RW Johnson: The quandaries of the GNU

Key topics:.ANC's resistance to policies that could drive higher economic growth.The National Health Insurance (NHI) as a key ideological goal of the ANC.The struggle between economic reform and the ANC's focus on its National Democratic Revolution (NDR)..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By RW Johnson___STEADY_PAYWALL___.The disputes within the GNU over the budget have a wider significance than just the rate of VAT. The DA quite rightly insists that the government's success or failure must be judged against the benchmark of whether it can achieve higher economic growth and make a dent in the hideous unemployment figures. One might have thought that would be non-controversial but the extraordinary thing is that, by its deeds, the ANC is resisting this logic, for it pays only lip-service to creating higher growth and more jobs. It knows that by increasing taxes (whether by a VAT increase or bracket creep) on an already stagnant economy it can bring what is only a crawl to a dead halt, yet the ANC seems quite unperturbed by this. .Worse, the ANC is still infatuated with the idea of NHI, despite the fact that the government has been unwilling to cost this scheme for fear that the resulting figures would be hideously unaffordable. In addition it is hoping to create a R100 billion fund for BEE, although this can only be funded by taxing productive industries in order to redistribute to much less competitive enterprises. (This is true almost by definition. Given the enormous advantages enjoyed by BEE firms in government and company procurement, if they still need external help it can only be because they are uncompetitive.) This maldistribution of resources is just another way to cut the growth rate. Similarly, the VAT increase is needed mainly in order to pay yet another inflation-plus salary increase for the largely unproductive public service..At the same time easy wins are disregarded. If the port of Cape Town was privatised tomorrow there would be an immediate leap in its productivity. This in turn would translate into a large increase in agricultural exports, simultaneously creating more farm jobs. Allowing the city of Cape Town to run the local railways would ease traffic congestion and increase productivity. Yet these changes are resisted for essentially ideological reasons and because the contrast between the prosperous Cape under DA rule and run-down Gauteng under ANC rule has become glaringly obvious..In the same way, the ANC refuses to make quite obvious spending cuts. For example, it is still the proud boast of the ANC that we are second only to America in the number of our consulates and embassies throughout the world. It would be sensible to close a good half of these. Our diplomatic service is of very poor standard and we certainly don't get value for money. Similarly the SETAs are well known to be wholly ineffective and often corrupt. Abolish the lot. Or again, a simple legal change would be to make the officers and councilors of a ruling majority in any given municipality personally liable for any losses through wasteful and unnecessary expenditure. .Simply enumerating a few areas for economy (as above) highlights the fact that these are being protected because they are part of the ANC's patronage network. This is not a reason for the state to increase the taxes on the over-burdened working population. .Read more: Inside Covid-19: ANC's economic recovery plan; SA's 1.5 Reproduction rate (Rt) shows worse to come. Ep 40.The central question remains: why is the ANC so resistant to measures which would stimulate higher growth and put more people into jobs ? After all, it was heavily punished at the last election because everyone can see that the present policy mix isn't working. Real per capita incomes have been dropping for over 15 years and it seems certain that if the ANC persists with its present policies it is bound to receive further punishment at the polls. The government pays lip-service to the notion of carrying out reforms but in practice its record is pathetically lacking. .Thus the World Bank has listed Cape Town as the world's worst container port. And this is South Africa's second biggest port. One might think that this would spur any government into action but on this issue the ANC government has decided to do….nothing. Similarly, the government has sat and watched for year after year as its most important city decays into a slum. Now, at last, it has asked for some cosmetic change, though purely for the sake of its G20 visitors..There are a number of factors at work here. One could start with the fact that most ANC ministers are poorly qualified people and that in general their work pace is, well, shall we say "very relaxed" ? They are, in general, hopelessly ill-suited to running a modern state. Secondly, there are all the usual ideological taboos. Privatisation is a word mentioned only with horror. .Yet in practice South Africa has become accustomed to privatisation. There was a time when SAA ruled the South African skies. Today it hardly flies and its place has been easily taken by more efficient private sector airlines. Similarly, Telkom once had a 100% monopoly on telephones. Today it is a relatively minor player, having been elbowed aside by more efficient and faster moving private sector players. Similarly, Eskom's monopoly of electricity has been quietly removed by ever-proliferating solar panels and by schemes for enterprises and municipalities to produce their own power..The third factor is the most puzzling, however. The ANC visualizes its progress not in terms of what growth rate it achieves or how many jobs it creates but in terms of its advance towards the goals of the National Democratic Revolution. Effectively this means a full transition to socialism – including full state control of all industries, radical redistribution etc. For the whole idea of the NDR was originally a Soviet one (though the Russians who designed it have long since denounced it as a lot of rubbish). The ANC swallowed this notion whole and the SACP within its ranks keeps the movement focused on achieving NDR goals. Moreover, both the EFF and MKP are effectively committed to the same goals..This commitment to the NDR is why it is so difficult for Ramaphosa to reach a sensible compromise with the Opposition on NHI because the NHI is a key NDR objective. The current stage of the NDR is supposed to see increased state control over education, the legislation