Do startups make inequality inevitable?

SAY “PG” in South Africa, and everyone knows you are talking about Finance Minister Pravin Gordhan. In the tech start-up world the initials belong to Paul Graham, a venture capitalist and influential essayist. Recently, he controversially argued that economic inequality is a necessary consequence of start-up success. “You can’t prevent great variations in wealth without preventing people from getting rich, and you can’t do that without preventing them from starting start- ups, ” he wrote. Although written in the context of a debate on changes to the tax system in the US, Graham’s words must give us cause to pause. South Africa’s National Development Plan argues that “mass entrepreneurship” will contribute to higher employment, lower poverty and increased social mobility. It also argues for a more equal society, and focuses on equalising opportunities. But are we attempting to reconcile two irreconcilable goals —growing entrepreneurship and lowering inequality?

Inequality is good and bad?

He argues that inequality has good and bad elements, and governments and society should amplify the good and reduce the bad. He s ays arguments against rising inequality are simplified and conflate everything into a single argument. This perspective has many adherents in the American tech start-up space but is embraced by a minority here. For example, Uber employs no one, and drivers have no stake in the company. Some see this as the internet enabling progress. But work is redefined and precarious employment increases. The debate piqued my interest because tax reforms for small businesses in South Africa are imminent, and we often mimic inappropriate developed-country solutions.
Vast inequality is not inevitable, nor a requirement for progress. In responding to Graham, Nobel laureate Paul Krugman shows that the top 1% in the US are not entrepreneurs but corporate executives. Thomas Piketty also makes this point consistently —the top 1% earn from inherited wealth, which requires little investment and contributes little to job creation and wider social outcomes. In South Africa, high levels of inequality go with low private sector investment.
Our financial institutions have been criticised for underinvesting in the economy despite the availability of money, and BEE deals for not creating new invest ment. According to Stats SA , large companies receive the bulk of government subsidies and grants. The recent World Bank Sector Study of Effective Tax Burden  [PDF] in South Africa shows that large corporations generally pay less than the 28% r at e for companies due to a complex system of government subsidies and tax planning. It raises the question of whether government subsidisation of large business can be restructured to support higher levels of employment.

What should Pravin Gordhan do?

So what should our own PG do? The Davis Tax Committee recommendations on small business taxation should be speedily implemented. For start-ups, more ambitious approaches are needed. The popular option is to provide start-ups and all small business with three tax-free years. The rationale is easy to follow —establishing new businesses would be encouraged, and once successful, the businesses would start paying tax and provide jobs. One needs to understand why there is such a low take-up of tax concessions for venture capital activities. In South Africa this differentiation between small and big business is important, as their interests often conflict. We can learn from the US debate on how tax impacts start-ups that inequality matters and that government policy matters in how markets functions. The wider question remains in South Africa: can we create mass entrepreneurship as envisaged in the NDP without tackling the underlying inequality of opportunities? Our PG can make a good start by prioritising tax reforms for small businesses.
Hassen is the editor of  Zapreneur.com a student at the Wits School of Governance
This article first appeared in the Business Times (Sunday Times) on 14 February 2016.

Why does the South African National Development Plan divide us?

Do we hunt rabbits or deer?  The analogy of hunters making choices between hunting rabbits on the one hand, and hunting deer on the other hand, offers a way to understand the extraordinary failings in South African National Development Plan (NDP). The choices faced by the hunters are to either (a) hunt deer as a group, and in so doing everyone will eat and not just for one day or (b) hunt rabbits as individuals only the successful hunter will eat a single meal ([ref] The idea of a stag hunt as a cooperation game is an old one, that has some useful applications to public policy. See this Wikipedia entry for a good introduction. In this article, we use the idea metaphorically. [/ref]) . This series of posts argues that the NDP turns us into a nation of rabbit hunters, not deer hunters leading to distributional outcomes that are likely to perpetuate inequality and unemployment. It starts with a discussion on failure of reach agreement within the Tripartite Alliance, and having dealt with the political challenges, it the next article focuses on the debilitating fetish of economic growth on our thinking.

