians as we do now.

Another example involves how our political establishment understands political economic management. I am reliably told that the minister of agriculture spends some of her days running around trying to help farmers manage their operational and cost constraints, and losing. She loses in her endeavour because most of these constraints fall outside her mandate.

I have seen numerous videos of milk trucks in the Eastern Cape stuck in the mud because whatever dirt road was there during the dry season turns into a sea of mud in summer. These farmers have shouted themselves hoarse begging for help regarding a general infrastructure problem and got nothing.

For those who believe in the theory of witchcraft, anyone who does not want to invest in the dairy or general farming sector in the Eastern Cape because of these problems is participating in “an investment strike”. If they invest additional funds to build and maintain the roads at their own cost, or to install diesel generators to keep their operations going, when they try and recover the cost they will be accused of profiteering. 

Now let us imagine a world in which parliament refused to pass the budget until Transnet was funded. MPs are under no obligation to accept the national budget as tabled, and when they do, they choose to accept whatever the cabinet has decided the minister of finance should put before them.

Had MPs insisted that Transnet be funded, it would force the cabinet to make the tough choices it refuses to make about where to reduce or cut funding so the country’s economy can breathe and grow.

It is also a constitutionally allowable political choice for the national government to place the worst-performing municipalities under administration, however many there may be. Such a decision would prevent any more companies, such as Clover did in the North West, to shut large and job-sustaining operations and move to provinces where the service delivery is better.

Municipalities that get the basics right are a magnet for business and residential investments, and therefore jobs. But that outcome needs political and government institutions that are able to do their work effectively and efficiently. It is not the job of the treasury to take over and run municipalities. Instead, it is the responsibility of voters to choose politicians who make the right policy and legislative choices so that the economy may flourish.

Getting voters to choose right is hard because the mismanagement and theft of public resources has caused people to lose faith in politics and so many of them abstain from voting. In the 2021 municipal elections about 28  million South Africans who are eligible to vote decided to stay at home instead — 14 million of them are already registered.

I often struggle to find the words to explain the importance of politics to our economic survival because it always feels as if there must be some other magic trick that can be turned into results. 

There isn’t, of course.

What we are left with is a deliberate choice by those with the knowledge and experience to become better quality politicians to enter the political space so that finally, parliament can refuse to vote for a budget that does not solve our economic problems. 

This means that people who consider themselves “too good for politics” must decide to make politics good, for the good of everyone.

In our system, ministers must, except in only two instances, be drawn from the politicians who have chosen to go to parliament and nowhere else. As much as some people like to fantasise about a super cabinet made up of prominent civil society and business figures, such exercises are futile. Ultimately, the country is run by people who choose to contest elections, not those who shout from the sidelines.

The path to a better economy lies in political parties and politicians who understand the meaning of system leadership, the ability to bring different political competencies and institutions to bear on one problem to produce a great economic or social outcome. 

Failing that, South Africa will continue to be a rich country with millions of poor, suffering people whose elites believe in economic witchcraft instead of the hard political work that produces results.

Songezo Zibi is the leader of a new political party, Rise Mzansi.

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.