The bigger picture of patronage and corruption

Posted on July 22, 2017

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A month ago I wrote that South Africa may be heading into a “winter of discontent” as the public sector unions face their employer, the government, in pay and benefits talks. Since then finance minister Malusi Gigaba has announced his 14-point plan aimed at “taking the country out of recession”.

The plan — to be fleshed out in the medium term budget in October — lacks detail, but does make almost certain that there will be a winter, and ongoing discontent. Not only in the public sector where government has already effectively frozen more than 150,000 jobs.

Second on Gigaba’s “To do” list is: “Set up private sector participation framework.” It is a repeat of the long-held labour fear that a cash strapped government would resort to “selling off the family silver” and so putting the country into perpetual indebtedness and servitude.

The 14 points also take us back to 1996 when one leading economist called the government’s Growth Employment and Reconstruction (Gear) outline of that year “a cascade of improbabilities”. Last week, authoritative — and decidedly mainstream — economist, Azar Jammine, referred to Gigaba’s latest promise of economic salvation as “hot air”.

I think it would have been more accurate to have added the adjective: “stale”. Because, in essense, we have heard it all before, along with the inevitable acronyms: Gear, Asgisa (Accelerated Shared Growth Initiative), NGP (National Growth Plan), NDP (National Development Plan) followed by President Jacob Zuma’s nine points (that he could not recall in parliament) and now Gigaba’s 14.

They all follow the same trajectory and are usually vague on detail, especially about implementation. And they are guaranteed to fuel the same battles with the unions and with elements of civil society.

At a fundamental level, all these plans, initiatives and points are based on the concept that economic growth will lead to redistribution, the long discredited “trickle-down” theory. In 1996 the unions argued — as they still do today — that the redistribution of wealth should be the priority; that a policy based on redistribution would not only be a better, but a more equitable way forward.

All are still, at least in theory, bound by the proposals in the Social Equity and Job Creation framework that proposed a strategy of economic growth and wealth creation through redistribution. It was adopted in 1996 in response to “trickle down” proposals from the business sector and was based on work done over years by the ANC’s highly qualified Macro-economic Research Group.

But then Gear arrived and was at least vocally resisted. However, there was also much clutching at straws along the way. In 2006, several major unions, along with the SA Communist Party, hailed the announcement of Asgisa as “a departure from Gear” and “a major breakthrough”.

When it became clear that Asgisa was no breakthrough, let alone a departure from established practice, resistance began and was met with the NGP which some unions this time accepted as having “some positive aspects” a theme repeated when the NDP emerged. However, to several critics, myself included, this seemed similar to arguing that it was possible to be “a little bit pregnant”.

Now, having wallowed in scandals and corruption, especially over the past decade, with widespread looting of the public purse amid growing joblessness and immiseration of the masses, the patience — and perhaps hopes for patronage — of union leaders (although not necessarily members) has worn thin. Membership losses — the “fraying at the edges” — also finally resulted in a number of breakaways from Cosatu joining the newly formed SA Federation of Trade Unions (Saftu).

The PSA (formerly Public Servants Association), that is now probably the largest of the unions organising state employees, has also rejoined the Federation of Unions (Fedusa), giving it potentially more leverage at a time when the union movement has been weakened.

On the union front, therefore, the government and whatever allies it has, faces strong resistance. So why did Gigaba choose to announce these potentially inflammatory 14 points?

The answer is simple: Gigaba’s 14 points are aimed at the ratings agencies and, in particular, the two that plan another assessment of the South African economy in November. Which is why the 14 points point to reinforcing the neo-liberal, trickle down policies that will be elaborated on in the medium term budget in October.

This in order to pander to the ratings agencies in the hope that they will not further downgraded South Africa’s sovereign debt. The agenda of the agencies is straightforward: create conditions where a global monied minority can maximise profits, irrespective of the social consequences.

No-one should ever forget that it was these very agencies that promoted that mad money go round, the sub prime mortgage market, that triggered the ongoing financial crisis. One of their constant demands is the privatisation of state-owned assets.

Alternatives exist to this lemming-like rush to bankrupcy. But they require the political will to — in the first place — honestly and determinedly tackle the swamp of corruption and patronage-fuelled incompetence into which the country has slid. That is the bigger picture the unions should bear in mind in the fight to stop the country slipping deeper into the mire.

At the same time, it is essential that the details of an alternative and more democratic dispension, political, social and economic, be clearly defined and worked toward.