We all win when wealth is shared

We can still be­come the so­ci­ety of Man­dela’s dreams. Mam­phela Ram­phele looks to Ger­many

CityPress - - Business -

The 2015 Nel­son Man­dela Lec­ture gives us an op­por­tu­nity to reaf­firm our com­mit­ment to be­com­ing a more equal, pros­per­ous so­ci­ety. Thomas Piketty’s work on the need to tackle the grow­ing lev­els of in­equal­ity in our times res­onates strongly with Man­dela’s ideals – that po­lit­i­cal free­dom with­out so­cioe­co­nomic jus­tice is in­com­plete.

This lec­ture of­fers an op­por­tu­nity to re-en­gage in the dif­fi­cult con­ver­sa­tions about how we are to “heal the di­vi­sions of the past and build a so­ci­ety based on demo­cratic val­ues, so­cial jus­tice and fun­da­men­tal hu­man rights”. Man­dela’s ideals and in­spi­ra­tional lead­er­ship grew out of his per­sonal jour­ney as a poor, ru­ral, black man who was given wings through ed­u­ca­tion to fly out of apartheid-en­gi­neered poverty. Black peo­ple across gen­er­a­tions re­main com­mit­ted to in­vest­ments in ed­u­ca­tion as a sure and tested way out of poverty.

Piketty’s anal­y­sis of pat­terns of ac­cu­mu­la­tion of wealth pro­vides the in­tel­lec­tual ra­tio­nale for the ideals of so­cial jus­tice that tra­di­tional econ­o­mists had ig­nored. Tra­di­tional econ­o­mists, who pro­moted the trickle-down de­vel­op­ment model, jus­ti­fied in­equal­ity as an in­evitable out­come in the pro­mo­tion of eco­nomic growth and cap­i­tal ac­cu­mu­la­tion.

There is now con­sen­sus that in­equal­ity is bad for both rich and poor. Too great a de­gree of in­equal­ity makes build­ing one na­tion with a shared vi­sion im­pos­si­ble. In­equal­ity, es­pe­cially ours – which is coded by race, gen­der and ge­o­graphic lo­ca­tion – un­der­mines so­cial co­he­sion and shared cit­i­zen­ship. In­equal­ity is also bad for sus­tain­able eco­nomic growth be­cause it ex­cludes many tal­ented peo­ple from con­tribut­ing to the com­mon good.

Con­trary to the com­mon view that new black en­trants to the econ­omy are driven by con­sumerism, they are in fact bat­tling to pro­vide for ba­sic ne­ces­si­ties.

Struc­tural in­equal­i­ties – such as ba­sic as­set scarcity (hous­ing and house­hold goods and ser­vices), long dis­tances from work places be­cause of apartheid’s spa­tial plan­ning, and the costs of ed­u­ca­tion and health – con­strain op­por­tu­ni­ties for cap­i­tal ac­cu­mu­la­tion for many. Most black South African en­trepreneur­s are ham­pered by lack of ac­cess to cap­i­tal and the cost of cap­i­tal.

In our coun­try, in­come in­equal­ity, rather than wealth con­cen­tra­tion, is the big­gest driver of in­equal­ity. But one can­not dis­count the ef­fect of two of the rich­est peo­ple in South Africa, Jo­hann Ru­pert and Nicky Op­pen­heimer, whose com­bined wealth equals the to­tal wealth of 50% of our pop­u­la­tion.

Nor should we ig­nore the op­por­tu­nity costs of il­licit fi­nan­cial out­flows amount­ing to $122 bil­lion (R1.66 tril­lion) in the 2003-2012 pe­riod. In 2012 alone, $29 bil­lion, or 7.6% of the size of our econ­omy, was taken out through ma­nip­u­la­tions of trans­fer pay­ments by com­pa­nies and abuse of off­shore trusts. Piketty’s work chal­lenges us to ask whether we have gone far enough in us­ing tax as an ef­fec­tive tool for cre­at­ing a more equal and just so­ci­ety. Ger­many and South Africa’s trans­for­ma­tion to democ­racy pro­vides key lessons about how to tackle struc­tural in­equal­i­ties.

Hel­mut Kohl, a con­ser­va­tive chan­cel­lor, led Ger­many to in­vest in equal­i­sa­tion be­tween East and West through de­lib­er­ate dis­tribu­tive fis­cal and other so­cioe­co­nomic pro­grammes. At the heart of the in­ter­ven­tions is the ac­cep­tance that unity and na­tion-build­ing can­not be pos­si­ble with­out cor­rec­tive sol­i­dar­ity mea­sures. The im­ple­men­ta­tion over 30 years of the sol­i­dar­ity tax on rich re­gions and in­di­vid­ual cit­i­zens in favour of those who were poor has paid div­i­dends. The strong in­clu­sive growth has made Ger­many the an­chor of the EU, now led by the first fe­male chan­cel­lor and one who is orig­i­nally from East Ger­many.

Our at­tempts to heal the di­vi­sions of the past par­tially suc­ceeded un­der Man­dela’s in­spi­ra­tional lead­er­ship. We fal­tered be­cause of our hes­i­ta­tion to in­sti­tute a sol­i­dar­ity tax af­ter the 1996 Truth and Rec­on­cil­i­a­tion Re­port, to pro­vide the equal­i­sa­tion funds for in­vest­ments in ed­u­ca­tion, health and so­cial in­fra­struc­ture, in­clud­ing hous­ing and public trans­port.

An ad­di­tional 1% in­come tax for those earn­ing more than R500 000 for 30 years would have pro­vided the funds to elim­i­nate shanty towns, mud schools and in­ad­e­quate in­fra­struc­ture where poor peo­ple live.

It is not too late to re­design a pro­gramme that is bet­ter geared to turn ev­ery de­vel­op­ment chal­lenge into an op­por­tu­nity for equal­i­sa­tion. An in­clu­sive growth ap­proach, ac­com­pa­nied by ac­tive cit­i­zen­ship in both the public and pri­vate sec­tors, is es­sen­tial to heal­ing the di­vi­sions of the past, and build­ing a more equal and just so­ci­ety. SMS us on 34697 us­ing the key­word WEALTH and tell us what you think. Please in­clude your name. SMSes are charged

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Ram­phele is an ac­tive citizen. The 13th an­nual Nel­son Man­dela Lec­ture at the Univer­sity of

Johannesbu­rg will be held on Oc­to­ber 3


French economist Thomas Piketty

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