In the wake of the Gupta leaks, polarisation in SA has increased significantly with a strange alliance of free-market (mostly DA), populist (mostly EFF) and disgruntled ANC voices (often repressed) on the one side with Zuma and Gupta defenders on the other side. The current discourse often ignores the elephant in the room, which is that with a sky high unemployment rate, faltering economic growth and poor education outcomes, serious changes are needed in SA, regardless of who is at the helm. If we do not aggressively address the inequality in our country, exacerbated by these factors, we are at risk of a populist uprising, which could set us back significantly. Sacrifice will be needed.
The Zuma and Gupta defenders faction is aggressively employing a strategy of shifting focus away from the accusations of corruption and weak delivery toward the ills of what they call White Monopoly Capital. On the other side, you find a strange union of populists, who want Zuma out of the way to deliver genuine redistribution, aided by nationalisation and seizure together with ardent supporters of the free market, many of whom are fed up with funding an often inefficient government and yearn for the days gone by.
Because of the polarised environment, these two factions often misunderstand each other and may be talking across purposes. Firstly, not everyone who is concerned about the influence and ownership of the white population on the SA economy are simply taking this stance as a way of defending Zuma (and the Guptas). Many of them have valid concerns, including the extreme inequality in our country (to a great extent along racial lines), the high unemployment and the low economic growth.
Secondly, not everyone who is calling for the ouster of Zuma and the removal of Gupta influence is a closet racist secretly yearning for the return of Apartheid. Many of this faction are genuinely concerned that the country is poorly run and recognise that for the long-term success of SA, we need better education outcomes, increased employment and higher economic growth.
What is plain to me though is that whatever happens to Zuma, whoever succeeds him and whoever wins the 2019 general election, serious issues need to be addressed in SA and it will take sacrifice from especially the wealthy in the country. Even if the DA manages to secure a victory (outright or through coalition) in 2019, they will have to continue with and implement new more aggressive redistribution policies in addition to dealing with the existing challenges of our country, including poor education outcomes, crime, healthcare, unemployment and weak economic growth. Even if the new government manages to enhance efficiency (reduce corruption) and achieves better bang for the taxpayer buck, this is unlikely to be enough. To fully address the growing challenges of our country, especially in the light of a rising debt load, pressure on exports and credit downgrades, whoever takes over will have to seriously look at the tax dispensation.
The aim of the new government should be to enhance its tax revenue through higher tax rates and possibly a wealth tax (which will put direct tax pressure on wealthy citizens and corporations), but in exchange to deliver improved services (which could reduce the indirect tax burden, including school fees, private health costs and security); to drive skills development to make the populace more employable; and to create a conducive environment for economic growth and job creation.
Any party who claims that they can create a stable and growing economy, which provides opportunities for all and reduces inequality, without raising taxes, may be fooling themselves. At the same time, any Zuma and Gupta opponent that thinks that their removal and replacement will usher in a golden age of growth and wealth creation without sacrifice, will be hugely disappointed.
We are facing some serious challenges. Our first phase of redistribution (from the mid-1990s to the late 2000s), which resulted in significantly improved service-delivery, the creation of a large and growing black middle class, the transfer of meaningful corporate ownership through BEE and the introduction of a basic (albeit insufficient) safety net through grants, occurred during a period of almost unprecedented asset appreciation, commodity price increases and economic growth.
These tailwinds are gone now. We cannot depend on rising asset prices to lead to almost all BEE transactions being successful and creating an effective transfer of wealth. We cannot depend on high commodity prices to buoy our exports and support our tax receipts. We cannot depend on low interest rates to allow us the freedom to drive lending-based growth.
We have to find a solution that will be effective in the world we live in. Part of this solution will necessitate a South African New Deal, where the haves pay more in tax, which is utilised to upskill the have-nots, to employ them through infrastructure programmes and to provide them with many more opportunities to increase their economic participation across the board.
At the same time, steps should be taken to kickstart economic growth, including liberalising labour markets, creating an attractive tax environment for selected globally competitive (or potentially competitive) industries, selective public private partnerships to explore growing industries (Eskom in the renewable energy sector stands out), less stringent immigration requirements to allow us to attract more skills and much increased government efficiency where we get much more value for the tax rands spent.
It is my view that the majority of privileged South Africans as well as the corporate sector would be more than willing to make the necessary sacrifices as long as they see the long-term benefits that could emerge and the risks that could be moderated. Those that do not, should seriously consider the alternative, which is rising populism, increasing economic disruption and growing polarisation.
Really successful companies are not scared to invest for future growth and sacrificing short-term earnings in exchange for a more certain stream of growing earnings going forward. The average well-off South African should have a similar view. Rather sacrifice income and consumption in the short-term, in exchange for a less uncertain and brighter future. What is of course vital is that whoever increases the burden on South Africans does so from a position of zero tolerance for corruption and at the same time, significantly increases the efficiency of how tax rands are spent. Those who are currently unwilling to sacrifice may soon change their minds if they see concrete delivery. That is at least my hope.
Do you think that the removal of Zuma and Gupta influence will automatically lead to a better life for you and your family? Are you prepared to sacrifice when asked by new leadership who promises improved delivery and a more secure future? Do you think you can have your cake and eat it or are you more realistic? I would love to hear your feedback.
In the mean time, keep your talking straight!
#GuptaLeaks #WhiteMonopolyCapital #NewDeal