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Sat Aug 02 10:35:21 SAST 2014

A chasm that serves SA well

Brendan Boyle | 23 February, 2012 00:54
Brendan Boyle
Image by: The Dispatch

This is the week of every year in which the chasm between the parallel universes of South African politics and finance yawns widest.

Because the budget is a day-long commitment for the reporters covering it, I have had to write this column before the presentation, knowing it will only be published a day after it. But I will eat the first hat presented if Finance Minister Pravin Gordhan has not again reinforced the conviction that the Treasury is the rational centre of South African governance.

Where President Jacob Zuma could present a cocktail of optimism, fantasy and reality in his recent State of the Nation address, Gordhan is bound by the numbers.

The currency of economic policy is money. You can count it, weigh it, store it or exchange it for something that makes a citizen's life better. There are myriad ways to forecast its behaviour, though not always accurate, and a host of theories about the best ways to drive the chain of production, distribution and consumption to deliver the social goods of jobs and wealth.

The currency of politics, however, is power. People enter politics to attain power, they stay in politics to dispense power and they drop out when they lose power. That power cannot be weighed, counted or entered in a spreadsheet.

It is felt like the seasons, measured in influence and visible in the abundance that surrounds it.

In an ideal state, politics also should deliver the social goods of jobs and wealth, but the link between promise and product is difficult to analyse. Politicians have an easier time of it than economists. They don't need the same levels of specialised education to get the job, and they are less accountable for their use of power than economic leaders are for their use of money.

Politicians who take on economic portfolios still trade in the marketplace of power, of course, and some never accept the constraints of fiscal management. Herbert Murerwa during three stints as finance minister in Zimbabwe, between 1996 and 2007, headed a political department, not an economic one, so he could make decisions that any economist knew would take the country deeper into disaster.

The rules were not much of a constraint either to the finance ministers of the late apartheid era, when the domestic rand was de-linked from the reality of the outside world and used as an instrument of power. Since the beginning of our democracy in 1994, we have had governments that acknowledge that the numbers matter.

While some ministers have moved from one platform to the next with implausible promises they hoped would increase their reserves of power, backroom teams at the Treasury, the South African Revenue Service and the Central Bank have been crunching the numbers. Unlike many of the departments responsible for spending tax revenues, these departments have ensured they have people able to do the job required.

When a plan with the potential to build political power has been financially ill-considered, the backroom team has had the presidential backing to say no. Sometimes, as with the arms deal we did not need, politics has trumped economics and the Treasury's reservations have been overruled. At others, as in the intra-governmental row over Aids policy under Thabo Mbeki, the Treasury has crossed into the arena of social policy to defend the rational view.

But, on the whole, the two sides seem to understand each other quite well and the outcome keeps us safe. For the moment, the need to maintain that rational core of government seems unchallenged from within the administration. The politicians accept the fiscal constraints that will keep us in the global game as long as they are allowed to pass the blame to a tight-fisted Treasury. That is no longer the case regarding that other essential pillar of stability and progress, the judiciary. Zuma and many around him appear to believe justice can safely be politicised.

There can be no doubt the Treasury, SARS and Central Bank are fully committed to economic freedom for those who have achieved only political freedom. But they know that freedom will be meaningless if it is taken at the price of rational fiscal and monetary policy.

Even if Julius Malema is suspended from the ANC Youth League, there will be renewed pressure in the run-up to the ANC's Mangaung election in December to politicise Treasury policy and de-link it from the global economy. His populist ideas of easy wealth have broad appeal. So the chasm between the parallel universes of politics and economics serves us well. It protects the rational centre that every democracy needs.

  • Brendan Boyle is editor of the Daily Dispatch

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Sat Aug 02 10:35:21 SAST 2014 ::