Vol.4 No.3, 16 March 2004
World Class Third World
The Organisation of African Unity held its 1973 Conference in Addis Ababa - at the time of the famous famine in Ethiopia. During that conference the media was given a splendid banquet by the Emperor Haile Selassie. Three different French wines accompanied the five courses. The invitation came embossed in gold. I remember thinking how much more I would have treasured a simple card stating that normally the Emperor would have given us a banquet, but in view of his country's current drought, he was giving those resources to the task of relief and reconstruction.
The Emperor was not a callous man. He was simply going along with normal protocol that required Heads of State to deliver what I suppose we would now call 'world class' hospitality when hosting an international conference.
That aspiration to 'world class' status is one of the factors that entrenches the dual economy in South Africa and elsewhere. It is taken as axiomatic that in the formal economy we must invest in 'world class' airports, hotels, highways, conference centres, government ceremonial and hospitality. And those who run our economy, our enterprises and our public service must be rewarded with world class incomes and bonuses and even financial windfalls. All this is considered good investment in a global market, because tourists, conference organisers and good managers can go somewhere else if they are not offered the same or better facilities here.
What does world class in this sense mean? What is the bench-mark? What are we emulating? I don't think it is Scandinavia, or Australia or even Canada. I think it means America 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 - the lifestyle of the celebrity.
Seen in that light it is obvious that the other part of our dual economy - the informal, the unemployed, the unskilled and uneducated, the people who live by begging, borrowing or stealing - cannot possibly be accommodated in a world class manner. There are not enough resources to invest at world class levels in both economies.
For instance 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. Therefore we cannot afford world class education - or health or public transport or social grants. Even if that investment would yield high dividends in the long run, only the short run can be realistically accommodated.
The skewing of public investment in the direction of the already well-resourced is justified as bringing in foreign direct investment and tourists. And these will spread employment and thus bring more people into the formal sector. That has been the rationale for the rapid opening of our economy to global competition in terms of trade and capital.
In fact that does not happen - neither in South Africa nor anywhere else. Capital, always fickle, is not wooed like that. Capital goes where profits are highest and most immediate, and that can vary from year to year. Most successful capital is actually in the financial sector, where it trades in shares and currencies and property for speculation. Take Warren Buffet, world class rich, 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 because they failed to look after their shareholders.
But there is a deeper reason for the failure of current efforts to 'ladder' the dual economy so that the poor can reach prosperity. The world class end can exist at its current levels only because resources are being sucked from the bottom to the top of the economy. Poor people, rural economies, local communities are subsidising the cities, the tourists and rich people. So is environmental capital, now considerably exceeding its capacity to regenerate.
This process has been going on for the past three decades in every country where the global market rather than governments defines processes. 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 state of the world economy, similarly out of our control, will determine our employment; that we must endure huge swings in the maize price, staple food for most of us, not because of our production but because of speculative maize futures and the price of the dollar - so food security is a distant phantom. Meanwhile those at the top are insulated from all this by accumulated capital.
Meanwhile our informal sector fails to support its 'workers'. Latest statistics - for late 2001 - show 367,000 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 they continue to go along with the myth that the coexistence of world class and third world can bring the latter up to the former.
New attitudes to wealth must accompany poverty alleviation. Why not make a start by dividing up 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 that out to communities all over the country, so that everyone can eat and drink well on one day at least. Even more important it might signal a break, after ten years, with the whole world class hoohah.
© South African New Economics Network 2007. Page generated at 09:27; 22 September 2007