Hopeful Moments For A Social Compact

On the establishment of the NDP, the prospects of rigorous planning and coalition building were high.  The ANC had begun discussing the concept of a “Second Transition” (PDF Link), and both the SACP and COSATU had refined their perspectives on economic development, and on redistribution. The prospects for a left programme rooted in our context seemed not only possible, but desirable. More importantly, the process around the National Development Plan, could potentially test the ideas emerging from workers and communists, and provide a sounding board for linking broad theoretical concepts to questions of implementation. The outcome would be a united public policy platform for the Tripartite Alliance, given expression in the NDP. In turn, this would be the foundation for constructing wider coalitions in society, potentially codified in a social compact.
Sadly, hope in this process was misplaced. The usual-usual followed. The SACP and COSATU offered root-and-branch criticism of the NDP, while the Planning Commissioners argued that their policies represented the best options going forward. In all of this, the ANC was strangely silent. The Alliance Summit held after the publication of the NDP, agreed that there were disagreements and established a committee to discuss these. It also attempted to salvage parts of the NDP by asserting that were agreements are reached implementation will take place.  The process after the Alliance Summit has faltered with COSATU noting that scheduled meetings were either poorly attended or not scheduled.
Political economy explanations of the divisions have focused on ideological divisions, or have focused on the dominance of the  African National Congress (ANC) . These explanations offer much in terms of understanding where we are, but shy away from imagining a better process. To imagine this process, we need to enter the power saturated world of internal political management.
 

Extraordinary Failure

The disagreements in the Tripartite Alliance represent an extraordinarily large failure. It is worth restating the obvious –  a plan developed by a government of the African National Congress, does not have the support of its alliance partners and has received lukewarm reception from National Executive Committee of the ANC.  This virtually paralysis the country in terms of communicating to investors, and more importantly getting going on the tasks of creating jobs and reducing inequality.
One is left wondering, why a process to reach a semblance of agreement in the Tripartite Alliance was not run in parallel to the development of the NDP. The answer offered by both COSATU and SACP speaks of a dominance of a policy formulation process developed in the National Treasury over the last twenty years. in the view of SACP and COSATU , this process is one of insulated policy making by neoliberal technocrats,.  One is left gobsmacked by the criticism South Africa remains stuck in the debates that followed the publication of the Growth, Employment and Redistribution: A Macroeconomic Strategy.

Are we really to believe that bureaucrats are outmanoeuvring powerful organisations like COSATU and SACP for the last 18 years?

The National Planning Commission (NPC) argues that its task was to develop the best policy proposals, not manage politics.  In fairness, the NPC was structured to be independent advisory body. However, it would be naïve to argue that the NPC was not conscious of the likely impact of its proposals on wider South African society. The NPC would have in all likelihood aimed to receive support from major players, both inside and outside the Tripartite Alliance as it is minimum requirement for implementation of the plan. More importantly, the NDP sees itself as a basis for reaching a “social compact”.

Are we really to believe that the NPC saw its task primarily as a thought exercise, distant from delivering a plan that had a minimum level of support?

Brazilian Organised Platforms and Indian Coalitions

The internal management of party politics is a core function of a ruling party aiming to create a developmental state. In fact, projects created by left leaning governments require extensive process management, and the articulation of policies tempered by reality but fuelled by ethical commitments to justice. It is a demanding and complex task, but far from impossible. In a sense, it is about building a realistic radicalism.
To illustrate, both India and Brazil have long-term plans in place that are widely supported, and have large programmes both to supporting small business and providing work and income to the poor. This is worth expanding upon for emphasis:

  1. Government is engaged with the market in ways that reform the way markets work, with activity focused on supporting smaller players in the economy; and
  2. Recognising the role of the state to support poor households, strategies are implemented that provide income support and connects poor households to opportunities.

