Over-prioritising redistribution entrenches poverty. This legitimises racial discrimination which stokes sufficient polarisation to cripple accountability.
The pandemic has tested many organisations, with most failing to meet expectations. Conversely, a handful of pharmaceutical companies have vastly exceeded expectations. That these companies remain generally underappreciated shows how accountability can be enfeebled by subjectively indulging values.
While countless health workers have responded heroically, most health departments and government leaders have wobbled. Putting aside the important health and individual freedom issues to focus on the economics, the benefits of the vaccines massively outweigh the costs. Nine billion jabs have profoundly influenced behaviours. Billions of people have become more willing to go to work and spend freely. Irrespective of government decisions, without the teamwork among scientists and executives at a handful of firms, the global economy would be in a perilous recession, if not a depression.
Many will resist that interpretation as they are critical of pharmaceutical companies profiting from health threats. Yet there is little reason to believe that remedies could have been developed and distributed cheaper without profit-focused pharmaceutical companies – or that these research-intensive companies could be top performers without their revenues exceeding expenses.
Perhaps in second place are the companies which have made working and studying from home viable for hundreds of millions of workers and students. We aren’t conditioned to applaud Pfizer or Microsoft but they are among the tiny number of companies whose research and distribution capacities were necessary to avoid a global economic calamity.
Interpreting events through values-based filters is not new but, as the pace of disruptive changes keeps accelerating, its appeal as a crutch has grown. Just as societies need to run, jump and change directions with ever greater alacrity and coordination with other societies, our ruling elites have employed social justice memes to justify prioritising redistribution ahead of growth.
Moral superiority
Their formula is simple: Project an image of moral superiority due to past injustices and lingering inequities. Then judge harshly the imperfections of those who actually know how to create a successful economy.
While our economic policies have bred poverty and polarisation through emphasising race-based redistribution, the rest of the world has embraced declining communication and transport costs to achieve remarkable global integration. As most nations steadily progress through transforming to compete within a services-led, highly integrated global economy, our political elites see South Africa as a resource-endowed nation whose inherent wealth must be judiciously apportioned – by them.
Pandemic-era disruptions have supported the assertion that success happens not at the level of the company but across supply chains. Whereas weak global auto demand last year was amplified by a shortage of computer chips, Tesla’s superior supply chain management supported its sales nearly doubling in 2021. More broadly, efforts to address climate change challenges are spotlighting multiple levels of selection pressures which must be navigated to support human progress. Meanwhile, our leaders remain stuck in a ‘comfortably numb’ 1970s mindset.
Broad prosperity is only possible in South Africa through vastly greater integration into the global economy. Instead, our political elites demand greater localisation, a strategy which is sure to further exacerbate unemployment and poverty.
Other countries also contend with polarising politics but South Africa achieves leadership in this dubious category through racially discriminatory legislation which benefits the politically connected at the expense of the majority who are left unemployed or poor or both. This region is unusual as there are no role-model nations which have achieved broad prosperity through adding value within global supply chains. South Africa was best positioned to show regional leadership in this regard but political opportunism prevailed.
Subsistence payments
As we tuned-out to shift into holiday mode, it was reported that our policy makers had decided to extend Covid-19 relief payments for another year due to the Omicron variant. That is, rather than adjust policies to surge employment, healthy young adults will rely on subsistence payments – which aren’t fiscally sustainable.
There is probably no better indicator of a nation’s long-term growth prospects than the portion of its young adults who add value within global supply chains. The portion of South Africa’s young adults who are formally employed is remarkably low and very few of them add value within global supply chains.
Our median twenty year olds are poor, with meagre education. Worse still, they compete in a labour market defined by a massive, and growing, bulge of young unemployed aspirants. It is virtually impossible for this to change before they become permanently marginalised unless South Africa becomes vastly more integrated into the global economy. Our domestic economy simply doesn’t have the spending power to fully employ each year’s class of school leavers. South Africa’s per capita GDP peaked in 2011 and it is unlikely to recover to that level – on an inflation-adjusted rand basis – prior to 2030.
While responsibility for this horrific situation sits squarely with our policy-makers, none of us is blameless. The belief that our young adults can’t compete globally is harmful and widespread. Elon Musk recently admitted that creating self-driving cars is far more difficult than he expected. How human minds make sense of their surroundings is simply amazing. Our poorly educated twenty year olds can relate to how our world is evolving in ways that elude older, well-educated people.
It used to be that a country’s potential was determined by its resources or global positioning. Is South Africa’s resource wealth as globally impactful as Musk’s constructive disruptiveness? Formally resource-dependent countries are now hustling to redefine their economies while work-from-home capabilities further undermine distance’s ability to preclude participation.
South Africa is the world’s icon for a nation too polarised to produce a workable plan. Instead, our non-government leaders offer lists of many things that should be done better.
Struggling economically
Most South African voters are poor or struggling economically. For them, corruption allegations reflect disputes between those who had previously gotten rich through political favouritism and those who are doing so now.
Successfully managing our challenges requires adopting a solutions-focused mindset. Intense polarisation precludes this essential first step.
All other regions have become vastly more globally integrated. Countries that resist global integration and place imprudent reliance on exporting commodities have become highly vulnerable. That this region has about 1% of the world’s discretionary purchasing power traces to the anti-development effects of over reliance on commodity exporting. It also means regional integration can’t stem South Africa’s economic slide.
Favouring those with shared genes is the norm among vertebrates, including all primates. We favour siblings ahead of cousins …. Yet, the core competitive advantage of humans is an extraordinary capacity to cooperate and adapt among huge numbers of unrelated individuals.
As it has suddenly become possible to video chat with nearly anyone, anywhere, for free, innovative disruptions playing out across global supply chains now propel the world’s economy. Meanwhile, our political elites indulge racist policies to feed patronage while polarising, isolating and degrading our society.