of expropriation without compensation – preparing the way for mass nationalisations – and the introduction of NHI, The first two objectives have been achieved which means that the introduction of NHI is now crucial..Read more: ANC's shocking stance: Call to cut ties with France threatens South Africa's economic growth.Within the ANC and SACP (and indeed, the EFF and MKP) there is a sort of confident willingness to disregard the appalling outcomes of so many failed ANC policies. For what really counts is whether the progress towards the NDR can be sustained – and it is just assumed that the NDR would be good for the population at large.. This is also why the ANC isn't really available for the sort of bargaining over policy which the DA sees as the essence of coalition politics. Thus far the ANC consoles itself that despite its loss of a majority in 2024 it has continued to play its vanguard role and has somehow dragooned the DA into agreeing to continue the advance towards the NDR – passing the Expropriation Act, the BELA Act and, it hopes, soon the introduction of NHI..In terms of the NDR the ANC has to play the leading (vanguard) role in driving the country towards socialism. This vanguard role can't be compromised no matter how many votes the ANC loses and quite regardless of the DA's demands to have a share in policy-making. This fits only too well, of course, with the conviction of the ANC leadership that the democratic revolution of 1994 means that the African nationalist elite are now and forever the permanent rulers of South Africa. .This assumption that whatever happens the ANC must remain in the driving seat is, of course, the reason behind the brazen cheating which allowed the ANC to hand the DA far fewer ministries than it should have had and to keep them away at all costs from the economic ministries and from influence in foreign affairs. Foreign affairs are crucial to the ANC's planned role at the forefront of Third World progressive forces and, crucially, it is where the ANC's historic alliances with revolutionary movements are maintained and where foreign flows of money to the ANC can be negotiated..A key point which BizNews readers may care to know is that just before proceedings before the ICJ began at the Hague the South African legal team was told that a secret meeting had been arranged for them. Mystified, they trekked away to a secret destination where they met "heroes of the revolutionary Palestinian resistance" (presumably Hamas/Hezbollah/Islamic Jihad). This was a typical ANC touch. Publicly, of course, the ANC would deny that it was pursuing its ICJ case in support of Hamas but it also wanted to "inspire" the legal team with revolutionary enthusiasm. If one wonders how Hamas/Hezbollah/Islamic Jihad militants got to the Hague one realises that this had to be co-ordinated with the Iranians. It would be extremely surprising if considerable sums of money did not also change hands. The incident illustrates yet again why control of foreign affairs is so crucial to the ANC..This determination to remain the vanguard and to keep driving forward the NDR also explains the relatively calm way in which the ANC has accepted its electoral decline. Provided the advance towards the NDR is maintained there is nothing to panic about. And meanwhile all this pushing and shoving by the DA over economic growth and lowering unemployment is just an unwelcome distraction: the ANC and SACP do not measure their progress in such terms. .All of which poses a number of questions for the DA. They have approached the GNU with the assumption that every sensible person or party would like to increase the rate of growth and reduce unemployment. This is fair enough for the polls show that producing more jobs is the number one objective of the voters. .Read more: ANC's quiet march towards socialism: The gradual revolution – Ayanda Zulu.But if the ANC remains resolutely determined to ignore such objectives and to focus instead on maintaining its patronage network and on the ideological objectives of the NDR then there is no real future for the DA in the GNU. Indeed, if that is the case then in effect the ANC has decided to go down with a sinking ship and the DA would be well advised to disembark so that they don't go down with the ship too..The GNU is nine months old and as yet there is no sign of any progress towards higher growth – indeed, last year's growth came in at a miserable 0.6%. And thus far the ANC seems determined to resist all of the DA's proposals for increasing growth. Moreover, the likely closure of the Arcelor-Mittal steel industry and the probable ending of South Africa's AGOA privileges suggest that the coming year could be a very difficult one for the national economy: we could even see negative growth. On top of which the government's long-ingrained habit of granting inflation-plus salary increases to public servants and its continued determination to pour money unproductively into BEE suggest that this year's budget crisis is just the first of many such crises to come. .That said, it would be difficult for the DA simply to leave the GNU, announcing that since there was no hope of increasing growth or reducing unemployment there was no point in maintaining the GNU. Such an announcement would be tantamount to a declaration that South Africa was doomed. And the business community – the DA's main donors – would be determined that the DA should stay in the GNU in order to keep the MKP and EFF out..The climactic crux of this quandary is the ANC's National Health Insurance Scheme.. On the one hand the SACP and ANC regard the introduction of NHI as a key building block of the NDR. On the other hand the DA, most of the health industry and the business community are all adamantly opposed. Indeed, if NHI went through many businessmen as well as doctors and nurses, would emigrate. The increased tax burden NHI would require would be so intolerable as to provoke social unrest and in general it would be a major national disaster. Yet if the DA and its allies were to defeat NHI the ANC and SACP would have to face the fact that the advance towards the NDR had failed. All told it would provide a large moment of truth for everybody..Read also:.🔒 RW Johnson – After 17 destructive years, ANC's needless suicide taking SA economy with itANC's renewal is empty rhetoric: KatzenellenbogenThe ANC's stealthy policy reform: Katzenellenbogen

RW Johnson: The quandaries of the GNU

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