Now, to reach these end points, the ruling governments in India and Brazil needed to build support around a plan. Even our limited understanding of party politics in India and Brazil, tells us that like in our society there is vigorous contestation within centre-left parties, especially those capable of winning elections. In fact, left politics in India and Brazil seems much more noisy. On Zapreneur, we have earlier discussed the meaning of the Lula Presidency and its very contested interpretations.
In the case of the Workers Party in Brazil it contends with over 25 different “organised platforms”, that as Brazilian commentators remind us have their own internal disagreements. In India, the Congress Party has a governing coalition with other political parties  called the United Progressive Alliance.  Sitting in South Africa, the inner workings of these governing arrangements are impossible to follow let alone understand, as political parties guard their inner workings. The outcome is however understandable – robust internal debates leads to the development of better public policy for political parties, but that the process is about power with some ideas being endorsed, and others not. More to the point, the process is often brutal with weaker policy platforms (in terms of support, not always on substance) being squashed. The outcome is important as the Workers Party and Congress Party are able to unite their constituencies, define the dominant policy platform and garner support for their programme. More to the point, the plans are criticised – often justifiably – for being timid in the face of hunger and inequality on the one hand, or limiting capitalism.
Our Tripartite Alliance does not function in a similar way, and provides an important insight on why the NDP – which should unite South Africa, has become a source of deep division. In Brazil and India, the process around developing national plans is deeply contested, however the political parties manage their internal processes much more effectively.

Are we even hunting?

The extraordinary failure of political management of the NDP has consequences. Unlike President Dilma Rousseff or Manmohan Singh, our president Jacob Zuma is unable to lead a national debate on the future of the country. Zuma instead contends with a house divided. It is a worst possible outcome, leaving not only our President without a coherent plan, but as a society without the building blocks of a wider agreement on how we meet the challenges of poverty, inequality and unemployment. This however has powerful implications, enabling the drafters of the NDP to steer the conversation, which may be the intended outcome. Even if this is so, it is a much weaker outcome than an agreed strategy crafted in the fiercest of policy debates.
Where does this leave us in terms of our metaphor of rabbits? Arguably, we have not yet understood that as a nation we are hungry, let alone whether we are hunting deer or rabbit.
 
In the next article, we will discuss why economic growth as a central indicator is so limiting to developing a national plan. Most importantly, the debate on economic growth provides an insight that may suggest that the lack of internal political management might be intentional. The article will be ready when it is ready, but I plan to publish it next Wednesday (unless I get immersed in the fascinating debate between Amartya Sen and Jagdish Bhagwati).

Xenophobia in South Africa: Unequal opportunities drive violence

These are my speaking notes from an event organised by The Star newspaper on xenophobia in South Africa held  in June 2008. Unfortunately, five years later the same argument applies. All data in the article is correct for 2008, and I have not updated it. (Hat tip – My notes were based on an article I co-wrote with Stephen Gelb).

Opportunity

South Africa transition to democracy carried with it a promise, that no longer will life opportunities be dictated by initial conditions of race, gender and class. The xenophobic attacks tell us that that promise remains unfulfilled. It remains unfulfilled because whilst the violent mobs that carried out the xenophobic attacks, represent a significant section of our society that have access to very limited set of opportunities. Young unemployed South Africans have neither a strong prospect of getting that elusive first job, nor are they provided relief through government’s social security system, even though this system is very extensive. How then do we create a society with opportunities for the poor? Let us first explore the problem a little more deeply, before moving on to solutions.

Why Xenophobia?

