After the Bell: Answering Dali Mpofu’s pertinent questions

On Monday, the day of the putative shutdown, South Africa’s most high-profile politician-cum-lawyer, Advocate Dali Mpofu, asked the Twitterati two important questions:

“Dear White Fellow South Africans, THINK VERY CAREFULLY about these questions: 1. Is a safe future for you & your children guaranteed when other people are hungry, desperate & landless? 2. Do you REALLY hate Malema/EFF more than load shedding??” 

Very pertinent questions, as you would expect from one of SA’s most successful lawyers. I would like to answer him.

The answer to the first question is absolutely “no”. The answer to the second question is absolutely “yes”. I didn’t even have to THINK VERY CAREFULLY about these answers. They are, at least to me, very obvious.

The reason the answer to the first question is “no” is more or less self-explanatory. No society survives long term with extreme levels of inequality. It’s unfair, unreasonable and unjust. And it’s for this reason that though I grumble about South Africa’s high levels of tax, I support the government’s very intense redistribution efforts. The grumbling is not about that: it’s about wastage and corruption, and maladministration and cadre deployment, and all the other woes with which we are all too familiar.

SA’s support for the very poor is well developed compared with many countries in our middle-income category. Actually, that is a massive understatement. The support net has increased from about 3 million beneficiaries in 1995 to about 18 million now who currently receive state welfare grants, while a further 11 million get the state’s Covid-19 grant, now transformed into a general social relief grant. That is nearly half the population of the country.

SA spends about R200-billion a year on the social grant system, and a further R44-billion on the Social Relief of Distress grant, which is R350 a month. This is a lot of money for the government, and since it is spread so widely, individual payments are modest. But, you know, better that than providing for too small a group.

And, of course, the whole system is placing a huge strain on the tax system. I’m not raising that as a reason for it to be cut back or reduced. It’s just a fact. But what it does do is set limits on how much further it can go without bankrupting the country.

There are about 10 million registered taxpayers in SA, but I think only about 5.2 million actually qualify to pay Personal Income Tax, the largest of SA’s tax income categories. That number is increasing, but not at the same rate as the population as a whole. This is a recipe for a fiscal car crash, and you can see that in the gradual increase in SA’s debt-to-GDP ratio. Since 2008, the government’s debt has risen from about 26% of GDP to about 70%, an increase that is among the steepest in the world.

But the point is that it’s not as though the government is unaware of the need to assist poor South Africans; it’s extremely front-of-mind, as it should be. When you are providing some support for half the population, it’s hard to argue the problem is being ignored. As a proportion of GDP, SA’s cash transfers are three times larger than the average for the developing world.

As for the second question, the consequences of load shedding pale in significance to the consequences of the Venezuela-esque socialist system I suspect your party, the EFF, would like to implement. Venezuela went from being the fourth-richest country in the world on a per capita basis to being poorer than it was in 1920 after electing a series of Marxist governments. 

About 75% of the population now lives in poverty, they have participated in the largest mass emigration ever experienced in South America, and of course, experienced the hyperinflation and all the other joys that belligerent notionally Marxist governments impose. Going to school is now a luxury.

By the way, I notice one of your follow-up tweets is brought to us by Karl Marx: “Capitalism contains the seeds of its own eventual destruction.” It’s odd how revolutionaries are always predicting capitalism’s collapse in the future while Marxist systems actually collapse in the present.

In exchange for answering your questions, I have a few for you: Do you know what it feels like to have to meet payroll every month? Do you know what it feels like if you are running a small business and suddenly you have to lose a day’s trading because a political group wants to close down the country to protest about things everybody already knows are problems? Have you experienced that sinking feeling in your stomach when you know the tiny amount you make standing behind the counter of your little store every day is going to be crimped even further because that same political party, well represented in Parliament, wants to make some completely obvious points?

My guess is that you don’t really know how that feels because it doesn’t affect you. It doesn’t affect you because you earn tens of thousands of rands every day you appear in court, where you are effectively, and knowingly I suspect, subverting the legal system by presenting spurious legal matters in a transparent effort to prevent a former president from  facing corruption charges first brought more than a decade ago.

That is my guess, but, by all means, let us know. DM/BM