SA post-Covid: more state control, or pragmatism?
The crisis provides us with a chance to take a significant turn for the better — or the worse
● Rarely in this world does a country get a chance to reset itself. SA had that chance in 1994. Its success is still a moot point.
Now Covid-19 has afforded nations with complex histories and troublesome presents an opportunity to reboot into an upgraded version of themselves. In this way, the dramatic and often damaging consequences of the pandemic can forge a new growth path in an atmosphere of improved social cohesion.
Though it is true that the country still has to reach “peak virus”, now is the time to begin a debate about post-Covid SA. For SA there are encouraging and discouraging signs.
Our success will be measured on whether we can forge a revitalised social compact — and whether it can begin to develop coherent policies to kick-start an economy that is on its knees.
This crisis ought to up-end the moribund love affair the ANC has with unprofitable and criminally vulnerable state-owned enterprises (SOEs). But will it? The signs are less than favourable — at least in the government’s attempts to keep a state-owned airline alive in the midst of what is the worst crisis ever for aviation globally.
With the domestic coffers bare, propping up the loss-makers is increasingly just impossible and even irresponsible. This means the sale of some state assets and a stripping of excess staffing both in numbers and in terms of wage settlements.
The good news is that the nexus of government, business, labour and community groupings in SA, Nedlac, is negotiating aspects of this. If the crisis brings with it a new-found flexibility — particularly on the side of labour and the ANC’s more “statist” wing — we will be onto something significant.
However, President Cyril Ramaphosa’s recent return to the language of “radical economic transformation” as the way out of our present crisis adds an element of uncertainty as to whether he, his faction and his larger party are ready to embark on anything other than centralised and statist efforts.
In order to restart SA, a flexibility of attitude is required to upgrade the current version of the country that is not working. Indeed, it needs to come from both the public and private sectors — from both the political hacks and the frustrated citizenry, and from those who still hold much prejudice and deep suspicion in our society. It really requires exceptional leadership from not only our president and the governing party but from the opposition and civil society, too.
The deep inequality of our society that is being laid bare as we grapple with providing for the poor can either be a motivation for a pragmatic and market-friendly reappraisal of our future, or it can spur on those who see central planning, state control and social re-engineering as a way forward.
There are those who see this as an opportunity to emulate China — continuing to model the SOE option, albeit under the guise of greater efficiencies. Similarly, the new-found (or perhaps latent) eagerness for micro-management and control as exhibited in the plethora of lockdownrelated regulations displays a tendency for increased social controls.
China, after all, has long been attractive to many with links to the former liberation movement, so there should be little surprise they see this as an attractive model. China’s successful battle to save Wuhan has only added to that country’s esteem in the eyes of this political sector.
Extrapolating a China model for SA is immensely impractical for historical, social and constitutional reasons, but it’s alluring nonetheless, even in a hybrid form.
The battle lines in the ANC — already evident on a host of policy issues pre-Covid — will extend to the recovery domain. Those who favour greater central control — perhaps even an authoritarian system — are waiting in the wings, having barely been able to withhold their glee at opportunities to exert control. Libertarians have had to take a back seat as the guise of lockdown regulations presents a patriotic and health-based pretext for control.
Of course, SA will develop a post-Covid model that is specific to the influences and nuances of its own body politic. State capitalism (or whatever hybrid model is now in place in China) is still quite different from the private-sector model that largely remains intact in SA.
As SA moves beyond the first phase of its Covid19 response, paying for it will become more problematic. The country can accept a $4.3bn (R79.4bn) handout from the International Monetary Fund and World Bank, which could draw it closer to the lending agencies and their world view.
But, loans or no loans, our future budgets for the next number of years may choose to increase taxes as debt and state health take centre stage. Once again, the country will have to choose whether it is merely a quasi-socialist state collecting cash to maintain dependency for its poor (and political patronage too) or it can choose to lower taxes and provide real policy incentives to grow and create jobs. Indeed, industrialisation is critically needed. But so are investor-friendly policies that run alongside the need for smaller government, deregulation and labour reform.
The ANC will still have to reach consensus as to who will drive the post-Covid era — will it be the party apparatchiks or the captains of industry? It’s an old debate and not nearly over. It’s also a tiresome debate that’s debilitating and it needs to reach clarity sooner rather than later. The lack of clarity over economic policy and political philosophy is what has held back the country in recent years. We don’t need more of this.
In these ways, SA has a choice. It can rise from the ashes to enhance its citizenry and restore its name in the world. Or it can fall further into ideologically induced despair. We need strong human rights, a recommitment to our constitution and its protections, and a social compact not only in word but in deed as well. We need our own home-grown revival — but if it’s based on the wrong global examples, we will slip to a new pariah state despite a belief that the China umbrella will protect us.
Those on and below the breadline can’t go on any longer. Social unease and frustration will rise. The middle classes will be similarly decimated and despondent. Choosing the best inclusive outcome is the only option. But the solution still looks pretty elusive. And that’s the problem.