We need more than a new leader — we need a new kind of politics
Growth alone will not reduce inequality; forms of redistribution are vital to uplift society’s lower end
● South Africa’s young democracy has emerged intact, albeit severely battered, from Jacob Zuma’s tempestuous era. President Cyril Ramaphosa is at the helm, and has to chart a strategic course that is beneficial to all.
We have survived a multifaceted political and socioeconomic crisis in which trust has eroded between much of the citizenry, the political elite and the now departed president. Our society is ravaged by extreme levels of inequality, with the gap having increased exponentially in the post-apartheid era, resulting in a fractured, polarised populace.
Ramaphosa has to develop an innovative strategic agenda that addresses both this trust deficit and the inequality challenge. This has to involve a focus on growth, attracting investment and rebuilding the economy, while addressing the fundamental challenge of inequality, coupled with poverty and unemployment. We need a pioneering plan that creates an environment conducive to growth and enables inclusive development, thereby strengthening the foundations of democracy.
South Africa achieved some economic growth in the past two decades. However, growth is a necessary but not sufficient condition for inclusive development. While it is true that much has been delivered and that poverty rates have declined in the post-apartheid era, our society has been ravaged by inequality in the past two decades. We overtook Brazil to become the most unequal society in the world.
A new agenda requires recognition that regulation is essential to channel resources to education, healthcare, infrastructure and small business development. None of this is going to happen without a reconsideration of tax rates, remuneration caps, more measured profitability and longer-term investment horizons — measures that mainstream business has opposed for so long.
It is also incumbent upon all social actors — the private and public sectors, civil society, active citizens and the Fourth Estate, among others — to confront power and transform society to the inclusive vision we share. It is my view that two powerful sets of stakeholders — corporate leaders and the political elite — are not sufficiently appreciative of the extent of the challenge of inequality.
Some executives in the corporate sector and those who serve them continue to argue for trickle-down growth politics. Thomas Piketty, in Capital in the Twenty-First Century, demonstrates that inequality will grow unless there is a clear political attempt to counter the structural dynamics that facilitate it.
The political elite recognise the threat that inequality poses, but cannot muster the political will to do anything about it. Some erroneously assume that by addressing poverty, we will automatically reduce inequality, a view expressed in the National Development Plan. The NDP proposes to expand livelihood opportunities at the lower end of society through a series of reforms: a new industrialisation plan targeting employment, expanding educational opportunities, and financing new entrepreneurs. These are important recommendations that will grow the economy, increase employment opportunities and address poverty. But they will not address inequality.
The problem is that even if we get livelihoods growing at the bottom of society through employment and financial support for new entrepreneurs and the like, the income of those at the upper end is likely to grow even faster. This is because the rich have assets — property, stocks, bonds — which ensure their incomes grow faster. Even if poverty erodes, inequality will grow faster. This has happened in South Africa, Russia, India and China in the past 20 years.
The only way in which economic inequalities can be addressed is if the expansion of livelihood opportunities at the base of society is coupled with either containing the enrichment at the top of society, or ensuring that the bottom grows faster than the top.
The struggle for social justice in South Africa is a struggle for structural reforms. What this means is that when there is growth, it must be accompanied by redistribution and social upliftment. For example, if we allow for private housing estates, they must include housing for low-income households. As we institute minimum wages, we should consider caps on executive remuneration and stakeholder dividends.
Tax must be structured to promote long-term investments rather than treating short-term capital flows on an equivalent level. If we focus on tax incentives and subsidies for youth training, this must be accompanied by protecting the existing employment of workers. There should be broad-based BEE mechanisms that allow for new entrants into industry but do not cater just for the politically connected and the economic elite. Procurement opportunities for businesses could be tied to simultaneous investments in universities and schools. Similarly, private hospitals should be obliged to allocate a percentage of their resources to providing services for poor people.
Our development strategy and regulations should be focused on establishing a balance between growing our economy and stewarding it in an inclusive direction. This should be at the top of the agenda of Ramaphosa’s next cabinet meeting. He has the opportunity to rebuild the state, but it requires imaginative political leadership.
This week has demonstrated that even though our democracy is in its infancy, it has proved to be resilient enough to self-correct. This may be due to our active citizenry, strong civil society, an independent Fourth Estate, trade union movements and pressure from the private sector. These same social actors will have to work together to develop a social pact; a pact that will require compromises from all of us.
The fundamental lesson is that if we are committed to social inclusion and addressing inequality, there is a need to change not only our leaders, but our politics. There has to be a new politics of accountability that is principled yet pragmatic, peaceful yet robust, infused with integrity yet responsive to the needs of our citizenry, in particular the poor. Only then can the hopes of the past few days for a peaceful, democratic and inclusive South Africa truly be realised.