Let us take a household called ‘Mzansi’. This household has young adults that cannot find that elusive first jobs. Statistically, they represent 76% of all unemployed people who have never worked, being between 15 and 30 years. This household has received both a child support grant, as well as housing, water and electricity. In other words, they have benefited from governments service delivery programme. Yet, these transfers have mattered little as this household attempts to access job opportunities, possibly start a micro enterprise, save for a rainy day. Should this household get into a small business – let us say baking bread – they will find large cartels that set prices, control distribution channels, and have sown up the distribution channel. Even if this household somehow manages to enter the market, they will find that there is a lack of demand in their area, or rather that incomes in the areas where they live might be insignificant to running a business profitably. In other words, this households is unable to break out of its current path of dependence, into a path which provides hopes for a better future.
This household is part of a system of distribution, that is unequal, and that this inequality is structural. Some reminders of these significant disparities are:
• Over 60% of those employed earn less than R 2500-00 per month, whilst the highest paid CEOs earn in access of R 10 million.
• In shorthand this translates to workers earning around R 1-00 for every R 333 rands that a CEO earns.
• Since democracy the distribution of income has remained more a less constant, with the bottom 10% receiving less that 1% of total national income, and the top 10% in access of 50% of national income.
• In 2004, the Minister of Trade and Industry provided data that 70% of BEE deals went to four companies – the so-called ‘usual suspects’. Despite some widening in the beneficiaries of BEE deal – it is vital to remember that they do not result in the creation of new jobs in the economy.

Towards solutions

Let us know turn to solutions.
South Africa thus needs to continue and expand its poverty alleviation measures, but must focus much more strongly on inequality. This means focussing on the entire distribution of income and assets, not just on those at the bottom. Whilst this does not imply confiscating assets from the top to transfer to the bottom, it does entail significant changes in government policies. First, it is not merely for government to reprioritise its spending allocations in the national budget. Lack of money is not the only problem. Far more important in many ways is the need for government to shift its allocation of its own human and organisational resources. Putting its best people to addressing the problems in our school system, our health care, our housing and community infrastructure delivery would be a strong signal as to where government’s priorities lie and would surely lead to performance improvements.
At a household level policy must create conditions for the poor to build assets. Moreover, for inequality to decrease and poor households to make the huge transition out of poverty, their asset base must grow faster than the assets of those at the top end of the wealth distribution,. The consequences of such a strategy would be improved social cohesion, participation in the economy, and longer run economic growth.
Reducing inequality makes economic sense. Economic policy has focussed on macroeconomic stability and increased business competitiveness. The assumption has been that ramping up economic growth will bolster employment and in turn reduce poverty. The blind spot in economic policy making is that the quality of economic growth matters, not only the rate of growth. In South Africa, too much of our recent growth has been in sectors where the labour force is small and high-skill – finance, communications, metals processing. This reinforces inequality and exclusion of the poor. In fact, international evidence indicates that more equal societies have better prospects for economic growth that makes a difference to job creation and lower poverty, but also for sustaining growth, from which everybody will benefit.
The sort of re-thinking of policy and growth priorities which is needed will not happen easily. In countries where inequality has been successfully lowered, it has often been because the poor were part of a political alliance with the middle class. With support from the latter, lower inequality and poverty were pushed to the top of the policy agenda. Is this likely or possible in South Africa today? It may seem remote but there are rays of hope. The recent whistle-blowing on bread price-fixing by a small Cape Town bakery is one. The bread cartel is a good example of how inequality can become a self-reinforcing process in society. Though perhaps acting from self-interest to increase its own sales, the whistle-blower also positively affected the lives of the poor. If such examples of common interest between the middle classes, especially small business, and the poor could proliferate, South Africa would be well on the way to lower inequality.
However, the solution also lies with us as individuals. We must ask a question what can we do in our capacities as individuals. A key message must be that as a minimum we must transfer resources and time. At its basic level I would like to propose the creation of and ‘opportunity fund’ – that would focus on providing small-scale venture capital to micro enterprises. It would be build up on the small debit orders by individuals, and larger ones by companies. The fund would focus not on charitable functions but rather on providing risk capital into our economy. Simply stated, it would provide a means for households to break out of current paths.
For the household that we described it might entail the following:
• Access to employment through an expanded national youth service programme
• Government and private households creating systems for venture capital for small businesses
• A significant change in the quality of schooling through educational reform programme
In doing this, the assets of the poor will be enhanced, their participation in the economy would improve, and with it we may finally move a little closer to realise a central goal: a nation of opportunity. Unless we do that, we can expect a reoccurrence of xenophobic attacks, and also higher levels of violent service delivery protest.

