Economy must be inclusive of the poor
Real participation in it has always been a preserve of the haves in SA
At the centre of the downgrade by S&P is the silent, subliminal voice of no confidence in President Jacob Zuma.
It can be concluded that the country’s leaders have brought this on themselves at no invitation from the ratings agencies.
That’s not the point though. Our economy is unapologetically liberal. Nothing in it talks to the dire exposure of the poor. With no (economic) means, there is little by way of effective participation of the poor in the economy.
In a country where the dominant language of correspondence and conversation is third or fourth in the order of most spoken languages, it is no surprise that we remain poorer performers in areas of mathematics and finance. That’s the super-most form of economic exclusion. If the economy doesn’t speak in the language of your comfort, there is little chance you will succeed.
Bring that to the complex economics narrative of a downgrade, it makes for complex misunderstanding.
To default to the expected narrative that a downgrade has a portfolio of negative consequences (elevated inflation, low and poor growth outcomes, depreciating currency and its associated effects, high bond yields, capital flight, wide current and fiscal deficits, etc) is to avoid the uncomfortable conversation that liberal economies are by their very nature deliberately exclusive and generally racist in a country like ours.
For more than 23 years of political liberation we are nowhere near the egalitarian wishes of many who have perished. Granted, the path to selfdestruction for the country required little guidance as it was profusely fueled by blinded political energy.
Economic performance offered no alternative in all this time of political dominance. It has always remained protective of the haves. The reality is that economic hegemony is the sole preserve of the haves.
Yes, we will all be in dire straits if the economy hits full brakes. No need to identify who’ll be affected the most when that happens.
The employed are regarded as hedged and therefore can rely on income and/or relieve themselves of their contractual savings (whether to forego medical insurance, life cover or convert pensions).
Our economy hasn’t transformed itself to easily accommodate the have-nots. The quantum of solace for the poor and have-nots will be radical departure from regular economic operation.
With a downgrade, clearly the task at hand is made even more complex. To spend capital you don’t have through borrowing is made even tougher, pushing the goals of economic inclusivity further out of reach.
This government will continuously find itself responding unintentionally (or maybe intentionally) to the calls of the haves. It is opined correctly that the haves pay more taxes and therefore have corresponding say to the goings on in the economy. Contrary is the “preserve” of the poor. Such is the uncomfortable state of economic affairs.
It is no surprise that ministers of police and/or justice remain in the hands of the African majority. This country struggles when it comes to acceptance of ministers of finance as Africans.
Well-respected Nhlanhla Nene had to fall from the inaugural chair of economics to be recognised as a capable finance leader. He had to serve under successful Pravin Gordhan and Trevor Manuel to earn legitimacy with the markets.
We didn’t experience his stand-alone achievements and success as his finance leadership role was prematurely cut short.
Until we have an unapologetic economy that preaches and implements inclusivity, we will have difficulty in understanding the rating agencies.
Provision of social grants and any dependency grants is a means to an end. We need an end.
If the path to economic recovery was truly on course as espoused by the sacked Gordhan, why punish the country? Knowing full well that the path to a revolving door of neverending poverty and high unemployment is as wide as the church door following S&P foreign currency downgrade, we will never recover, at least not any time soon. The last time the country was at BB+ (S&P) was in 1994 and peaked at BBB+ (between 2005 and 2011).