In 1973, when the Organisation for African Unity held its conference in Addis Ababa, Emperor Haile Selassie threw a splendid banquet for the media. Three different French wines accompanied the five courses. The invitation came embossed in gold. At the time Ethiopia was in the grip of its most famous famine.
The emperor was not a callous man. He was simply going along with normal protocol that requires heads of state to deliver what we now call “world-class” hospitality when hosting an international conference.
The aspiration to “world-class” status entrenches the dual economy in South Africa and elsewhere. It is considered axiomatic that in the formal economy we must invest in “world-class” airports, hotels, highways, conference centres, government ceremo- nial and hospitality.
And those who run our economy, our enterprises and our public service must be rewarded with “world-class” incomes and bonuses.
All this is considered good investment in a global market, because tourists, conference organisers and good managers can go elsewhere if they are not offered equal or better facilities here.
What are we emulating? Not Scandinavia, Australia or even Canada. “World-class” seems to mean the United States or Britain, which have poor and declining public sectors. And it means the richest part of those cultures: the most resourced, using the highest technology, the most luxurious and lavish, the most competitively successful, the most glamorous.
Obviously, the other part of our dual economy — the informal, the unemployed, the unskilled and uneducated, those who live by begging, borrowing or stealing — cannot be accommodated in a “world-class” manner. There are not enough resources.
If you ask why our education system doesn’t even aspire to “world-class” status, you are told that sadly we are in some respects a “Third World” country. We cannot afford “world-class” education — or health, or public transport or social grants. Even if that investment could yield high dividends in the long run, only the short run can be realistically accommodated.
The skewing of public investment towards the well-resourced is justified as bringing in foreign direct investment and tourists. These will spread employment and bring more people into the formal sector. That is the rationale for the rapid opening of our economy to global competition in terms of trade and capital.
In fact, fickle capital is not wooed like that — it goes where profits are highest and most immediate, and this can vary from year to year.
Most successful capital is in the financial sector, trading in shares, currencies and property for speculation. Take Warren Buffet, whose Berkshire Hathaway doubled its earnings last year to $8,15-billion. Addressing the Forum for Corporate Conscience (sic) in early March, he said his strategy was to “hold positions in five foreign currencies” totalling $12-billion; and he laid into corporate wrong-doers for failing to look after shareholders.
There is a deeper reason for the failure of efforts to “ladder” the dual economy so that the poor can reach prosperity. The “world-class” end can exist at current levels only because resources are sucked from the bottom to the top of the economy. Poor people, rural economies, local communities subsidise the cities, the tourists and the rich. So does environmental capital, now exceeding its capacity to regenerate.
This has been going on for three decades in every country where the global market, rather than governments, rule. The galloping inequality, the galactic incomes at the top, the thinning substance of the middle classes and the growing destitution of the poor are obvious to all except the deliberately blind.
So we continue to hear from the top that we can do nothing about our currency, whose volatility is a mystery; that the uncontrollable world economy will determine employment; that we must endure huge swings in the price of staple maize, not because of production but because of speculative futures and the dollar price. And those at the top are insulated by accumulated capital.
Meanwhile, our informal sector fails to support its “workers”. Latest statistics show that 367 000 of them earned nothing for their pains; while another 780 000 earned between R1 and R200 a month. Their incomes have steadily declined as their numbers have risen.
Our government is not callous. But it continues to buy into the myth that the coexistence of world-class and Third World can raise the latter to the former.
New attitudes to wealth must accompany poverty alleviation. Why not start by dividing the R80-million due to be spent on a lavish party for well-fed people at Union Buildings into R5 000 chunks? Why not hand these to communities across the country, so that everyone eats and drinks well on one day at least?
More importantly, this might signal a break with the whole “world-class” hoohah.
Margaret Legum is an economist and member of the South African New Economics Foundation