If SA actually wanted economic growth, it would stop the pretentious ifs, buts and caveats

The upcoming State of the Nation Address is likely to be many things. The fashions are sure to be vibrant; the weather should be lovely. Yet perhaps the surest prediction is that the president will utter more platitudes about making the South African economy grow.

There will be talk about structural reforms, and more lofty promises to drive employment creation and investment. Yet it is, once again, almost guaranteed that all of the above such pledges are doomed to fail. Why? Because South Africa does not actually want economic growth, or, more specifically, it has proven unwilling to make the decisions and resulting trade-offs which economic growth requires.

South Africa’s core problem is that while almost everyone says that growth is a priority, from this president to all who came before him, just about no one means it. There is always something else which is more important – be it societal, egalitarian, ecological or political. Every decision that needs to be made that would result in growth is avoided or delayed because someone else needs to be pacified, incorporated or – in many senses – paid off.

One thing which South Africa does not lack is a growth strategy. There is the aged National Development Plan, launched more than 10 years ago by Jacob Zuma. There is Operation Vulindlela and even the latest politburo – the Presidential Economic Advisory Council, which supposedly meets the president every two months to advise on even more plans and growth strategies. But why do all these plans have the same result – economic stagnation?

The US is a good example here. This week of a new presidential inauguration, it is worth looking back on what grand growth plans there have been over the past 15 years of breakneck US economic expansion and productivity growth. I cannot think of any. This most successful of large economies didn’t really have a plan. Of course, no economy is flawless, and it was the last president – with his disastrous scheme of Bidenomics, which simply poured oil on the flames of inflation and spent billions on unproductive semiconductor factories – who did his best to ruin this record.

But the point still stands. As Janan Ganesh has written in the Financial Times, what the US had – beside cheap shale oil and an enormous domestic market – was an extremely strong growth preference. When growth bumped up against another imperative — tax cuts against income equality, corporate expansion against antitrust concerns, fracking against local sensitivities — the American bias was always for growth.

Europe is the perfect counterexample of how not to run an economy. Mario Draghi’s tome on how to lift European competitiveness from its moribund state is the latest example of another set of plans to be read, acknowledged and placed in a drawer because actually enacting them would piss too many people off. There are other priorities: domestic, ecological, agricultural, geopolitical, even cultural. Take common European debt to fund investments — an economic no-brainer, yet culturally unthinkable for German voters who still believe it would be tantamount to handouts to wasteful, lazy southerners.

Of course, newspapers are equally guilty. Thousands of words, this column included, have been expended on the need for structural reforms in South Africa, but at no point is a way to negotiate the trade-offs discussed. Structural reforms, by definition, will entail losers. They will entail change, and some people today who are benefiting from the corrupt, inadequate or dysfunctional status quo will be vehemently against such shifts. But the sclerotic nature of the South African political economy means that such lobby groups and interests can hijack the entire process and prevent those changes happening. In all the key areas of reforms – mining, energy, Transnet, roads, telecommunication – reforms are not made because some (relatively insignificant) stakeholders are able to hold it up, for their own interests.

It is around now the argument is made that the problem is democracy; South African leaders are not able to drive these tough decisions through because consensus is required, decisions are made by committees, subcommittees, and all the stakeholders must, in the words of the president, be “consulted”. Singapore is cited as a benevolent dictatorship panacea. But that is not how democracy works, or at least needs to work. Once again, the US is a great example; if a policy is good for companies to invest and hire, then it simply just happens.

Economic growth is not everything. Inequality, of the kind that exists in South Africa, is crushing. The environment must be acknowledged and protected. But in a country where unemployment is stuck above 30%, and which has not seen any growth in per capita GDP in 10 years, then it is clear where the priority, at least now, should be. Ironically, at this point, enabling the economy to function freely – by allowing independent rail services instead of miners depending on trucking, or allowing companies to freely generate green power for the grid which would diminish the need for burning yet more coal – would do more to help the environment than any lofty planning documents might.

The counterargument is that things are moving in the right direction, that such difficult processes cannot happen overnight. There have been positive sounds coming out about the reforms in both Eskom and Transnet. Yet, other than the privatisation of the Durban port terminal, currently paused and beset with bickering between two bidding parties, there is precious little to show for it.

It is clear what needs to happen. No more Sonas, no more plans, no more committees. Just decisions made to free up the economy that will piss some people off but benefit many more, in the single-minded, unaltered, unqualified, pursuit of economic growth. No ifs, buts, or caveats. Until that happens, South Africans should resign themselves to living in a beautiful but compromised, stagnating nation. DM