State must "get out the way" of economic recovery

John Steenhuisen says latest data vindicates DA's early call to end lockdown


It is now incontrovertible that lockdown greatly exacerbated the real disasters we face as a nation – poverty, unemployment, and inequality – hitting the most vulnerable hardest and causing far more suffering and loss of life than it prevented. Ramaphosa’s government is directly responsible and the very least they can do now is get out the way of South Africa’s economic recovery.

Two sets of socioeconomic data released this week confirmed what should have been obvious to all on 27 March 2020 when lockdown was implemented: that anything longer than a short, well-managed lockdown to buy time to implement more targeted interventions would wreak major destruction on a nation already in crisis.

StatsSA reported that 2 200 000 people lost their jobs in the second quarter of this year, with broad unemployment increasing from 39% to an unprecedented 42%, and youth unemployment (age 15-24 years) to almost 75%.

The NIDS-CRAM Survey Wave 2 gives valuable insight into the social effects of lockdown, which have been largely hidden from view, unlike the Covid death toll which is splashed on dashboards and reported on daily in the media.

- Nearly 1 in 4 shack dwellers experienced hunger every week in July and August. Nationally, hunger rates are still substantially above pre-lockdown levels.

- The 3 million jobs lost between February and April had not returned by June despite the partial easing of lockdown restrictions, suggesting these losses may be long-lasting.

- From February to June, the most disadvantaged groups (poor, rural, women, unskilled, less educated) experienced the largest declines in employment and the slowest recoveries, with the percentage drop in employment 10 times higher for the poorest 50% of workers compared to the riches 25%.

- 311 000 domestic workers lost their jobs.

- 40% of school days will be lost for most children in 2020, with education inequality increasing.

- ECD attendance levels were still down 75% relative to historical levels a month after programmes were allowed to reopen, mostly because ECD centres couldn’t afford to reopen.

This data vindicates the DA’s early call to end the lockdown, which was met with outrage at the time, when we argued that poverty kills by stunting bodies and lives, that lockdowns kill, that the poor and young would suffer most, and that growing inequality would dangerously destabilize society.

It is not good enough for government to claim these are “unintended consequences”. Many things have “shocked” Ramaphosa, but no self-respecting president can claim not to have foreseen the catastrophic socioeconomic consequences of shutting down an economy in recession and forcing people to stay inside their homes for weeks on end.

It is crucial that we as a nation recognise lockdown as a monumental blunder on the part of government. Because rule number 1 for recovering from lockdown is to not go back into lockdown if covid cases start to rise again. But also, because Ramaphosa’s government must be held to account for the devastation. South Africa needs a new government.

Anyone who believes that the same government that caused this devastation can lead a rapid economic recovery is living in fairyland. And indeed, Ramaphosa’s “Economic Recovery Action Plan” is the stuff of fairy tales.

The evidence suggests that these 3 million job losses and our economic depression may be long lasting. Lockdown has turned to slowdown. A recovery even just to pre-lockdown levels of employment requires bold pro-growth reforms to free up the private sector.

Instead, Ramaphosa’s plan is to double down on state-led “development”, a contradiction in terms for a state as hollowed out and incapable as ours. Dyed-in-the-wool communist, Trade and Industry Minister Ibrahim Patel, is to tell us what we may and may not import, fresh from telling us what shoes and shirts we may and may not wear. Investment-killing NHI is to forge ahead. BEE regulations are to be strengthened. Labour Minister Thulas Nxesi, recently fingered as having received payments from Mr Edwin Sodi in the asbestos audit scandal and champion of tighter employment equity regulations, is to chair the Economic Recovery Leadership Team. You can’t make this stuff up.

The only possible economic recovery for SA is one which is market-led. The individual choices and risk assessments of 58 million people must direct what gets produced and how much. Power to the people who care about their lives, not to the state that doesn’t. No government that cares about people’s lives would cut R10.5 billion from social programmes at a time like this to resuscitate bankrupt SAA. It is unforgivable that public transport for the rich is being subsidised while people are starving.

The government cannot even perform its own core roles to any acceptable level – witness stolen railway lines, crumbling infrastructure, broken health and school systems, bankrupt municipalities, and delayed social security payments. Nor can it run its own businesses – witness bankrupt Eskom, SAA, Denel, SABC, SAPO and Transnet. Yet it wants to direct the private sector, the only sector which still has capacity.

We need open, competitive energy and labour markets. We must decisively reject investment-killing policies such as NHI, EWC, BEE, prescribed assets, and Reserve Bank nationalisation. We must stop bailing out state-owned enterprises. We need high-level arrests of corruption suspects Jacob Zuma, Ace Magashule, Nomvula Mokonyane, Gwede Mantashe and the like, to stop corruption in its tracks and build immediate confidence in South Africa. Scapegoating through token arrests of small-fry suspects is not going to cut it.

Only if our corrupt, incapable state gets out the way of innovation and entrepreneurship in this country will jobs be created at the scale required, and will the financial reserves be generated to offer a strong safety net and trampoline to those pushed down by lockdown.

What Ramaphosa envisages as a state-led recovery, will more likely be a state-blocked recovery. The DA’s headline advice for government’s economic recovery action plan is just four words long: Get out the way.

Warm regards,

John Steenhuisen