SA policy on wrong track

The African National Congress (ANC) is driving economic policies that would lead to more poverty. Prominent political economist Moeletsi Mbeki says that instead of a productive class, the ANC is creating an administrative class, made up mainly of the black elite, which is part of a household-consumption-dependent economy.
Mbeki was speaking at a seminar at Wits University on the ruling party’s policy documents, to be discussed at a conference next month, Business Day newspaper reports. On the other hand, the large size of welfare payments — made to 15.3 million out of a population of about 50-million — bought off the poor, but worsened their poverty. Last year Mbeki, who has become a strong critic of the ANC, caused an uproar in the party when he said the ANC would face a “Tunisia Day” civil revolt around 2020. “We are a country that is deindustralising, yet the welfare state is growing,” he said Thursday.
The increasing welfare expenditure was an “effort to buy off the vote of the black poor”. The country needed new politics, with labour and business firmly at the centre of political decision making, he said. “As long as they are out, there will never be economic growth that is meaningful … these two groups control productive assets.” A class of indigenous entrepreneurs was also needed, he said.
Mbeki said public servants were drawing huge salaries, which meant that resources were not going to a productive sector of the economy. “The ANC government is about consumption, not production. Production is secondary to them.” Even the infrastructure drive meant to boost economic growth and create jobs was doomed, he said, because there were no domestic savings to pay for it.
The SA Press Association adds there was something wrong with the way the political elite was managing South Africa. It was the political elite which determined how the country developed. “There is something very wrong with South Africa … with how the political elite are managing South Africa,” he said.
Under the ANC, three social groups had emerged. They were: the capitalists or bourgeoisie, the political elite or bureaucratic bourgeoisie, and the under-class or unemployed. “We have a unique political system in South Africa. It’s controlled by the black middle class [political elite], but it has an alliance with the poor or the under-class,” Mbeki said. The objective of the political elite was to maximise consumption of the black middle class and to retain the monopoly on political power.
However, its weakness was that it depended on the vote of the under-class, which did not own productive assets, he said. “The ANC has been driving a consumer revolution at the expense of production.” Mbeki said the political elite’s private consumption was being funded by state revenue and had become a burden on taxpayers.
“It’s becoming clear where the bottleneck sits and where the problems are,” he said. “The consumption of the black elite is unsustainable and has to be reversed.” The capitalists needed to be brought into the loop. This group of society was defending itself by moving capital out of South Africa, said Mbeki. “We need a new politics in South Africa, a more inclusive politics, not just a black elite and a black poor.” “As long as they [capitalists] are out of the political loop, we’ll never have economic growth. They control the productive assets of the country,” he said. In 2007, more than $20-billion (about R166.7bn), which was 20% of the gross domestic product (GDP), was moved out of South Africa by these capitalists. “When you moving 20% of the GDP out of the country there is no way of developing your country,” he said.
Mbeki said the solution for South Africa was to develop entrepreneurs who were productive, and to develop science, maths, engineering and management education. Without that, we’re going nowhere.”