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SONA a juggling act at best of times

A STATE of the nation address is a juggling act at the best of times.

It is an attempt to give an outline of government policy for the year to come - as well as examples of this - and practical successes from the previous year. Similar to the National Budget, it’s virtually impossible to please everyone. Gaps will usually be apparent in both policy and implementation.

Getting it right on both accounts is tricky. In the complex, inter-connected world of a diversified, financially sophisticated economy like South Africa’s, and with a history like ours, policy has to increasingly be smart, responsive, informed, nimble and nuanced. Some steps in support of such policy gymnastics were evident in SONA.   

The Nine-Point Plan the president referred to was announced in the 2015 SONA and it is hoped will add an additional 0.8 percentage points in the short-term and one percentage point in the medium to long-term to the gross domestic product (GDP). The GDP in 2016 of around 0.5% may not have been the best testimony to this, but at least 2017 is expected to deliver 1.3%.

The concept is good: pick a shortlist of strong focal areas - industrialisation, mining and beneficiation, agriculture and agro processing, energy, SMMEs, managing work place conflict, attracting investments, growing the oceans economy and tourism - and attempt to turbo boost them.

We might have arrived at a (contested) National Development Plan (GDP), but given the ongoing sluggish growth rate, every attempt to create extra speed is welcome. Not that this is a unique problem. Most developing countries, and even some developed ones, have significant unemployment and poverty.

It’s partly that capitalist thing - it usually tends to favour that outcome. Our problem is that the origins of our challenges were deliberately created, so that sort of makes us unique among developing countries in terms of the size of the hole we have to dig ourselves out of.

High GDP growth

Given how our high GDP growth has to be to create enough jobs, we’re going to have to become extremely innovative extremely fast at both a macro and sectoral level. Leaving it up to the invisible hand of the market may not be the smartest or safest choice in this instance.

The CEO Initiative the president mentioned is a step forward towards normalising economic interaction between our three bulls. Our weird past means South Africa has to work harder to put in place a positive, trusting, informed relationship between government and business and labour.
Although government, business and labour of course have different mandates, collaboration and understanding are just still too thin on the ground. But with what has to be built, we have to somehow improve this. And yes, this alone could greatly affect our chances of making it.

Getting to a national minimum wage is quite an achievement, considering the depth of feeling this concept generates. Whether it’s a good or bad thing often depends on which school of economic theory you subscribe to and which side of the pay cheque you are on, but if you accept that the needs and stakeholders that drove it were never going to magically disappear, then it might become more understandable.

Given how complex and distorted global trade often is, a minimum wage is not going to sink us. Sluggish, blunt policy making would get us long before that. And no, we can’t squash trade unions and free people from the tyranny of higher wages like some of our peers (and some of our richer friends in the past).

The focus on energy, water leaks, schools, roads, tourism, investment, data and harbours was good. Often building a strong economy is as much about the basic as the complex. It’s that frustrating interconnectedness again. I’m not sure why we accept that big businesses, shopping centres and sporting seasons can be complex and multi-faceted but we think a national economy is relatively straightforward and ring-fenced.

Public treatment centres 

The announcement of new public treatment centres for drugs can be welcomed as a real blessing in this struggle, given the costs of rehabilitation, and local data suggesting that approximately 6% of the adult population meet diagnostic criteria for a substance use disorder.
Existing private and public treatment centres have been reporting both multi-drug use and an increasing demand for rehabilitation by persons who have not been in treatment before. It looks like the only way we’re going to win this one is by gearing up to tackle it on scale similar to the HIV-AIDS efforts. Hopefully more public centres will follow. The faiths have figured this out and are starting to mobilise too.

The launch in the SONA speech of new efforts to dramatically transform the economy will generate fierce debate and intense focus. In this firestorm, the rationale and magnitude of the challenges driving us must remain squarely in focus.

We have a radical problem – not only were our economy and skills policies actually structurally designed over decades to be exclusionary and massively unequal, but we achieved our liberation in a world of increasingly competitive liberalised trade, mobile capital, skills specialisation and growing automation.

In other words, we landed in fiercely contested economic terrain just when we needed the space to quietly work on ourselves and grow and share our pie. At the same time the economic policy space has been shrinking, with alternative economic paths increasingly attacked as unrealistic.

Capitalism

Yet the fact is that capitalism as it is, is not delivering fast or safely enough to eradicate inequality and poverty, either locally or globally.

In fact left to its own devices the invisible hand of the market appears to have a built-in tendency for inequality, instability and occasional self-destruction and obviously never heard Barney sing about "sharing is caring".

So, if we’re sort of a worst case scenario for inequality and unemployment and business as usual won’t cut it then we’re logically going to have to create a new way of doing economic life if we want to live in an equitable, prosperous, stable nation.

Our massive structural challenges and multiple forms of inequality leave us little choice. The trick is going to be to reach a consensus on what’s sustainable and implement it without breaking what we’ve got or tearing ourselves apart.

The good news: our political, societal and developmental mix is so unusual and potent that we might just be the ones to successfully define, demonstrate and defend new and sustainable economic models and paths.

* Wolfe Braude is a director at Emet Consulting, a boutique policy, research and strategic communications consultancy based in Durban. He writes in his personal capacity. Follow him on twitter @BraWolfe.

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