The Cape winter storms have started, and those of us who are well housed are in for seasonal discomfort. We know that on the Flats they often live and die in bitter cold. Nelson Mandela declared an emergency in his first year as president, but each winter is an emergency for tens of thousands of our people in Cape Town alone.
One consequence of getting the Olympic Games in Cape Town would have been decent housing for these citizens. It would have been seen as an investment that foreigners be spared the sight of miles of misery when they arrived at the airport; and the Cape Flats would have been permanently upgraded.
Which raises the question: what criteria are used to decide what is investment and what is welfare? A major difference between the neo-liberal and the social democratic paradigms is what constitutes investment that can be justified even when ”fiscal discipline” is at the heart of economic policy. And what is described as welfare that can be postponed because it only relieves suffering now.
Investment essentially means putting resources in now, so that wealth will be created for the future. From the faithful widow’s mite to the prudent householder we postpone consumption so that tomorrow we may consume more. Hence governments’ emphasis on the savings/consumption ratio.
The neo-liberal paradigm underlying all structural adjustment, whether enforced or voluntary, sees anything that expands opportunities for profit-based business as investment, and enjoins governments to cut spending on social programmes, which are seen as welfare. These include health, education, housing, income support and social service.
The theory is that people should be employed by government-promoted business, and hence enabled to buy their own schooling, medical insurance, homes and social security. In other words, people should be responsible for investment in their own families. Thus airports, highways, casinos, shopping malls and exports are heavily subsidised by tax-payers. And subsidies to consumers of schools, water, energy, housing and clinics must be at a minimum.
The theory is flawed in two ways. First, modern successful enterprise is based on the process of continual enlargement and capital intensiveness. In the jungle of global competitiveness, you do not survive unless you continuously shed people in favour of technology. That is how the market works: the results in terms of employment are all around us.
So more and more people have no incomes, even when the national income is rising. Therefore they cannot invest in themselves — through no fault of their own.
Second, the logic is extraordinary. It defines casinos, cigarette factories, security firms and jails as areas for investment, but not education and health. It is obvious and well-documented that an educated and healthy nation is a nation of creative, enterprising and self-motivating people. It is easily the best form of investment. Dependence and exclusion are a total drain on resources and contribute to crime.
”Healthy and educated children do not result from development. They drive it.” So concludes the report by the United Nations secretary general following the World Summit for Children last year.
If it is so obvious, why do practically all governments, including our own, budget otherwise? The partial answer is that business is perceived to make the necessary investment in job-creation. In fact, huge subsidies are given for their infrastructure, including export subsidies, which are seen as proper investment.
But a less acknowledged reason is that those who benefit by the neo-liberal system have a powerful influence on most organs of public information. Who gets interviewed on matters concerning the economy? Mostly investment houses and banks, which have a direct interest in the present paradigm. These institutions even sponsor some of our news programmes. They are considered to be the experts, but have a particular sectional interest.
Hence the red faces as the Myburgh commission unearths evidence that we did indeed lose billions of rands as a result of the activities of overseas banks Kevin Wakeford’s evidence having been virtually universally rubbished in the press. Not to mention the tens of billions we have lost since permission was given for our companies to list overseas after the press chorused approval at the time. We are getting almost exclusively the views of people who have an axe to grind.
The news that the government is committed to a basic income grant, provided the delivery mechanisms and the financing can be planned, is a truly defining moment. It acknowledges that investment in people must become the basis for sustainable development. Let it be the start of a new focus.
Margaret Legum is with the South African New Economics Foundation in Cape Town