From left: Spectrum Party leader Christopher Claassen, United Independent Movement’s Neil de Beer, IFP leader Velenkosini Hlabisa, DA leader John Steenhuisen, Freedom Front Plus leader Pieter Groenewald, ActionSA president Herman Mashaba and the Independent SA National Civic Organisation’s Zukile Luyenge on the first day of the national convention on coalitions at Emperors Palace, Kempton Park, 17 August 2023. (Photo: Twitter / @Our_DA)
After four years of chaos under a far right-wing government, expectations were high when Lula da Silva reprised his role as Brazil’s president.
But a lot had changed since he first governed 20 years ago.
For one, Jair Bolsonaro’s government had deepened divisions, leaving the returning left-wing president to contend with a reformist, conservative congress. Lula’s narrow victory demanded that his Partido dos Trabalhadores form a coalition considered fragile because of its internal contradictions.
Moreover, Lula’s return roused scepticism among international investors concerned that he would abandon fiscal discipline — a hangover from the Dilma Rousseff bust-up. Prevailing financial conditions haven’t helped.
All this to say that Lula has had little room to manoeuvre, a fact that has left some disappointed at the pace of political and economic progress.
Lula is a veteran statesman, clearly more prepared than most to rise to the challenge. Even so, in negotiating this tightrope, Lula has had to make some difficult-to-swallow compromises, including adhering to a still-restrictive fiscal rule.
Thirty years into democracy — a significant portion of which has been marred by political and economic malaise — South Africa is preparing to break from the current regime with the hope of landing at something better. New political arrangements have been formed and new promises have been made.
But, as we have come to see, not all of these are new at all.
Last week we got a glimpse into the so-called Multi-Party Charter’s economic aspirations. The charter is a pact between 11 political parties, including the Democratic Alliance (DA), the Inkatha Freedom Party, Freedom Front Plus and Action SA, to come together to unseat the ANC in the upcoming elections.
It is true that anything truly enterprising from this coalition, a motley crew led by some of the country’s most conservative politicians, is probably too much to ask. But, if the coalition hopes to take South Africa in a new economic direction, it probably ought to distinguish its policies from those of the ANC.
The Multi-Party Charter outlined its economic plans last week in a document that seems to attribute South Africa’s economic crisis to ANC-era mismanagement. The charter’s promise is to reduce unemployment and poverty by “creating conditions for economic growth and increased global competitiveness”.
The document sets out some of the group’s shared economic principles. These include unlocking investment by removing red tape and protecting property rights; creating competitive local manufacturing by reducing fuel costs; unleashing the full potential of small businesses, partly by exempting them from labour legislation; adding skills to the workforce through visa reforms; and improving education.
Moreover, the grouping commits to ensuring value for money in government expenditure on economic infrastructure by further enhancing the efficiency and transparency of fiscal management. “We will establish fiscal discipline on government borrowing by capping the debt-to-GDP ratio annually through implementing a ‘fiscal rule’,” the document reads.
While the document suggests that the Multi-Party Charter will be somewhat more conservative than the ANC, especially insofar as worker rights are concerned, it repeats a lot of the language that we have heard from the current administration recently. President Cyril Ramaphosa is all about “removing barriers” to “unlock” and “unleash” the private sector and investment.
The fairly predictable emphasis on fiscal discipline is pretty much the extent of the charter’s macroeconomic policy proposals, apart from ensuring the independence of the South African Reserve Bank.
The charter’s support of a fiscal rule is something the DA has proposed in its Responsible Spending Bill. The official opposition has already likened the treasury’s current proposals, which include introducing a fiscal anchor, to some of its own.
Fiscal orthodoxy seems almost impossible to escape these days, whether you are a two-time president or a member of a party hoping to offer something new.
In the case of the Multi-Party Charter, fiscal prudence has rather mistakenly been put forward as an economic solution when it is only a way of avoiding the punishment inflicted by markets. It is a prevention, not a cure.
Brazil’s fiscal rule played a key role in the rise of austerity discourse, as well as the changes to that country’s political system — which researchers Clara Zanon Brenck and Pedro Romero Marques wrote about in an article published by Phenomenal World last year.
When fiscal rules are restrictive, growth is left to the market, because there is only enough state spending for social welfare and not investment, Brenck explains elsewhere.
The point is that when politicians are forced to abide by markets, they fall into a trap that makes it difficult to deliver on their promises of economic growth and reducing unemployment — something South Africa has learned the hard way.
It is possible that, at least in the short term, an economy will be buoyed by the view it is under better management. But, whatever headway is made can quickly disappear when economies are left vulnerable to shocks.
The truth is, it is simply not enough to bring in someone new — especially when there is really nothing new about them.