If SA’s rich believe in this country’s possibilities, they “need to invest in sectors that can actually resolve unemployment”.
This is the view of Mbuyiseni Ndlozi, former EFF member of parliament, and nowadays talk show host who spoke at the PSG Annual Conference on Thursday. “The rich in South Africa need to be challenged,” he declared.
Ndlozi and Moeletsi Mbeki, political economist and chair of the South African Institute of International Affairs (SAIIA), were invited to weigh in on political and economic reform in South Africa on the second day of the conference held in Johannesburg.
In his speech, Mbeki reiterated his criticisms of the policies of the ANC, particularly black economic empowerment (BEE) and the creation of a bloated public sector.
These policies, he argues, have led to the formation of a highly remunerated African middle class within the public sector.
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“The other day, I saw a report from the International Monetary Fund from a study that our government commissioned. It said 17% of South Africa’s GDP is preened off into the salaries of the public sector.”
In similar countries in the world with the same level of development as South Africa, this figure is 6% to 7%, Mbeki notes.
“So, the owners and controllers of political power use their power to milk – if you wish – the rest of the economy.
“They turned the clock around – in the 20th Century, the capitalists exploited the non-profitable owners. Today, the non-profitable owners exploit the capitalists through the tax system.”
This, according to Mbeki, is one of the “characteristics” of South Africa – a tax system that transfers wealth from the productive finance sector to the public sector, “primarily as compensation for those with political power”.
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‘Investors to blame’
Ndlozi, on the other hand, notes that the size of South Africa’s government wage bill has nothing to do with the fact that the economy is not creating jobs.
“It also has nothing to do with how much we tax capitalists.”
The crux of the problem is “deindustrialisation”, which, according to him, has happened in the interest of “financialisation”.
“Financialisation means you’re not investing in the productive sectors of the economy. You’re not building factories as capitalists.”
He believes investors should therefore also take responsibility for South Africa’s unemployment, inequality, and poverty.
“[Unemployment] is the fault of the state and the investors. Their wrong investment decisions are responsible for this.”
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According to Ndlozi, there is a need for a shift in investment decision-making towards labour-intensive, product-based sectors of the economy.
He referenced the policies of US President Donald Trump, who, according to Ndlozi, aims to redirect capitalists benefitting from cheap labour in Asia and “force them through policies to invest in their own country”.
“Those with money should realise that their investment decisions over the last few years have not helped to solve unemployment.”
Ndlozi also notes that SA’s macroeconomic policies have not been hostile to business, and democracy has benefitted capitalists, making them wealthier than during apartheid.
“This democracy is not disruptive to capital.”
He challenged the wealthy to change their investment attitudes and invest in sectors that can resolve unemployment.
“You’ll want to live in a country where the majority of the population has jobs. That [employment] will reduce crime. In the townships in particular, there’s too much idleness, which leads to despondency, especially among the youth, and all kinds of toxic behaviour arise from that.”
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Ndlozi dismisses the argument that businesses need a “stable country” before investing.
“South Africa is stable. We have democratic elections. In fact, there are 16 by-elections taking place next week Wednesday [14 May]. You have people who accept electoral outcomes, and you have a new government where the ruling party lost power and agreed to share it.
“That is political stability.”
According to Ndlozi, the high levels of unemployment and inequality are the true causes of instability, which he attributes to the “poor investment decisions” of those with money.
“The market didn’t create the jobs. They had all the leeway, but didn’t.”
This article was republished from Moneyweb. Read the original here.
