Zuma and the Economy

So Zuma has made promises far and wide to all and sundry. He has also announced no major changes in economic policies. Personally I do not know whether that is a good or a bad thing. What commentators have duly pointed out is that Zuma will inherit the same constraints to provide jobs to people that Mbeki faced. It is unlikely that he will come up with a magic formula to create more jobs. This is both a good and a bad thing in my opinion.

It is good because the arm-chair critics - COSATU/SACP alliance partners - will have to eat humble pie. Voters who support them will quickly find COSATU/SACP’s promises vaporised and the latter will have a hard time at it making the sort of sideway criticism we hear coming from them every time there is a rise in the interest rates. I keep on asking myself when the Reserve Bank is going to tell them to shut up or challenge them to justify their remarks, which seem to me to be just opportunism. Surely higher inflation means fewer poor people can afford essential goods as opposed to more indebted and thus employed people being less able to service their debts?

It is a bad thing, because ordinary folk in the streets are increasingly making shocking comments. Just two days ago I spoke to some builders who all expressed their support for Zuma because they hope he will bring more jobs. They pointed out that if Zuma fails to do so, which he is likely to do because he & his SACP buddies have overpromised (and will underdeliver due to the same constraints Mbeki faced and that in a tougher global economic environment), they would have to then look at “letting white people run the country again because then at least there were a lot more jobs”. I was flabbergasted at hearing remarks such as those. They are not new, but to hear it from the horses mouth shocked me.

It is clear that a sizeable number of people vote on the promise of jobs. It is even clearer that when those promises don’t transpire, our democracy may come to be threatened by the type of rhetoric that has kept desperate leaders like Robert Mugabe in power. Zuma’s overpromises will come to haunt him if his graft trial doesn’t do so first. But far from being concerned about what he may or may not do to the country’s economy, I am really more concerned about what his failure to deliver on his promises might do to our democracy. Ironically, for the leftists to be in power may be good for a free market economy, especially if they are seen to fail in an expected tougher global economic environment, which is why I suspect they want Mbeki to stay on as President for now, so that he can take the blame. Mbeki’s good macro-economic policies would also have been over associated with authoritarianism had he won. He was on his way to becoming another Houphouët Boigny and General Pinochet and in doing so, would have associated free market economics with authoritarianism. It has taken us long enough to associate free market economics with a new emerging middle class (one success of Mbeki’s government and the traditional domain of nationalist politics and mixed-market economies in this country) and the last thing we needed was to let it go back to the days of apartheid where communism was associated with freedom and free market economics with political oppression. It is to everyone’s loss that Mbeki wouldn’t open the way for other potential leaders to assume responsibility for that.

On the other hand, letting the bench politicians (COSATU/SACP) fail does come with a built-in price that threatens to bring a lot of destabilisation and disappointment in the democratic process, which in turn threatens to be a beast of a different sort. In the meantime I will not pre-empt myself further in that respect and sit tight and observe what comes next, though I am sure it promises to be exciting if not anxiety spurning.

Already we have seen COSATU saying they will change the country’s macro-economic policies (this despite the fact that they themselves are not the government but only in alliance with it and thus have no mandate to do so). Already we have seen Zuma saying that it is not he who sets the country’s economic policies, but the ANC and already we have seen the ANC saying repeatedly that the macro-economic policies will not change.

Who to believe? There will just be more insider manoeuvring and closed-door decision making, excluding the public from the debate as would occur in an alliance split up into multiple parties, each vying for support. There is no reason to believe a swing to the left will necessarily be bad. It has happened many times in Europe and most recently in Australia and was not accompanied by instability. Sure a number of plutocrats will have a harder time at getting their way, but that is a good thing for democracy and against organised crime and corruption. On the other hand, the capacity constraints, the pressure to deliver and the expected global economic slowdown may just push some bench politicians into the fold of extremism. We’d better ensure it does not come to that and that reason will prevail. At least with Mbeki out of the way reason will have an opportunity to be tested more vigorously in public debates in which the National Executive participates, rather than ignore it as if it does not exist whenever it threatens to embarrass them.