Talk of state risk-taking just part of Cyril’s dream factory

Iwas driving when President Cyril Ramaphosa answered questions in Parliament on Thursday, up to his neck in political treacle. By most neutral accounts he did OK, but reading what he said and the debate around it, the thing that stood out for me was the influence public enterprises minister Pravin Gordhan has in our politics. In a way that is a good thing. He is brave, principled and incorruptible. If you were in a trench, you’d be lucky to have him by your side.

But he is also a fierce defender of big government and of the state getting involved in business. Gordhan comes out of the South African Communist Party and his relationship with business remains, if not adversarial, a little stiff nonetheless. It is probably why he was such a good South African Revenue Service commissioner.

He assumed businesses were paying as little tax as possible and his spectacular collection record leans heavily on how he could knock on Stephen Koseff’s door at Investec or Jacko Maree’s at Standard Bank and sit there talking and arguing until he’d squeezed more tax out of them. It was these relationships that Tom Moyane utterly failed to appreciate or imitate. I don’t believe Ramaphosa actually believes in the big state to the extent that he sometimes appears to when defending ANC policy, but he’s an admirer of the Chinese mixed economy and, I’m told, is at least considering studying towards a master’s or PhD on state-owned companies. That may have been set aside for the moment. He’s a little, erm, busy.

But here he is on Thursday, answering a comment or question from an Economic Freedom Fighters MP. The reporting is from News24:

“‘We need to be a smart state, entrepreneurial and take risks. Where the private sector does not take risks, the state must be able to take risks,’ Ramaphosa said. He used an example of how in the US, the government spearheaded the development of Silicon Valley and the military led to the creation of the internet.

“Ramaphosa said the state must work with the private sector and lead the private sector to invest more in the country. There must be a symbiotic relationship between the government and the private sector, he added.”

Look at that bit about the state being “entrepreneurial”. It’s the second time I’ve seen it

this year. The first was during the debate after Ramaphosa’s state of the nation address (Sona) in February and it was Pravin Gordhan who said it. Most of the media missed it because he went into some detail on rescuing Eskom. But here’s the part of his February 13 Sona debate speech we all ignored:

“Recent literature further proposes a more dynamic, strategic and enterprising entrepreneurial role for the public sector,” said Gordhan.

“This view is backed by the activist role of the state in research and development. According to Mariana Mazzucato (The Entrepreneurial

State), the role of the state has gone way beyond creating the right infrastructure and setting the rules. It should be a leading agent in achieving the type of innovative breakthroughs that allow companies, and economies to grow, not just by creating the ‘conditions’ that enable innovation — for her, ‘the state can proactively create strategy around a new high-growth area before the potential is understood by the business community (from the internet to nanotechnology)’.”

This is the state we’re in — the Ramaphosa dream factory. Best we all have a squiz at Mazzucato’s work because, Eskom or no Eskom, our state is going to get bigger, not smaller.

Ramaphosa knows business worries about stuff like this. He speaks to business leaders all the time and they know him well enough to talk straight to him. But now he is in politics, his old friends can’t really help him; the way he plays this game is with exasperating caution. It’s not the long game, as some people like to sneer. Politics is the getting-through-today game. He can’t do that without Gordhan and the few loyal others.

You could argue that one way to prove his symbiotic bona fides would be for people like Mark Barnes to be left alone to do their jobs if they’re doing well, like he was at the Post Office. I doubt Gordhan would let him. He’s an intervener, telling parliament in June that “the situation within our SOEs requires special measures, which shall include greater intervention from the shareholder if the boards and management do not take the steps needed to deliver on the outcomes expected of each company”.

Good luck running a state-owned company and taking the risks Ramaphosa spoke of on Thursday. If you fail, you die. The Chinese model indeed.