The Star Late Edition
Ten years of toxic bickering are a lethal dose to policy coherence
EVENTS seem to have become the prime movers of our political economy. Over the past 10 years we have been seized by events that have undermined coherent thinking, and this has become toxic. And in the mix of these events has significantly been the behaviour of the exchange rate level of the rand to the dollar in particular.
To this extent an idiom of picking up the rand entered our lexicon in 2015. Let the rand fall we will pick it up. The rand also seems to be ill fated in the month of December. Twenty years ago, in December 2000, the rand suddenly fell to R13 against the dollar from R6.
Then, in September 2008, with the recall of the then-president Thabo Mbeki by the party and the resignation of the then-finance minister Trevor Manuel, the rand again fell. In December 2015 it slipped because of the removal of finance minister Nhlanhla Nene.
Now, in 2021, the rand on a sustained basis has traded above R14 to the dollar and on Tuesday, May 11, it dipped below R14 for the next three or so days. This dipping coincided with the firm suspension of the secretarygeneral of the ANC. The mantra of events created a make-believe thought that the decisive action against the secretary-general was responsible for the movement of the rand below R14 to the dollar.
The rise of the rand against the dollar was for days coming. This was because of the jobs figures in the US that did not live up to expectations. Second, the sustained rise in the commodity prices and the recovery in manufacturing figures released by Statistics SA. The behaviour had nothing to do with the decade long perennial drama of cult personalities in the ANC.
Economist Milton Friedman, the intellectual guru of market fundamentalism, found himself in pole position with the ascent of presidents Ronald Reagan and Margaret Thatcher to the throne. The long-held Keynesian philosophy of the role of the government in directing economic policy and leveraging investments were thrown in the bin. A new economic language of structural reforms with institutional support from the World Bank and International Monetary Fund dominated the agenda. The public services of many an African country, were subjected to a user pay regime and as a result the health and education systems were among those that suffered a terminal decline.
Covid-19 has laid bare the false wisdom under-girding Friedman’s market fundamentalism and its attendant neo-liberal philosophy. Perhaps the tenyear perennial drama of personalities should give way to policy focus. The Overton Window of political possibilities is nigh in South Africa. Like in the case of Milton’s market fundamentalism, the return to Marxist theory of value and Keynesian economics we see the impossible now becoming the inevitable. These have added value from the empirical study of economist Thomas Piketty that confirms the theory of value by Karl Marx, where Piketty observes that returns to private capital have consistently exceeded economic growth and thus explains the rising inequality, which is simply unsustainable.
Furthermore, economist Mariana Mazzucato confirms Keynes’ theory through her articulation of an entrepreneurial state. Finally, economist Stephanie Kelton through her Modern Monetary Theory has thrown into the dustbin of economic history the notion that equates a household financing to government financing through the role of the Reserve Bank and the Treasury. In this regard, political analyst Aubrey Matshiqi should be correct in advancing the eminence of the inevitability of two tectonic movements in South Africa.
These are the re-emergence of active citizenry in the Ven Diagram of political and economic space and the imperative to shift away from neo-liberal economic practice.
South Africa no doubt identified the correct problems to resolve, but the policy incoherence and toxic thinking led by egos undermines all the work and the possible throughput.
Had the 10 years of bickering in the ruling party focused on policies and the desirous outcomes for a better South Africa, rather than false lamentation of failure of implementation as the evil against its laudable policies, South Africa – even with Covid19 – would have been better off. We would not be in an Animal Farm style contestation of stakes where pots call kettles black.
In a very short space of time, the late Dr John Pombe Magufuli, President of Tanzania, put into practice what Mwalimu Julius Nyerere of Tanzania articulated against the neo-liberal economic policies.
Five SAAs of Tanzania had their engines revving and in the skies while our SAA lay in ICU infected by Corrupt!!ion Covid. The evidence is there. It is for South Africa to choose.