Contradictory goals

In a timeous warning to government, an IMF delegation states that we are not doing what it takes to decrease unemployment, poverty and inequality (IMF issues ominous warning about public sector, June 12).

Correct — but even the IMF retails the myth that we, or any developing country, can solve poverty and inequality simultaneously. They are contradictory goals.

In 1980 China had half a billion people in desperate poverty, and a “good” Gini coefficient of 0.16. Four decades later nearly all the citizens have been lifted out of survival mode. Income per capita, on an annual basis, has risen from $150 to $9,000. But the Gini has risen to 0.55! This is regarded as nearly as “bad” as ours.

The fact is that Gini is a relative measure, while poverty is absolute. A billion Chinese are vastly better off than they would have been in 1980, but entrepreneurs and skilled people’s income has risen even faster, hence the higher Gini.

This is not a travesty but a natural development in rising out of dire poverty. Initially, as high growth kicks in the incomes of the skilled and innovators surge, and there is a lag before the poor and lesser skilled follow. But follow they do, if China is any guide.

This is not just academic — the futile desire in SA to address poverty and inequality at the same time is stifling our growth prospects.

Willem Cronje Via e-mail