Reform strategy must be for the long term

IN the era of reality-TV politicians, modern democracies do not allow much room for real structural changes whose benefits would be realised only in the long term. There is just too much at stake in the short term for politicians to brave out the noise that may result from such long-term structural changes.

This is as true of South Africa today as it is of the French, who are only now trying to push through reforms that will help them shake off the tag of France being “the sick man of Europe”.

In South Africa’s case, major structural changes are required if it is to successfully break with its old apartheid development path, which excluded most citizens from meaningful participation in economic activities.

But the ANC is at its weakest since 1994. Its popularity is waning due mainly to scandals involving President Jacob Zuma. This makes it difficult for the party to take necessary, but unpopular, decisions that would get the country on the right track in the long run.

Even in years past, especially during the Chinese-inspired commodity super-cycle that propelled our economic growth, the party failed to use its majority in parliament to deal convincingly with the cracks in the system. Instead of addressing the main causes of massive unemployment, the government tried to placate the millions excluded from economic participation by increasing its spend on social welfare. It looked easy then, especially because the country often managed a budget surplus.

That was almost a decade ago, and in that time the cover of a growing global economy with China at its centre has unravelled. Our fundamentals, or to be precise, our weak ones, are exposed. Among them, an inequitable education system.

If the country had spent some of the 2007 surplus on extra funding for tertiary education, we would be reaping the fruits today.

Instead, the focus was on expanding the welfare state, which politicians may have thought would guarantee their re-election.

What’s also been unmasked is the increasing deindustrialisation of the economy, best expressed in Stats SA data that show the shrinking manufacturing base. It’s a sector that could have taken up the slack from a mining industry focused on improving efficiency, which starts with reducing labour.

Despite the rand’s depreciation since the US Federal Reserve quit its monthly bond purchases in October 2014, it’s a sector that hasn’t quite caught alight as one would expect. Perhaps through no fault of our own, as demand in the global economy hasn’t made a return since the collapse of Lehman Bros.

All the same, a country with our development metrics needs an industrial base to feed its people. As much as the economy is increasingly looking like a mini-American one, consumption will only dig us deeper into a hole, the less we produce for the rest of the continent and the world.

The list of our ailments for those already dispirited by the political noise that is perhaps the loudest in the past two decades may seem impossible to deal with. But it is not, and history has many lessons of turnarounds.

The partnership between government, business and other sectors of society over the past few months as the country faced being downgraded to junk investment status provides a flicker of hope.

Now that these joint efforts have helped avoid a downgrade, similar energy needs to be utilised to bring about long-term solutions to our problems.