Late last week, the Social Policy Initiative released a statement revealing that it had called on Ramaphosa to urgently host an inclusive debate on South Africa’s macroeconomic priorities in the wake of recent media coverage. (Emmanuel DUNAND / POOL / AFP)
A new word has entered the American lexicon: Bidenomics.
In a sideways nod to Reaganomics, US President Joe Biden has endeavoured to enact what is viewed as the most serious change in the superpower’s economic policy since the 1980s, when trickle-down theory became entrenched.
The president has recently gone about touting the success of his so-called Bidenomics, which — according to him — is aimed at growing the US economy from the middle out and the bottom up, instead of from the top down.
With “recession” on the lips of many Americans, Bidenomics will be an important campaign tool for the incumbent in the run-up to next year’s presidential elections.
Despite also squaring up for a battle at the polls, our own president has shown little fight in defending his administration’s economic policy against a wave of public criticism. Given that confidence in Cyril Ramaphosa’s economy has hit historical lows, it is critical that he at least tries to inspire some hope for our prospects post-2024.
During a speech he gave in the foyer of a Chicago post office last week, Biden lauded the virtues of his economic doctrine and explained the ills of the trickle-down theory championed by former president Ronald Reagan.
“It’s the belief that we should cut taxes for the wealthy and big corporations. And I know something about big corporations — there’s more corporations in Delaware incorporated than every other state in the union combined,” Biden said.
“I want them to do well, but I’m tired of waiting for the trickle-down. It doesn’t come very quickly … And it’s a belief that we should shrink public investment in infrastructure and public education — shrink it; that we should let good jobs get shipped overseas. And we actually have a tax policy that encourages them to go overseas to save money. We should let big corporations amass more power while making it harder to join a union.”
Biden, whose economic doctrine has earned him comparisons to Bernie Sanders, is far from being a revolutionary, his presidency probably the consequence of the “lesser-evil dilemma” that arose out of the ugliness of the Trump era. For now, I’ll abstain from weighing in on whether Bidenomics is progressive enough to truly reverse the inequalities reproduced by trickle-down economics or whether it is anything more than an ideological ploy.
What I will say is that the US president has at least created a new economic narrative for his country, identifying its ills, and is endeavouring to address them.
This is where Ramaphosa and the ANC have tended to fail. The virtues of Ramaphosanomics have become less clear by the day, a symptom of the longer-term ambivalence that is baked into the governing party’s economic policy — torn, as it is, between building a developmental state and a neoliberal one.
The governing party has seemingly abandoned its efforts to achieve the former, despite having adopted the principles and policies of a developmental state after it came into power in 1994.
Building a developmental state requires strong government intervention to protect the vulnerable from the market, with the broader goal of alleviating poverty, unemployment and mass inequalities.
At its centre is a well-capacitated public sector that has both the political will and the ability to deliver quality services to citizens. In this way, the developmental state is a departure from the neoliberal state, which necessarily minimises the role of the public sector and is instead preoccupied with monetary stability, fiscal restraint, attracting foreign investment and promoting free trade.
Some will point out that the ANC government has made major advances in lifting the standard of living of the poorest, albeit from a miserably low base, expanding the provision of basic services, such as water and electricity.
However, for most South Africans, access to services has been kept to a minimum level of consumption. Moreover, the state has at times reproduced inequalities when it comes to accessing services, a fact that has been borne out in the wake of the collapse of the country’s public healthcare system as well as our electricity and water infrastructure.
Those who can pay for alternatives will, while the vast majority have to endure the financial and social effects of deteriorating public services.
One problem that arises when governments are torn between developmentalism and neoliberalism is that they are often quite good at identifying economic ills but very bad at providing the right cure. This can result in them perpetually treating the symptoms, neglecting to address their underlying causes. A robust state can do both, while inoculating its economy against the ravages of the free market.
In 2009, Tshilidzi Marwala, who is now the rector of the United Nations University, observed that: “Developmental states generally believe that they will attain state legitimacy through delivery of services to citizens rather than through the ballot.
“In South Africa,” Marwala said, “state legitimacy is achieved through the ballot, however, the main shortcoming is that the society has not reached an equilibrium stage where the feedback mechanism between voting pattern and service delivering reinforce each other.”
Although the 2024 elections will provide more clarity, it has become evident that we are either at, or approaching, that equilibrium — a fact that ought to rouse the ANC-led government to spring into action.
Sure, there has been some action, even if it has seemed to come at the 11th hour.
Parliament has recently passed the National Health Insurance Bill, warts and all. There has also been some movement towards rolling out a basic income grant. The government might even be applauded for making a concerted effort to solve the country’s energy crisis, though its course of action should be questioned.
Notwithstanding the other uncertainties around these interventions, which stand to reshape our economy, they will also undoubtedly continue to come up against the scripture of fiscal restraint, delaying their execution and sending us even further adrift.
As the Bidenonomics portmanteau suggests, world leaders are closely associated with their economic doctrine. The results of next year’s elections should not only decide Ramaphosa’s fate but that of the government’s economic policies as well.