Rise of the rent seekers after golden spell turns to rust
If there is a God above who had a hand in shaping SA’s fate, I think he gave white people all the luck. The thought crossed my mind recently when I reread CW de Kiewiet’s masterpiece A History of South Africa.
Writing in 1940, De Kiewiet marvelled at SA’s good fortune. Modern capitalism had just been through the Great Depression and SA, a vulnerable economy exposed to a global hurricane, ought, by rights, to have been battered to smithereens.
But SA had gold. “Here was an industry,” De Kiewiet wrote, “which feared neither locusts nor cattle diseases, neither drought nor summer floods. Its product always commanded a ready sale in the financial centres of the world…. It stabilised revenues and preserved national income from violent fluctuations…. Like a great flywheel [it] gave stability to a country that otherwise would have been singularly sensitive to movements in the world economy.”
Over the following three decades, the luck of which De Kiewiet wrote only got better. After war’s end, the global economy entered a quarter-century of unprecedented growth, its primary store of value the gold under SA’s soil.
Thanks to its strategic significance in the Cold War and the demand for its minerals, the governing regime could do as it pleased. HF Verwoerd implemented grand apartheid while keeping full diplomatic relations with all the western powers.
The world’s greatest banks queued up to finance SA’s debt. Foreign capital poured in. Off the fat of these good times, a fabulous infrastructure was built. Behind an import substitution regime, a powerful manufacturing sector grew. God ended white SA’s long run of luck on July 31 1985. On this day, Chase Manhattan, followed in quick succession by a raft of other US banks, announced it would no longer roll over its loans to South African companies. The rand nosedived and the country froze billions of dollars of payments to foreign creditors. The threat of sovereign insolvency hovered.
Forty-five years after De Kiewiet wrote his book, the magic spell at which he had marvelled had been broken.
By the time black South Africans got to vote, the magic was long gone. The country they inherited had lost its geopolitical significance. World trade was rapidly liberalising and vast new industrial powers were emerging. SA’s manufacturing sector, its manifold problems long disguised by tariffs, was primed for a battering.
Due to global forces over which we had no control, we had become a plain-looking, difficult, ordinary place.
Ethiopia’s former prime minister, the late Meles Zenawi, once remarked that when a country had no comparative advantage, its elites inevitably extracted rent instead of generating value. He was describing his own country, but he may as well have been talking of SA.
Look at the two ANC men currently at war. One is wealthy because he was given equity in firms that grew rich during SA’s halcyon days. The other has turned parastatals of the fat years into a personal accumulation machine. They are both rent extractors par excellence, not because they are steeped in liberation movement culture or are lazy or entitled, but because they acquired power only after their country ran out of luck.
Of course, postapartheid SA might have been governed much better. Its predicament was by no means inevitable. But the mantra that our politicians are too lazy or too greedy to do more than redistribute wealth seems stale and unthoughtful, especially when mouthed by those whose wealth derives from luckier days.