Budget 2013 – The New Is Not Yet Born

Budget 2013. http://zapreneur.com/dev
Does the Budget have the right toolkit?

Antonio Gramsci, the influential communist writer, has a quote that when applied to the National Budget, tells a story of government adopting a “holding position” when more direct and deliberate action is needed to tackle what the African National Congress refers to as triple  challenge – unemployment, inequality and poverty. The quote is:

The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

Hard Realities Of Budget 2013

The National Treasury has produced a fiscal framework that could be considered a “holding position” that is simply not good enough to meet the goals of the reducing poverty, inequality and unemployment. The 2013 fiscal framework is understood to reflect three factors:

  1. The slowdown in revenue collection due to impacts of the economic recession; 
  2. Increasing levels of non-compliance in people and companies paying taxes; 
  3. Attempt to balance economic relaities with the need to prioritise programmes. In fact, Minister Gordhan was emphatic in the press conference stating that “This government will never implement austerity measures.”

In fact, under President Jacob Zuma there has been significant reprioritisation of several departmental votes. The Department of Trade and  Industry, Department of Rural Development and Department of Higher Education are examples of government linking spending to play a role as a developmental state. In the case of the DTI, this has been focussed on establishing the special economic zones, and in the case of Rural Development through government buying land. In Higher Education department the focus has been on widening opportunities for young people through expansion of the Further Education and Training sector. For its part, Treasury has played a role of tightening up the official rules of the game, but more importantly through stimulating debate on youth unemployment.

The Old Lingers

So far so good, one might think. However, the new is taking time to emerge. There is wide social agreement that fiscal policy should be  subjected to wider social forces, which means breaking the insularity that traditionally characterised the National Treasury. Minister Gordhan  has indicated that the “long term fiscal plan” is being developed, together with associated reviews on taxes and expensiture. The problem is  that the commitment has already been made in the 2012 budget speech, and progress in this regard has not been publicly visible. The intention is foundational to our commitments to meeting the goals of a more equitable society for three reasons:

  1. Expenditure on programmes aimed at social mobility and economic inclusion are facing pressures due to tax collection rates falling, and we face the possibility going forward 
  2. Big programmes like the National Health Insurance and the infrastructure programme associated with the Presidential Infrastructure Investment Committee will require funding. 
  3.  The deficit cannot grow much higher and more importantly, not quickly enough to support an increasingly expansive role for government. 
  4. The deeper danger is that in our exuberance to build a developmental state we could enter into a debt trap in the next two decades. Whilst, public service capacity to deliver has improved

