A few weeks ago President Barack Obama delivered his State of the Union address to Congress and said those who thought that the United States was in decline did not know what they were talking about. It is an election year and anything, even what cannot possibly be supported by the evidence, can be said, as long as it gets votes.
After all, which Democrat was going to say that Obama was wrong and that the US was in decline?
In 1946, when World War II was over, the US produced almost half the world’s gross domestic product (GDP). Having nuked Japan, flattened Germany, the Soviet Union literally decimated and Britain bankrupted, the US had no rivals at all — it was at the zenith of its global power. By 2010, however, the US accounted for only 23% of world GDP, and some time in the next decade the Chinese will likely push them out of first place.
The involuntary expansion of the definition of the world’s “leading powers” from the largely North Atlantic G7 to the G20 was a result of the realisation that almost nothing of any global importance can now be solved by the old Atlantic powers without the agreement of the rising Brics — Brazil, Russia, India, China and South Africa. This is evidence enough of the relative decline in US power.
Thomas Friedman’s recent book, That Used to Be Us, takes its title from a statement Obama made, that the US is in decline. Obama said: “It makes no sense for China to have better rail systems than us and Singapore having better airports than us. And we just learned that China now has the fastest supercomputer on Earth — that used to be us.”
US infrastructure has fallen behind because the country has invested neither in it nor in solving some of its most basic problems. Although the US remains the world’s most powerful nation, by virtue of its military power, and there is still much that is admirable in that country, it is simply not what it used to be and no amount of pre-election fiction from Obama will change the facts.
The US now has a political system that does not allow the state to function in the ways of modern states elsewhere — by helping the private sector or by providing modern and effective infrastructure.
Politically the US moved in 1980 to an entirely new consensus, which has lasted for 30 years, and believes states that its government could do no economic good and that the best thing to do was to allow the wealthy to become even wealthier by lowering their taxes and allowing them to invest.
This helped to make the rich very rich. In 2007 the top 1% of earners in the US took in 23.5 % of national income, up from a low of 9% in 1975. This redistribution in favour of the rich left less tax revenue and political space for the government to act.
South of the Limpopo basin we have a similar situation: South Africa, the great regional power, is also in relative decline and similarly in denial. Its absolute dominance of Southern Africa is now ebbing as its neighbours start to recover from decades of liberation struggle and apartheid-induced civil war.
At its peak in 1994, South Africa was responsible for 47% of sub-Saharan Africa’s GDP. By 2008 South Africa was responsible for only 28%.
Politically, South Africa, like the US, took a position and tried to redistribute wealth to the victims of apartheid rather than telling them what everyone knew — that the 1994 democratic dispensation was only the first step in a much longer and even more bitter struggle to end the economic injustice of the past.
The redistribution of income and government spending was never going to provide enough resources to redress the profound scars of apartheid. To deal with that the nation had a collective responsibility to create world-class national infrastructure, develop real black business and not “tenderpreneurs”, and invest massively in quality education. It would take at least one generation of national sacrifice.
The US has been remarkably successful in making the rich much richer, but South Africa’s efforts at redistribution have been less so. Measures of income distribution remain stubbornly close to those that existed during apartheid, despite the government’s best efforts.
And yet, the results of the failure to invest in South Africa are there for all to see. Rather than invest to expand electricity production, thenpresident Thabo Mbeki simply waved his hands after the electricity white paper in 1998 and said the private sector would supply Eskom, without ever providing a policy structure in which it could. The years after the power blackouts in 2007 and 2008 had been predicted in Parliament a decade earlier.
Instead of dealing with the rail bottlenecks, the government did almost nothing and, as a result, coal exports stagnated and South Africa lost the massive dividend of the Chinese coal boom of the past decade to Australia and Indonesia.
Earlier this month Transnet boss Brian Molefe made it clear that South Africa intended to develop its railway to Swaziland and Mozambique as a way of relieving the Richards Bay coal line for more coal from the Waterberg coalfield in Limpopo and, ultimately, from the huge Botswana coalfields just the other side of the border. To many in Botswana this looks like a power play to undercut rail initiatives being developed to build railway networks to either Namibia or Mozambique. However, unless the Richards Bay coal terminal is also expanded beyond its 91-million-tonne capacity, it alone could not accommodate Botswana’s planned coal exports of 70-million to 90-million tonnes.
Dominating the rail links in Southern Africa has been one of the pillars of South Africa’s relative economic power. Until just a decade ago almost everything coming into Africa south of the Congo River came in through Durban or Cape Town. Botswana’s dependence on South African rail networks has endured for more than a century, but the narrow Cape gauge railway built by Cecil Rhodes in 1897 from Mafikeng to Bulawayo that transits Botswana and links it to the coast is no longer fit for purpose.
Botswana now needs a modern heavy-gauge railway to transport 70-million to 90-million tonnes of coal to the sea and to India. What the new railway must do is to provide competition to the Port of Durban and the South African railroad system — and not be part of it. If transport economics teaches us much, it is that more railways also lowers the cost of road transport. There is probably no greater commercial barrier to Botswana’s economic diversification than the high cost of transport from the coast.
This month, all going well, Botswana will commission the first part of the new Moropule B power station that, by the end of the year, will generate 600 megawatts of electricity and put an end to two decades of almost total dependence on the now-crumbling power infrastructure of South Africa, which barely has the capacity to supply its own citizens.
The temptation to remain dependent on the declining rail infrastructure of our neighbour should be avoided. The competition will also do us both good.
These are the views of Professor Roman Grynberg and not necessarily those of the Botswana Institute for Development Policy Analysis where he is employed.