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Wed Apr 23 17:24:15 SAST 2014

Gordhan's economics, not Malema's, must inform debate

Brendan Boyle | 27 October, 2011 00:18

Thabo Mbeki fought valiantly during his presidency against the advance of sound-bite journalism.

He hated to see his 4000-word analyses of topics as complex as the economy and Aids reduced to 300-word newspaper stories based on one or two extracted quotes.

Perhaps he could not have been expected to foresee that an exchange of 140-character tweets would soon become a ubiquitous platform of international debate, but the signs were there. Facebook was on the rise and venerable media such as the magazine Time had started to tell stories in bubbles, boxes and easily digestible lists.

Mbeki was right, of course, when he said that the big questions cannot be resolved in paragraphs and bullet points, but he was wrong to think that one could ring-fence important debates and admit to the discussion only those who are willing to do the heavy reading and deep thinking.

That's why we have Julius Malema, who, if he has ever handled a copy, may think he has read Time when he has looked at the pictures, scanned a summary box and read one of those irritating "1203: The number of ." lists that pass for journalism these days.

It would be comforting to believe that Malema, having styled himself an economic freedom fighter in the mould of Nelson Mandela, has taken the time before today's "economic freedom in our lifetime" march on the JSE to read Finance Minister Pravin Gordhan's medium-term Budget policy statement.

It is true, of course, that Gordhan's updated three-year economic blueprint is based on a particular analysis of the facts, and that there are other valid interpretations of the balance between revenue and requirement. But marching for jobs as though they are hidden in some unfeeling Scrooge's cupboard, with nationalisation and the seizure of white land as the strategy to release them, does not constitute such a reading of the data.

The global recession is a reality that the government, Cosatu and even the ANC Youth League cannot wish away. It is also one premise of Gordhan's statement.

Trevor Manuel, as finance minister when Lehman Brothers went under in 2008, and Gordhan since, have powered South Africa through the mire of crashing economic growth by pressing ever harder on the accelerator. They have maintained an accommodative fiscal strategy and fuelled the economy with savings followed by capital borrowed against the collateral of next year's labour.

But what Gordhan's presentation made clear was that the tank that has fuelled South Africa's response to the global challenge is almost empty. Public debt is up from 23% of GDP in 2009 and heading towards 40% by 2015, the outer year of the current planning period. To borrow more would be to tempt a tragedy of Greek proportions.

In a statement of the obvious that seems to have escaped the Greeks as much as it has our own populists, Gordhan added: "We need to appreciate that debt has to be repaid, either through the tariffs and charges that are dedicated to these services or through higher taxes."

Gordhan appeared to deliver another round of magic with his announcement of R10.3-billion to top up this year's budget, nearly half of it to cover the above-inflation public-sector wage settlement. But he went on to explain that the appearance of new spending was an illusion. The higher wages and salaries would be offset by under-spending on investment and maintenance of infrastructure this year.

The dangerous trade-off between necessary infrastructure expansion and maintenance on the one hand and consumption spending on the other is a persistent theme throughout the policy statement.

"Our aim is to strengthen infrastructure investment and maintenance, because that is a key contribution to the underlying growth potential of the economy. This means we must see a moderation in the growth of the wage bill and spending on goods and services over the medium-term economic forecast period ahead," Gordhan said.

That is a tough message compared with Malema's: "The lives of black people in South Africa are valueless because we are doing nothing to improve their living conditions . The political leadership is scared of capital and sometimes scared of white people because capital instils fear in it, and white people present a picture of indispensability in the economy."

Anyone who does read Gordhan's full policy statement - which would take 292 tweets to transmit - would have to accept that "doing nothing" is an indefensible denial of the facts. The policy statement - which does not approach the detail of the annual February budget - is laced with reports on the efforts to provide jobs, housing, schools and services.

One example is that there have been 2651 proposals since the June launch of President Jacob Zuma's R9-billion youth-focused jobs fund, and allocations worth R352-million already made are expected to create 115 226 jobs.

Like the polemical "nothing has changed since 1994" sound bite that fuels much of the policy debate between the left and the centre, Malema's call to arms is based on a deliberate misrepresentation of the work done since the end of apartheid, and is a massive understatement, whether deliberate or just ignorant, of the constraints on those who really are trying to do something right.

As Mbeki refused to accept, however, Malema cannot be excluded from the discussion. The sound-bite activists may well gain the upper hand if the government and Gordhan's Treasury do not up their game and sell their tough but more realistic vision more effectively.

There is space for debate about the merits of the Gordhan analysis of the challenges and options. But it is, as Mbeki probably would still argue, a debate that needs to be based on a fuller reading of all the information and an acceptance or credible refutation of the facts.

The ANC halted the passage of the awful Protection of State Information Bill because it realised it had not won the acceptance of party members, and the leadership scheduled meetings to explain its view.

It would do well to devote at least as much effort to marketing Gordhan's argument so the economic debate can at least be kept on a realistic plane.

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Wed Apr 23 17:24:15 SAST 2014 ::