Vol.4 No.7, 06 July 2004

The Balance of Dependence

By Margaret Legum

Creating dependence is everywhere recognized as a potential hazard in poverty alleviation. Our government is especially sensitive on that point, because Black people suffered through centuries of policies that deliberately kept them dependent. The iniquity of dependence is not just that it impoverishes materially, but that it creates a mendicant posture. It humiliates; it forces the dependent into false attitudes of incapacity; it requires ‘ja baas’ responses.

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 create dependence for the whole country upon unpredictable global market forces and the world’s rich and powerful – with all the above consequences.

Let’s accept that we had very little choice at liberation, and that there are advantages to immersion in the global market. They are access to cheap and varied consumer goods, because these can be sourced internationally; and the right to move your money about the world. That’s about it – things like the internet and travel are available anyway.

These are not inconsiderable advantages, but of course accessible only if you have money for buying and saving. It is time to look at the downsides.

First, we create unemployment because our enterprises are not competitive with the cheapest that the rest of the world can throw at us. They are competitive within South Africa: our clothing, textile and footwear enterprises have always competed fiercely with each other. But however hard-working and well-managed those workers, they will lose their jobs if somewhere else in the world – over which they have no control – does something that brings the cost of their goods down relative to ours.

‘Trade is the engine of growth’ is the slogan under which our markets were flung open. That depends on the terms of trade – generally set by the stronger - as every child ‘trading’ with a bully knows. In trade negotiations we plead rather than bargain. Trade is most beneficial to those best fitted to compete, and can undermine growth for the weaker. Our expanded trade since sanctions ended is not reflected in growth, and has lost us jobs because competitiveness demands top technology.

Second, hot money has flowed in and out of South Africa since we allowed it, creating a volatile rand and thus uncertainty for people who trade in goods. That money is mostly speculative - not invested in buildings, plant or employment but profiting by trading in shares and currencies. Rand volatility encourages us to keep rates of interest high to attract foreign capital, and that inhibits growth of our own enterprise.

Perhaps the worst effect for poor people is felt via the cost of staple foods that are internationally traded in dollars. When the rand falls consumers must pay more, even when the harvest is good. So the hazards of harvests – already a source of unpredictability – is compounded by a volatile rand.

Third, the unpredictability of the global financial markets is a danger to the pensions and savings of us all. No one is in control of the world’s financial markets, and we are all interconnected. The people at the very top have stashed away millions, so may escape a bubble burst on an international scale. It will be dire for the rest of us in all countries. In 2003 pension funds fell by around one third, and that will be a picnic if the markets really crash.

Fourth, the global market makes us dependent on the most inefficient system for distributing resources, while telling us it is the most efficient. The skies are daily crossed with gas-guzzling air-polluting aircraft bearing identical goods across the world – from shoes to apples to toys. Food is discarded uneaten while people rummage in dustbins for a crust. Every product is ‘over-produced’, while millions have nothing. People with jobs work day and night, while the rest are idle. And all the obvious solutions are rejected by the rich and powerful on behalf of us all.

Fifth, how is democracy served by a system in which our government must make macroeconomic policy by reference to the approval of others outside of our democracy? Is it OK that the rand should be punished because government responds to voters’ preference for affirmative action, for protecting workers rights, for pro-poor policies, for a basic income grant? Of course some international interdependence is inevitable - hence the need for accountable international institutions – but electorate cynicism can be avoided only by seeking to maximize independence.

The truth is that the global market imperatives have enfeebled all governments and undermined their legitimacy. They have benefited only the already well resourced. Governments could be regulating how pension funds are managed; when and how our enterprises enter the global market; how our money leaves the country and others’ comes in; how wealth can be distributed and poverty addressed; and how we prioritize things like education and health.

If only we were less dependent.

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