Every parent knows the moment the balance of dependency shifts. Nothing needs be said; both parties know instinctively that from now on it is negotiation time. It is the recognition of equality of power.
Governments know it, too. Phoney equality — as represented by the P in Nepad (New Partnership for Africa’s Development) — is seen for what it is. Donors and recipients (sorry, “partners”) inhabit different levels of power, and the best that can be done is to avoid abusing that power.
The government’s current poverty alleviation strategies are deeply informed by this determination not to create dependence. All the more surprising that we continue to espouse economic policies that perpetuate dependency on unpredictable global market forces and rich and powerful countries — 10 years after they were virtually forced upon us.
Most people acknowledge that the global market has been disastrous for the majority of humanity: inequality, poverty and destitution have expanded everywhere. The question is whether we can do anything about it. Specifically, can the South African electorate and its government do anything about it?
Three decades ago the question would have been ludicrous. Within limits, governments could expand employment, reduce inequality, prevent national savings from leaving the country, protect pensions from speculative forays in the financial sector, and so on. Today the global market has enfeebled all governments and undermined their legitimacy.
Must we continue to allow our fate to be determined by unelected bodies and forces over which we have neither control nor influence?
First, can we control the value of the rand? Yes, we can. Its unpredictable volatility is not inevitable, nor is its results in terms of employment. Our government can fix the price of the currency, as do many governments, including China and Japan.
Malaysia was conspicuously successful in doing so when the Asian speculative debacle created about 10-million unemployed. To do so we need only face down those who benefit from currency speculation and/or those who would wish us to overvalue the rand so as to give their economies a competitive advantage.
Second, we can stop our savings leaving the country for investment, speculation or tax evasion elsewhere. That threat of capital desertion is fundamental to the government’s policy limitations. It is justified by reference to efficient world resource use. But mobile capital is not on the whole invested in productive employment creation — it buys and sells shares, bonds and currencies. Capital flows largely from poor to rich countries.
Governments can alter this. Our government can require potential exporters of savings created here to justify why they should be allowed to leave, in terms of how it would benefit South Africa. All governments used to do that; and we still have the remnant of such controls.
The financial sector would have us believe that the removal of remaining controls will bring in the promised real investment funds, which have eluded us despite progressive liberalisation. But direct investment in the real economy has very little to do with such regulation — and everything to do with the size and predictability of the market. Both are limited by our immersion in the global market.
Third, given the fact that South Africa lifted tariff and other controls on imports before the General Agreement on Tariffs and Trade and World Trade Organisation (WTO) rules required it, could we now protect our labour-intensive enterprises by restoring some regulation? It was that rush to liberalise that cost us most of the famous million jobs. Are we now locked into WTO rules?
No, we are not — for a number of reasons. We were not effective parties to those rules, which were made by, and in the interests of, the already successful trading nations. Those countries themselves are in constant breach of those rules, keeping the rest of us sweet by promising to comply just as soon as “political imperatives” (that is, elections) allow.
Meanwhile, they expect us to suffer our inability to compete with their subsidised products and the loss of markets — regardless of our “political imperatives”.
There is a simple process we could follow. Abandon the illusion that rich nations’ politicians will ever threaten their own chances by opposing their electorates’ interests for our sake. Impose a tariff on their exports to us, equal to their subsidy.
That would level the stakes for enterprises in both countries. And we could use the money raised to subsidise our exports to them.
All of this is illegal under WTO rules. But it is unimaginable that countries such as the United States and France will publicly “take us to court” for breaking rules of which they are also in breach.
There is such a thing as the court of public opinion, and South Africa has enough credit there to give a lead.
Such a courageous act of justice restoration could well mark the moment when both sides recognise that power is no longer all on one side.
Margaret Legum chairs the board of the South African New Economists network