Get more Mail & Guardian
Subscribe or Login

Editorial: GDP focus trips South Africa up

We need to deal with this notion that trickle-down economics works in South Africa. What has been clear over the past two decades is that the expansion of our economy hasn’t filtered through to the vast majority. Unemployment has remained stubbornly high since the mid-1980s when deindustrialisation began in earnest as an Asian factory gained in strength and through our boom years leading up to 2008 global recession.

While we’ve had terms such as “black diamonds”, made popular by the Bureau for Economic Research at the University of Stellenbosch at the height of the super commodity cycle that boosted our prospects, it was a phenomena that proved fleeting.

The emerging black middle class that was supposed to drive the country’s economic transformation has come under significant pressure over the past decade as corporate SA looked to rather invest offshore and public sector spend dried up as a result of a badly executed and corruption-tainted expansion of electricity generation in the main.

The Covid-19 pandemic has just added another dampener. While we may celebrate the first quarter GDP figures released by Statistics SA this week, the agency points out that the size of the economy is now comparable to 2016. It’s a sobering thought.

But here’s a hypothesis that the Mail & Guardian has been playing with this week as we considered the latest statistics that do point to a rebound in the economy. What if, in a best case scenario, markets turned in emerging market countries’ favour for the next decade? Would the fortunes of the regular man or woman on the street change significantly? 

The structure of the South African economy and the state’s focus on primarily GDP as a marker of its success or failure warn us that once again the benefits of any sustained upturn in our fortunes would only benefit a few. Any structural reforms that would ensure a greater share of economic wealth that would affect the short to medium-term target of GDP growth at all costs quite simply mean they won’t be adopted.

This is not uniquely a South African problem. Since the end of the roaring Twenties, GDP has been the primary target of governments in the modern democratic world. It’s been a marker of their success or failure as the idea of “trickle-down” economics has largely won the argument.

This is despite the fact that over many economic highs and lows, the harsh realities for most South Africans, Brazilians and Chileans have proved impossible to escape. We have to rethink our GDP focus. British economist Kate Raworth asks a pertinent question in her seminal 2017 book, Doughnut Economics, that we should all consider, in particular our policymakers. In the context of today’s social and ecological crisis, how can GDP — “this single, narrow metric” — still command international attention?

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

‘The children cannot cope any more’: Suicide in Calvinia highlights...

How Covid-19 has intensified the physical and emotional burdens placed on children’s shoulders.

Capitec Bank flies high above Viceroy’s arrow

The bank took a knock after being labelled a loan shark by the short seller, but this has not stymied its growth

More top stories

Covid-19: No vaccine booster shots needed yet

Scientists agree it is important to get most of the population vaccinated before giving booster jabs

The convenient myth of an Africa spared from Covid-19

There are few, if any, studies to support Pfizer chief executive’s assertion that the global south would be more vaccine-hesitant than the north

Council wants Hawks, SIU probe into BAT’s Zimbabwe scandal

The cigarette maker has been accused of giving up to $500 000 in bribes and spying on competitors
Advertising

press releases

Loading latest Press Releases…
×