/ 21 November 2011

The global economy is broken, says Trevor Manuel

The Global Economy Is Broken

The economic systems employed around the world have failed to adequately address poverty and inequality and must change, says Minister in the Presidency Trevor Manuel, who chairs the national planning commission (NPC).

National planning commission chairperson Trevor Manuel talks to the M&G about his new national development plan. Listen to the full podcast of the interview on labour legislation, fracking, public participation and more. Video to follow next week.

“The message coming out of everything we have seen over the past year in the Arab Spring, people on the streets in Europe, the Occupy Wall Street movement and the overall failure of systems of the past, is that that model is broken. We need something that deals with the needs of people and the economy must serve the interests of the masses … and at the moment the market doesn’t provide for that,” Manuel told the Mail & Guardian in an interview at the Union Buildings.

His comments follow the unveiling of the National Development Plan (NDP), a 430-page draft document crafted by Manuel and the 26-member NPC, aimed at addressing the many challenges facing South Africa by plotting a course of action for South Africa until 2030.

  • The nine challenges facing South Africa:

Paradigm shift
“This all dictates the need for a different engagement between governments and the governed — a paradigm shift — as it is called in the plan. This is the centrepiece of what is on the table and what we are proposing to South Africans,” he said.

Chief among the proposals in the plan is the target of completely eradicating poverty and lifting South Africa’s Gini coefficient inequality rating from 0.7 in 2009 to 0.6 in 2030.

The key ingredients to the plan’s success are the growth of investment and employment, along with public private partnerships, good governance and involvement from all sectors of society.

Best of both worlds
Since the unveiling of the NDP, questions have been raised about how the commission’s plan stands against the new growth plan (NGP) unveiled in 2010 by Economic Development Minister Ebrahim Patel .

While the NDP advocates a broadening of partnerships between the government and the private sector, the NGP gives the state a more dominant role in the economy.

But the two were not mutually exclusive. Manuel said an entirely free market would not cure all economic ills. A mix of government intervention and private sector engagement was the best solution, he said.

“Free markets don’t exist anywhere except in some strange textbooks. The situation in the United States that makes the current economic arrangement unworkable is the fact the wealthy don’t have to pay tax effectively. When Warren Buffett says his secretary pays more tax than he does — you have a failed system,” Manuel said.

“So, if you believe that is a free market, you believe in tooth fairies and Easter bunnies. Markets are good at doing some things but they are not very good at providing public services and remedying the inherent faults in the markets. This is the reason you need a strong active government that can respond to the needs of citizens,” Manuel added.

Tackling corruption
One of the main challenges facing South Africa is widespread corruption, which Manuel said must be addressed swiftly.

“We’ve never masked the fact that corruption is a fundamentally challenging issue in South Africa. We have examined what has gone wrong, in the diagnostic report of the NDP and the proposals in dealing with the change are in the NDP. We need to ensure speedy justice through dedicated investigation and prosecution teams to ensure we can put people away for corruption. The sooner this happens the sooner they will realise corruption does not pay, and others will realise that crime does not pay,” said Manuel.

Manuel added that although the NDP was intended to reach fruition in 2030, a lot of the work required to reach the goals envisaged in the plan need to be implemented immediately.

“Many of these decisions need to be taken in the short term and can’t be left. Bad values and bad systems entrench themselves and ossify and become the enemy of transformation,” Manuel added.

Come together
Manuel believes the country must draw on its past successes in bringing an end to Apartheid in setting out on the new journey the NDP proposes.

“Our generation — the ones who faced each other across the barrel of a gun — we were the people who brought the country out of the abyss; it is still fresh enough in our minds to be able to work in the same kind of circumstances and bring people together again. It’s not empathy or sympathy — it’s about participation. That’s the goal — participation in nation building,” Manuel said.