These contextual factors sit cheek-by-jowl with values of transparency and what Minister Gordhan calls “cost sharing” (which I understand to
mean more than the joint financing of projects, but more expansively that government – society partnerships need to be created).
Yet, the old lingers. The question is why?First, it is vital to recognise that after 18 years of democracy there has been patterns of expenditure that reflect soft captures of state resources. We are not talking about corrupt capture, but rather informal rules that have become embedded. For instance, the Department of Defence spend R 4,3 billion in the 2012/13 financial year on contractors. In the current financial year, this budget estimate is cut by 2 billion rands. The decrease of just under 100% in spending on defence contractors is laudable, and a major step in the right direction. However, it  still R 2 billion. In comparison, structures such as The Jobs Fund and the Small Business Finance Entity (SEFA) have similiar budgets, but have much more important goals to acheive. In the detail of the budget there are other soft captures of state resources, most recently highlighted by the extensive usage of consultants in the public service.
Second, there is a lack of political spade work. Structures like NEDLAC are unjustifiably criticised for not creating a “social compact”, when in  fact the reasons are simply a lack of building structures and systems that build confidence between the parties. As an example, there is a draft  fiscal guidelines document from previous years, that requires extensive debate. A process similar to that being undertaken on the youth employment subsidy needs to be pursued on fiscal policy. There is no doubt that the debate will be contentious, however the outcome is worth engaging in the debate. As an outcome it would commit our society to protecting spending aimed at reducing poverty, inequality and unemployment in ways that translate commitments into a binding framework. The example of the National Health Insurance and the Community Works Programme – which have built wide social support – provide an example of deliberate political work.
Third, the reforms of the budget system to support parliamentary oversight are very new, with the Budget Office only recently established. The importance of the reforms is that it provides civil society with a much deeper engagement process around the budget. The challenge though is that the underlying debate on fiscal strategy are not resolvable in an ideological sense. The debate refocussed on linking rands to prioritise are however resolvable.
Fourth, as the global economic crises has shown South Africa is intertwined with developments across the globe, and that the globe is increasingly volatile. In fact, some pessimistic accounts of the future of global economy suggest that growing volatility is likely to become – in the parlance of management consultant -the “new normal”. In such circumstances, having a guiding policy is vital to guide coherent implementation plans.
Fifth, moving towards 7% economic growth is a tough task. There are in fact no easy answers on how we accelerate economic growth, but the prospects are enhanced with certainty on the long term fiscal strategy. It potentially provides a means to leverage private sector investment as  it would provide certainty, but perhaps more importantly highlight the “pipeline” of projects and reforms that are in place. Even more importantly, it levels the playing field making for civil society organisations campaigning on social and (as recent history shows) on economic inclusion programmes. Simply stated, it provides a way to unpack the framework for inclusive economic growth.

Can the “new” be accelerated?

The idea of a “crises” is central to political theory on building social compacts. The recent events in mining, high levels of social unrest, unease in the private sector over new mining regimes, suggest that the crises has become more visible, more real and a more commanly held view. In a sense we have realised that the crises is on our door steps.
In addition, the National Treasury has laid a foundation. There have always attempted to reprioritise spending, but under the watch of  Minister Gordhan the focus on detail has been impressive. The learning will come in handy, as it provides the basis for a fiscal framework to develop guidelines to cut fiscal spending on wasteful expenditure.
Most importantly, though it is remind ourselves of another quote from Antonio Gramsci on the fable of the beaver:

The beaver, pursued by trappers who want his testicles from which medicinal drugs can be extracted, to save his life tears off his own testicles.

We could be like the beaver through a debt trap, social unrest trap, and even a private sector investment strike.
It is a scary prospect that in each of these traps could emerge, and even simultaneously,  if we are unable to proactively talking about the future in a much more detailed manner. In that context, agreeing to deficit and expenditure levels, and broad policy guidelines to guide implementation seems immanently possible.
Next week we will focus on the budget as it impacts on  small business. To stay informed please subscribe to our newsletter. 
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Two thirds of South African Households Are Poor

Statistics South Africa released it’s annual report titled “Selected development indicators” yesterday, 3 May 2011. The report provides important data on government performance on its programmes. One of the most important descriptors is an attempt to measure the extent of poverty in South Africa. The report defines the poor as households with a monthly expenditure of R 2500-00 of below. This measure shows that two-thirds of South African’s households are poor.
Based on the data available, the calculations for each province was undertaken, which shows variances across the provinces. These are represented in the table below:
[table id=21 /]
Continue reading “Two thirds of South African Households Are Poor”

Infrastructure Investment Catalyses Social Accord

Photo: Hannelie Coetzee, MediaClubSouthAfrica.com

Towards an infrastructure investment social accord

In the last session of the second annual Economic Development Programme conference hosted by the Economic Development Department, a series of remarkable commitments emerged from business and labour leaders, on government’s Infrastructure Investment Plan.
The session chair and convener of the Economic Development Conference, Minister Ebrahim Patel posed a series of questions to the panelists focused around commitment to the plan and the commitments sectors were willing to make . The panel consisted of:

