Cape Times

A better life closer to opportunit­ies

- Lester September September is the chairperso­n of the Forum of Cape Flats Civics Steering Committee.

RESEARCH from the World Inequality Lab revealed that South Africa was one of the world’s most unequal countries, with 10% of earners capturing 66% of the national income, where the top one percent in 1987 held 8.8% of SA’s wealth and by 2012 had enlarged their share to 19.2%.

SA’s low labour productivi­ty levels have been bemoaned by both business and local government’s Western Cape Investment and Trade and Promotion Agency (Wesgro), with reference to labour law rigidity being an impediment to faster economic growth. Cape Town is especially referred to in business circles as “Slaapstad”, due to its low levels of productivi­ty and a CBD that goes quiet after 5pm, except for a small area in Long Street and surrounds.

Labour productivi­ty surveys, however, don’t take into account labour fatigue, due to long hours at work and a significan­t commute between home and work. The poorest Capetonian­s live furthest from economic opportunit­ies and the many hours spent away from home also undermine the ability of workers to improve themselves through further study.

Studies on urban design revealed its profound impact on the foundation of economic growth, poverty reduction (job creation), the reduction of inequaliti­es and the creation of safe, financiall­y and environmen­tally sustainabl­e and efficient towns and cities.

The Annual Global Traffic index, however, rated Cape Town’s roads, once more, as being the most congested in SA, for the most part due to historical injustices experience­d in Cape Town during apartheid, specifical­ly spacial planning. Many town planners referred to this as urban sprawl on steroids.

The business cost of urban sprawl has been explained in Robert Townsend’s book, Up the Organisati­on: How to Stop the Organisati­on from Stifling People and Strangling Profits, in which he cited increasing distances between satellite offices and head office as a cost (the further that inventory has to travel, the higher the cost of doing business).

Urban researcher Barbara Southworth stated that internatio­nal studies on urban sprawl proved that the creation of more compact cities could save, conservati­vely, between 35% to more than 45% of a city’s operating budget. The reversal of apartheid spatial planning could thus release billions of rands per annum for social developmen­t interventi­ons into the Cape Flats.

A number of academics and researcher­s have drawn attention to the fact that compact cities could reduce levels of inequality.

Senior researcher at the University of Johannesbu­rg’s Centre of Social Developmen­t in Africa, Lauren Graham, highlighte­d the inter-generation­al transmissi­on of poverty as being a hurdle to reducing high levels of poverty. She emphasised that:

“Young people who are born to parents who live in poverty have every chance of falling into poverty themselves.”

“We need to look at methods to interrupt the transmissi­on of poverty. Suggestion­s of extending the child support grant to a youth grant will not solve the problem on its own.”

“A lot of it is rooted in the apartheid policy of the past, relating to exclusion from partaking in the economy.”

Andrew Fleming (Urban researcher) explained in the Global Urbanist that an important interventi­on to integrate historical­ly disadvanta­ged Capetonian­s back into the economy and social fabric of society was to create housing opportunit­ies in the inner city (CBD and a 10km radius around it).

Dr Johan Fourie, senior economics lecturer at Stellenbos­ch University, linked the distances that Capetonian­s had to travel to and from work to high poverty levels and: “One of the ways to combat poverty in South Africa is to bring the poor, who live on the outskirts of cities, closer to the city centre.”

Research undertaken by Professor Raj Chetty – editor of the Journal of Public Economics and director of the Lab for Economic Applicatio­ns and Policy (Harvard University), and of the National Bureau of Economic Research – which combined empirical evidence and theories on taxation, unemployme­nt, education and upward economic mobility, has been widely cited in both the media and US Congressio­nal testimony, resulting in Chetty being awarded the prestigiou­s Macarthur Genius Fellowship in 2012.

Chetty and Professor Nathaniel Hendren of Harvard University, in their Equality of Opportunit­y project, used “big data” to develop new solutions to the mobility of low-income households, with the previous phase of the project having presented “statistics on how upward mobility (escaping poverty) varied across areas ... and over time”. The project asked the question: “How can we improve economic opportunit­ies for low-income children?”

Graphic analysis by Chetty revealed the cost-effectiven­ess of moving to opportunit­y (MTO) (affluent/ upmarket areas) and an increase in income, available to children aged under nine, of 31%.

The five factors associated with strong upward mobility were:

Less segregatio­n by income and race.

Lower levels of income inequality. Better schools. Lower rates of violent crime. A larger share of two-parent households.

Analysis of the MTO highlighte­d that Manhattan scored the lowest, compared to other US cities, due to a bias towards mass housing developmen­ts on the periphery of its CBD (as was being promoted in Cape Town).

Better results in other US cities were seen as being due to affordable/ fair housing units, available within well-located, mixed-income apartment blocks in upmarket areas.

In fact, if mixed-income developmen­ts in central Manhattan had been solely considered, the city would have performed the best.

The study, “Effects of Exposure to Better Neighbourh­oods on Children”, by Raj Chetty, Nathaniel Hendren and Lawrence F Katz (Harvard University, 2015) concluded that “offering low-income families housing vouchers and assistance in moving to lower-poverty neighbourh­oods has substantia­l benefits for the families themselves and for taxpayers ... our findings suggest that efforts to integrate disadvanta­ged families into mixed-income communitie­s are likely to reduce the persistenc­e of poverty across generation­s.”

A 2016 study by Chetty and Hendren for the US National Bureau of Economic Research, on the “Impacts of Neighbourh­oods on Intergener­ational Mobility In: Childhood Exposure Effects” concluded that “children’s opportunit­ies for economic mobility are shaped by the neighbourh­oods in which they grow up. Neighbourh­oods affect children’s long-term outcomes through childhood exposure effects: Every extra year a child spends growing up in an area where permanent residents’ outcomes (income, college attendance, marriage, teenage employment, and lower teenage pregnancy) are higher, increases his or her earnings ...

“These results motivate placebased approaches to improving economic mobility, such as making investment­s to improve opportunit­y in areas that currently have low levels of mobility or helping families move to higher opportunit­y areas.”

The Equality of Opportunit­y programme reveals that the creation and promotion of affordable social housing for the poor and working class within the inner city and along the M4 (from central Cape Town to the southern suburbs) will have benefits for taxpayers – and ratepayers – as people stimulate economic activity and economic growth.

Concurrent interventi­ons that promote small and micro businesses on the Cape Flats and the outlying areas of Cape Town should also be implemente­d.

Inevitably, the reduction of poverty and inequality would increase the tax/rates base and reduce taxpayers’ tax burden.

 ?? Picture: Courtney Africa/African News Agency/ANA ?? URBAN SPRAWL NEGATIVES: The gap between the rich and poor in South Africa is growing.
Picture: Courtney Africa/African News Agency/ANA URBAN SPRAWL NEGATIVES: The gap between the rich and poor in South Africa is growing.

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