A plan is not optional

SA cannot solve any of its economic challenges in the absence of a realistic long-term plan.

The NDP is not a credible plan.

Morally anchored values are important but insufficient

SA’s 1990s transition emphasised values to the exclusion of objective, evidence-based analysis and this produced a persistent legacy.

SA is not a wealthy country

Many South Africans of various backgrounds continue to believe that SA is a wealthy country despite junk credit ratings and more than half the population being mired in dire poverty.

A related perception persists that SA’s modest number of affluent households can provide the economic heft to uplift the far larger number of marginalised households.

Redistribution is not a plan

Over reliance on redistribution has choked off growth and continued over reliance on redistribution in lieu of growth is now accelerating economic and political decay.

Extracting natural resource is not a plan

Discovering significant oil and gas or mineral deposits has modest potential to slow SA’s economic decay and it can not reverse it.

As comparing Venezuela and Taiwan demonstrates, natural endowments are a poor predictor of national prosperity.

Growing through value-added exporting versus no growth

There is no path to sustained high growth without surging exports whereas post 1994 transition politics have favoured ever greater reliance on redistribution thus steadily undermining export competitiveness.

SA’s purchasing power is insufficient to fuel adequate growth

The central political-economic disconnect is the presumption that SA’s domestic purchasing power and wealth can fuel sufficient growth to reduce the nation’s poverty in line with global norms.

SA’s policy making has been unresponsive to key global shifts

The core shifts in the global economy are adversarial toward SA’s economic configuration yet policies have not adjusted. Consider:

• The global shift from manufacturing-led to services-led growth.
• The shift from a collection of lightly integrated national economies to what resembles a tightly integrated global economy.
• The shift from resource limited growth to final demand limited growth.
• The shift from an industrial economy to an information economy – where reproduction and transport costs are often negligible.
• The shift from incumbent advantages to disruptor advantages.

That SA is a global outlier is reflected by persistent inflation amid very low growth within a world economy which is has been growing more than twice as fast with almost no inflation.

There are no capital shortages globally or in SA

Investment capital has been designated as a growth blockage and it has been further presumed that there is a shortage of domestic capital.

Yet neither presumption is valid.

The slow pace of capital formation is consistent with policies limiting sustainable growth to under 2%.

SA does not lack the ability to mobilise capital to fund prolonged high growth, rather the policy environment precludes high growth through undermining the country’s competitiveness.

Redistribution and over indebtedness 

Over emphasising redistribution flattens long-term growth potential.

• Competitiveness and exports inevitably suffer and the damage compounds.
• Household over indebted then ensures long-term stagnation as it undermines growth in SA’s domestic purchasing power as it leaves so many households with little disposable income after funding living expenses and servicing debt.

A workable plan requires objectives be prioritised

A workable long-term plan cannot be designed without agreeing an overarching objective.

Instead, the 1990s transition presumed reconciliation through redistribution overcoming the numerous entrenched inequities.

The ruling party has blurred planning, implementing and accountability through making each serious inequity a priority to be remedied through further redistribution.

What would work

Economic success requires anchoring policies around a single objective: greatly reducing poverty.

But not through increasing reliance on redistribution.

Meaningfully reducing poverty is only possible through sustained high growth through surging exports while easing consumer indebtedness.

Complicated politics are amplified as the nation has never focused on value-added exporting and building emerging household balance sheets starts from a low base.

Getting to evidence-based decision making

Evidence based analysis is resisted by multiple prioritising alongside the politics of historical inequities and redistribution-prone policy making.

Focusing on job creation is counterproductive

If the economy is not expanding substantially faster than the workforce, efforts to “create jobs” will further flatten the long-term growth trajectory of total employment.

Complaining about monopolies is a distraction

Complaining about monopolies distracts from focusing on the core impediment, lack of access to adequate purchasing power, and from the central priority, eradicating poverty.

Directing government funding and regulations to undermine well-resourced and well-managed incumbents to benefit small, under-resourced, inexperience new-entrants amid long-term stagnation is counterproductive.

Entrepreneurs are key put the focus must be on exporting

Government has left itself no option but to pursue poverty alleviation through creating an environment conducive to surging exports.

Entrepreneurs, not government, should be identifying export opportunities.

President Ramaphosa’s influence is expected to grow after the election

The Zuma faction clearly needs Ramaphosa to achieve an ANC electoral majority in the National Assembly.

After the election, Ramaphosa’s value to the Zuma faction will have expired.

After the election, it may become clear that Ramaphosa should have been more aggressive in neutralising the numerous members of the ANC who did not support Ramaphosa to head the party.