  •  Bobby Godsell, President, Business Leadership South Africa
  • Zwelinvima Vavi, General Secretary, Congress of South African Trade Unions,
  • Ndaba Ntsele, President, Black Business Council

Bobby Godsell representing Business Leadership South Africa argued that the long term nature of the infrastructure investment framework provided the space for business to think about the next twenty years as opposed to the next quarter. In turn, he argued that the private sector should “seek a realistic and sensible” rate of return. The rate of return he ventured would be a real return, but would be in single digits.
Continue reading “Infrastructure Investment Catalyses Social Accord”

Brazil becomes less equal, South Africa gets more unequal

Inequality can be reduced

, via Wikimedia Commons “]IBSA Summit Presents Brazil has a remarkable achievement, as it has reduced inequality over the last decade, as shown in the chart below. The exact reasons for the reduction in inequality is hotly debates in Brazil, as are the methods of calculating inequality. There are sceptics on this outcome, and those praising this achievement. Just so that we are clear – Brazil remains a very unequal society. South Africa has however become more unequal, and this fact is not disputed with official development indicators broadly agreeing with this finding. The chart below shows data from The World Bank for the Gini Coefficient. We have selected the BRICS countries to represent here, but the focus is Brazil and South Africa. It suggests that over a short period of time, inequality can be reduced, in an environment which reduces poverty and increases jobs. (I have added a note to the editorial calendar for Zapreneur, as it would be informative to better understand the reasons behind the outcomes.)

Lulismo

One debate that is emerging on explaining Brazil’s outcomes is occurring under the moniker “Lulismo”. The word derives from the name of President Lula, and seeks to explain the choices that were made by Brazil during that period. It however also suggests that there might be doubts of future leaders being able to replicate the gains capable under a leader, like President Lula. The debate however is largely conducted in Portuguese, which means that the textures and nuances of the debate cannot be fully comprehended by someone that does not speak Portuguese.
The features of the debate that we could glean ask a couple of demanding questions:

  1. Is the reduction of inequality a small victory for moving a leftist programme to the centre? The suggestion being that a more egalitarian outcome could have been achievable.
  2. Are the results simply derived from a commodity boom and will prove short-lived in an economic downturn?
  3. Are Brazil outcomes rather the product of a longer run reform programme, which included neo-liberal restructuring under previous administrations?
  4. Are the Brazilian outcomes the result of a developmental state, which saw the Workers Party (PT) introduce social and economic measures that are the cornerstone of the success?

The debate seems furious and polarised. The underlying question is one that South Africa would love to have -Why has our society become more equal, and can we sustain it over the longer term?
 
Continue reading “Brazil becomes less equal, South Africa gets more unequal”

Educational Failures – Are Trade Unions Too Blame?

Youth subsidy
Failing to resolve educational challenge, means fewer jobs. KwaZulu-Natal Midlands: Ceramic painters Zama Nqubuku (foreground) and Wiseman Ndlovu at work in the Ardmore Ceramics studio. Photo: Hannelie Coetzee . Credit Media Club South Africa

 
Andile Lungisa’s – Chairperson of the National Youth Development Agency and  ANCYL leader – call for the de-unionisation of teaching has sparked a furore. The arguments focus on the constitutional right for workers to belong to organisation, and that focus must be placed on the real problems facing education. I however argue that the problems in labour relations in the education lies not only with the trade unions, but with government, who have not fulfilled their responsibility as an employer.
Improving education in South Africa is the most important priority in South Africa. When I look at our results on the international benchmark examinations, I am angry with us as a society. We have literally failed a generation of children in South Africa. To put it bluntly, we perform very poorly on the international examinations, with some assessments of the results placing last in the world for performance on the Mathematics examinations. We are facing a crisis in education, and we must act.
Instead of acting to resolve the situation, there is this constant repetition that the trade unions are too blame. Here are a couple of refrains I have heard over the last few weeks:
 
Continue reading “Educational Failures – Are Trade Unions Too Blame?”