By Glenn Ashton · 20 Aug 2013
Structural poverty, exacerbated by falling employment, has dogged South Africa since 1994. Subsequently unemployment has officially increased from around one fifth of the active workforce, to a quarter today. The unofficial “expanded” and probably more realistic level of unemployment is closer to 40%. This issue, more than any other, threatens the fundamental stability of our nation.
In 1995 the philosopher Jeremy Rifkin published a book called the “The End of Work.” His predictions regarding unemployment were on the money. Technology and machines not only automated work, they similtaneously destroyed jobs at a staggering rate.
Industrial agriculture using GM crops employs less than 2 people per hectare. Free online advertising websites like Craigslist and Gumtree have destroyed classified adverts, shrinking income and employment in that industry by at least 80%. Real manufacturing has gone east, to China, India and the little tigers, never to return. Employment archetypes have been fundamentally transformed.
South Africa has been seriously compromised in its ability to deal with these challenges. Our self-imposed restructuring favoured big business and extractive industries. Eskom’s relationship with Billiton is a case in point; we effectively subsidise this offshore multinational, paying three to five times more for our electricity.
Our government managed the remaining scraps fairly well but remains handicapped by its neoliberal approach. It is not as if the economy has stagnated, here or abroad. Quite the opposite. Our GDP more than tripled, from around $135 billion in 1994 to over $450 billion today. Globally it more than doubled, from $33 trillion more than $71 trillion. Global wealth is presently estimated at around $225 trillion.
So where did this wealth disappear to? It didn’t trickle down as promised, to where it was most needed. Instead it ascended into the pockets of the already affluent. While South Africa has the most extreme inequality in the world, things elsewhere are little better; around a million people control nearly half all planetary wealth. The richest 300 control as much wealth as the bottom 3 billion. In the US the wealthiest 20% control 90%; in South Africa the top 10%, 80%. Inequality rules.
Only the elite benefit. That we lead the world in inequality, amidst our plenty, should raise alarms. Frustration grows at the lack of visible change, evidenced by service delivery protests and crime. We obviously cannot employ people in an economy driven by jobless growth.
When Rifkin wrote “The End of Work” he suggested increased unemployment through efficiency may create a more leisurely, egalitarian system. He was wrong. Jobless growth has driven unprecedented wealth concentration and greed. The plutocracy has sequestered between $21 and $80 trillion, up to a third of the world’s total estimated wealth, in tax havens and other financial black holes. This money, collectively earned by all of us, or plundered from the ecosphere, has effectively been removed from active circulation, let alone taxation or redistribution.
This pattern has been repeated with gusto here. South Africa has around 3000 individuals with assets of over R75 million. Maybe one in six are registered taxpayers, yet the public complains about informal businesses not being registered? Have we lost the plot?
South Africa was obliged to cap income tax below 26% under our economic and political compomises, so even if these super-wealthy individuals were registered, they would manage to avoid most tax and would never be subjected to any kind of super tax. This all seems unjust, given the accrued benefits. Instead of squirreling suitcases of cash away in tax havens, as local billionaire Chris Wiese effectively admitted to doing, the wealthy should do the right thing.
Jonny Steinberg recently suggested we should cease our deluded attempts to generate jobs for all. Instead he sensibly proposed we broaden the social security net to offset the massive burden borne by the few who are employed, who effectively provide a social welfare blanket for their extended families. This is one creative way to deal with systemic poverty. At least Steinberg thinks outside the box, unlike our blinkered leadership.
And just why, for instance, are the engaged young activists from our landless people’s movement and sharp young graduates and intellectuals ignored, even persecuted? Why are the new economists so marginalised? Why are we ruled by old men with old ideas? Why is there systemic fear of change? After all, real solutions require real change.
Perhaps we should learn from Brazil. Since the 1990’s Brazil’s Landless Workers Movement (MST) have legally resettled more than 350 000 families onto more than 8 million hectares of fertile land, with proper title. This family-based small farming sector is now the most productive in the nation and provides diversified food to where it is needed. Brazil has radically reduced inequality, halving the number of people in poverty, while we have slid downhill. Our trans-Atlantic neighbour has many useful lessons to teach us.
Landed South Africans decry the Zimbabwean land revolution, and yes, it certainly was messy. Yet today Zimbabwe is gradually returning to acceptable agricultural productivity levels. While this is being disputed, hard research backs up the reality.
The point is we can choose either the structured Brazilian way or the chaotic Zimbabwean model. Our options are limited. We certainly cannot continue to do nothing and must act while we still have choices.
Land is wealth. We have failed to transfer either. A hundred years after the notorious 1913 Natives Land Act, we remain hamstrung by our adherence to discredited economic models. The National Development Plan 2030 is mired in that paradigm: business will solve all and wealth will trickle down. And pigs will fly. And while Keynes may now be cool, far more creative, progressive thinking is required – Sen, Stiglitz, Krugman and Ostrum provide some hope.
The world has changed substantially since 2008, let alone 1994. Instead of change, our leadership appears to be drifting further out of touch, isolated from our oppressive, everyday realities by their bodyguards, wealth and electric fences. It is all so achingly, depressingly reminiscent of the laager mentality of old…