Don’t blame neoliberalism, blame the state
It’s not the private sector that’s failing our poor. It’s badly executed public policy that’s at fault
Education, healthcare, housing, electricity, water and other essential services can be provided by the market or by the state, and sometimes by relatives. The poor typically have little or no access to these services through the market because they are poor. Their relatives are often as poor as they are and therefore unable to assist.
State intervention is needed to ensure that poor people receive the services that are deemed to be socially necessary (in terms of basic human rights), politically useful (to boost support for politicians or parties) or economically functional (in that they contribute to faster economic growth).
Citizens benefit when the state provides services that the market does not provide, or does so at a cost lower than the market price, also known as decommodification. When the state and not the family provides for people’s needs, there is also what is referred to as defamilialisation.
Under apartheid, the state provided a measure of decommodification and defamilialisation primarily for its relatively prosperous white citizenry, and to a much lesser extent (although more so in the final years of apartheid) for some of its black subjects.
White prosperity under apartheid was buttressed by public healthcare and education, subsidised housing and labour-market protection.
Racial discrimination in education was fundamental to ensuring that white people enjoyed massive advantages in the labour market, which, in the 1970s and 1980s, meant that most overtly discriminatory labour market regulations could be abolished without compromising white prosperity.
In the last years of apartheid there was a rapid expansion of secondary education and public healthcare for the black majority. Nonetheless, in 1994 substantial racial discrimination remained in the public funding of all public services.
The ANC was elected into government with a clear and unambiguous commitment not only to remove racial discrimination in delivering public services but also to prioritise the poor. The assertion that it failed to do so, and that racial discrimination in public services simply gave way to market-based inequalities of access, was integral to the indictment of the post-apartheid state as supposedly neoliberal.
Such arguments emphasise the commodification of some public schools, healthcare for the rich, housing and, above all, the municipal provision of electricity and water.
In this view, the pervasive application of neoliberal principles not only prevented the decommodification required to realise the progressive ambitions of the Constitution and Reconstruction and Development Programme, but even entailed some recommodification. This interpretation is largely mistaken.
Although post-apartheid service delivery was indeed characterised by an emphasis on recovering costs and using private-public partnerships with respect to some public services, the overall trajectory of change was in the opposite direction.
When it came to healthcare — and in sharp contrast to neoliberal principles — the government abolished user fees for pregnant women and children under six in 1994 and, two years later, introduced free primary care for all. Over the following decade, more than 1300 clinics were built or upgraded.
A new policy ensured that everyone received some free basic municipal services. In 2006 the government announced that fees would be abolished in the poorest 60% of schools, and that the funding formula would be revised accordingly.
If one measures inequality not only by cash transfers but also by the benefits of public education, healthcare and housing, using a standard methodology of fiscal incidence analysis, then taxation and social spending reduced the Gini coefficient (the measure of inequality) by 0.14 in 1995, 0.18 in 2000 and 0.22 in 2006.
By this measure, the state is not only highly redistributive but it became more — and not less — redistributive over time.
As social policy academics Servaas van der Berg and Eldridge Moses recently noted: “The fiscal process in South Africa has been particularly successful in shifting resources on a large scale from the formerly privileged to the poor” and furthermore did so “without over-reaching the boundaries set by fiscal constraints and responsible macroeconomic policy”.
State social spending per poor person more than doubled in real terms between 1995 and 2006, from R1 373 to R3 454, the researchers found.
The bottom two income quintiles received 50% of the total social spending, including 49% of spending on school education, 62% of spending on child support grants, 59% of spending on disability grants, 70% of spending on old-age pensions, 57% of spending on public clinics and 43% of spending on public hospitals.
Only with regard to housing and tertiary education was social spending not targeted to the poor: the bottom 40% received only 28% of the housing subsidy. This is because most poor people live in rural areas and the housing subsidy is mainly urban-based. The same segment of the population received only 5% of expenditure on tertiary education.
Unsurprisingly, the government seized on such evidence and trumpeted its redistributive successes through the “social wage”. The value of public education and health for the poor was, however, undermined by its poor quality.
Public clinics provided free basic health services, but with very long waiting times and frequent stockouts of essential drugs.
South Africa spent about 6% of its gross domestic product on education, but the link between spending and outcomes was notoriously weak. Most of the educational budget was spent on salaries for teachers, many of whom performed poorly.
This, coupled with the poor management of schools and a shortage of basic physical and academic infrastructure, contributed to South Africa’s low ranking in international numeracy and literacy tests.
The main reason tertiary education benefits richer rather than poorer people is that poorer students went to underperforming schools and did not have the results to enable them to enter university and take advantage of the government’s bursary schemes for higher education, the researchers found.
The poor quality of public services was not so much the result of neoliberalism — that is, of any roll-back of the state and slavish enthusiasm for markets — as it was of the inability of large parts of the state to manage its massive public expenditure in ways that benefited the poor.
The quality of public health, for example, was undermined by poor management, faulty leadership and co-ordination failures between different branches of government.
The most glaring examples of state inaction were due not to neoliberalism but rather because of a failure of leadership: president Thabo Mbeki and health minister Manto Tshabalala-Msimang prevented the poor from gaining access to life-saving antiretroviral drugs through the public health system to treat and prevent HIV infection.
Government spending has become increasingly pro-poor in part because richer people have abandoned the public education and health systems, choosing instead to enrol their children in private schools and to pay for their own healthcare, including by joining medical aid schemes.
The rich experienced recommodification because they could afford to do so, whereas the poor benefited notionally from expanded decommodification but were provided with a deeply inferior product.
Because of the low quality of public services, and despite these services being mostly free, desperate poor people have also turned increasingly to the private sector.
Poor South Africans have consistently expressed a preference for private healthcare and are more likely to spend money on private healthcare than their counterparts in other African countries, recent studies have revealed.
They also discovered that even poor people not covered by private medical aid schemes prefer to use the private system — private providers constituted about a fifth of total healthcare use by South Africans in the poorest income quintile, a 2012 study found.
Another study, by the Centre for Development and Enterprise, in 2013, noted that the poor quality of many public schools is driving growing numbers of poor people to send their children to fee-paying, private schools.
The value and appeal of “decommodification” to the poor is clearly being compromised by the low quality of service delivery.