Reform is killing recovery
Cyril Ramaphosa looked exhausted last week as he announced his new stimulus plan. Who wouldn’t be, trying to juggle reform and recovery?
All of us remember the sense of renewal, revitalisation and progress following President Cyril Ramaphosa’s election, and the “new path” of economic growth, employment and transformation.
However, within just six months the veneer of Ramaphosa as the master negotiator, who plays the long game and who has everything under control, so popular in business circles, was shattered as the economy slipped into recession.
Writing to President Franklin D Roosevelt during the Great Depression, John Maynard Keynes warned that he was engaged in a “double task” of recovery and reform, and that even “wise and necessary” reform could “impede and complicate” recovery.
Well, that is exactly what has happened as the “double task” of reform and recovery has been bungled, with reform being allowed to impede and complicate recovery in SA.
We do need a debate on land reform, and we do need to right what was a terrible wrong, but triggering a debate about land reform without compensation now was a mistake because it will impede and complicate recovery.
What is worse is that the debate about land expropriation has less to do with righting a wrong than it has to do with trying to co-opt fake revolutionaries who wear overalls on the outside and designer clothes on the inside.
The biggest obstacle to recovery, to a large extent, is Ramaphosa The president does not appear to have any authentic ideas of his own on the economy or, if he does, he does not share them.
And when faced with tough decisions, he tends to negotiate, prevaricate and equivocate and call summits and conferences.
At this point, Ramaphosa seems more committed to fixing the pol- itics, and consolidating power, than he is to fixing the economy in SA.
The point was amplified last week as Ramaphosa, looking exhausted and defeated, struggled through his presentation of the “Stimulus and Recovery Plan”. The central element of this plan was the reprioritisation of about R50bn, which amounts to a marginal increase in spending on infrastructure of about 6% over the medium term in SA.
The Stimulus and Recovery Plan itself appears to have been a rough compromise between a government, which is more committed to fiscal consolidation, and a governhimself. ing party, which is more committed to fiscal expansion in SA.
In the end, the fact is that Ramaphosa is weak and unwilling — or perhaps unable — to stand up to the Left in the governing party. He has, to some extent, allowed himself to be co-opted by fake revolutionaries, which is why reckless economic policy proposals such as the formation of state banks, land expropriation, and the nationalisation of the central bank are actually being considered.
The heart of the
“New Deal”, which saved millions of people during America’s Great Depression, was not, as Richard
Hofstadter points out in his brilliant essay on Roosevelt, a programme, but a temperament. The “New Deal” is best described by Roosevelt as follows:
“The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation.
“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”
This is also what we need in SA. We need a new kind of leadership, capable of bold, persistent experimentation, and willing to try something, anything, different to boost economic growth and give hope to the 9.6-million people who do not have jobs, or who have given up looking for jobs, and who live without dignity, without independence and without freedom.
We need a new kind of leadership, willing to try something different to boost economic growth