Twenty lost years

Thomas Johnson says were are living with the consequences of a toxic combination of disastrous policy, incompetence and corruption

Democracy fails to bring development because of disastrous policies

A particularly opinionated talk show host once chastised a caller for suggesting South Africa is not a democracy. “SA is democracy”, he scolded. “It has regular elections.” He is always right.

So I was surprised the Economist Intelligence Unit’s (EIU) Democracy Index ranks SA 37th out of 167 countries for 2015 in the category “flawed democracy”. Other categories are full democracy, mixed regime and authoritarian.

Flawed democracies have fair and free elections, and basic civil liberties. But they have significant faults in political culture, participation in politics, and governance.

SA’s vaunted constitution – “the best in the world” – enforces socio-economic, gender and racial rights. So it’s a blow to national pride we are not among the 20 freest and most enlightened countries. We rank below Botswana (28th) and India (35th).

The top five are: Norway, Iceland, Sweden, New Zealand and Denmark. The US closes the list of full democratic countries at 20th.

Interestingly, Norway is also ranked 1st on the United Nations Development Programme (UNDP) Human Development Index (HDI). So I was interested, in light of continuous protests in SA over quality of life, standard of service delivery and funding, whether a country’s level of democracy has a correlation to its human development.

The HDI ranks countries in life expectancy, education and per capita income. The four categories are: very high, high, medium and low human development. SA is ranked 116th (0.666 out of 1.000) for 2015, and is in the medium HDI tier. In 1994 SA ranked 0.7300 (high HDI), meaning its HDI has declined – worsened – in 22 years. (The Western Cape and Gauteng is above the national average, and would be classified as high development.)

Most of the 20 countries that are full democracies also rank very in high human development. Countries that appear in the top-20 of both indices, in no particular order, are: Norway, Denmark, Sweden, Iceland, Switzerland, Germany, Netherlands, Luxembourg, Austria, UK, Ireland, US, Canada, Australia and New Zealand.

But it would be trite and incorrect to draw a correlation between full democracy and high human development. For example, Hong Kong and Singapore have very high HDI but are classed as “flawed” democracies. Qatar, Saudi Arabia, Bahrain, UAE and Kuwait have very high HDI but are “authoritarian” regimes – “nations where political pluralism has vanished or is extremely limited, with often absolute dictatorships” – scoring around 3.00 (out of 10) or lower on EUI’s democracy rankings. Brunei has very high HDI, but is an absolute monarchy (authoritarian regime). It does not appear on the democracy index, though.

There are altogether 49 countries with very high HDI. Apart from those mentioned already, European, former Soviet-bloc Eastern and Baltic European, and two South American countries – Argentina and Chile – round out the list. Not one African country appears in this category, but five – Algeria, Libya, Tunisia, Mauritius and Seychelles – have high HDI.

Croatia is among the 49 countries with very high HDI. Its recent history is troubled and violent. After Croatia’s declaration of independence from Yugoslavia in 1991, the Yugoslavian army and Serb paramilitary groups attacked, leading to a war that occupied a third of Croatian territory. The war ended in 1995. Croatia overcame that devastation and today is one of the highest ranked countries (47th) in human development.

Democracy is about people being free to choose the type of government and social system they want, and free of tyranny and oppression. It’s equated to economic freedom (see below), and improved social conditions. What was the ANC’s slogan – “a better life for all”? In SA, people were promised jobs, free houses and education, and improved and equitable social services.

The fight against apartheid was to overthrow a pernicious, race-based ideology and authoritarian regime and ensure an equitable distribution of the country’s wealth and resources. SA might – almost did – have chosen a socialist/communist system. Elements in the ANC/SACP still hanker for it with their National Democratic Revolution as semi-official policy.

But parties at negotiations, and voters, chose democracy, albeit with a defective free market system that had not properly developed under apartheid’s control and protection. And afterwards, by design, incompetence and neglect, it was never allowed to mature into a fully functioning, free economic system South Africa needs for growth and prosperity.

Smuts Ngonyama, the then ANC and government spokesman, infamously said, “I didn't join the struggle [to fight apartheid] to be poor”. As an ANC cadre he probably meant BEE contracts. To this type of mercenary thinking, democracy means the rapid accumulation of personal wealth obtained through patronage and rent-seeking. This is the defining characteristic of ANC-ruled South Africa.

To protestors burning community facilities and university libraries, democracy means promises not met, or demands that are impossible to meet. Their actions are driven by the perception their circumstances are not improving fast enough, or at all.

Anecdotally, people of all races have complained that in many respects social services, education especially, were better under apartheid. For a portion of the population anyway, their social needs were met.

But in SA’s racially fraught environment it’s unconscionable to say conditions are worse now. It’s deemed racist, offensive and unpatriotic, as the Dianne Kohler Barnard case shows. It’s claiming an African government has been a failure and cannot govern – “we told you so”. And more damaging, it’s suggesting the democratic project is failing.

However, “frivolous comparisons” to apartheid are not, as some on the left argue, a yearning for a return to disenfranchisement, oppression and enslavement under “apartheid’s yoke” – it’s frustration at unfulfilled promises that democracy brought.

It is indisputable SA’s economic and social indicators – unemployment, growth, HDI, inequality – are worse now than at the end of apartheid. Some might argue it’s because the country’s resources are spread among the whole population and not only 4.5 million whites. But that argument does not hold. GDP per capita has been on an upward trend since 1994 from about $3 500 to $5 692 (2015, World Bank).

Social conditions for the majority of South Africans are dire. Grants and free basic services have reduced the poverty rate to 54% head count ratio (2015, World Bank), though. But with the dependency on social grants (there are 17 million beneficiaries) at a huge cost to the nation, this cannot be seen as good. It’s an indictment because in 20 years government has failed to improve their livelihoods and development.

The UNDP states: “The HDI can also be used to question national policy choices, asking how two countries with the same level of gross national income (GNI) per capita can end up with different human development outcome. These contrasts can stimulate debate about government policy priorities.”

South Africa has had a toxic combination of disastrous policy, incompetence and corruption that resulted in declining social and economic outcomes.

Education is perhaps the single social policy area that could have made a difference. But under the ANC the educational system is disastrous, not equipping young people for the highly competitive, knowledge-based world that awaits them. It produces results far below less resourced African nations.

The World Economic Forum ranks SA 138 out of 140 for maths and science education for 2015/2016. (The Department of Basic Education stated the WEF’s report is “bizarre”, though.) And universities are in danger of irrevocably losing their already tenuous places in world rankings, and becoming degree factories.

Health fared little better under the ANC, from former president Thabo Mbeki’s denial of the link between HIV and AIDS that cost hundreds of thousands of lives, to a near dysfunctional public health system. And government is seriously considering an unaffordable, complex national health system.

Has democracy delivered what we expected of it? Or should we have elected a benign authoritarian regime if and only if it delivered the minimum quality of life we deserve?

In Africa’s Third Liberation Greg Mills and Jeffrey Herbst write countries don’t have to remain poor. There are examples that have risen from the ashes, like Croatia and Vietnam. Mills also wrote Africans are poor because their leaders, in the policies they choose, want them to be poor.

The Economic Freedom of the World: 2016 Annual Report shows South Africa has consistently dropped in ranking, from 42nd in 2000 to 105th place (6.74 out of 10) in 2014, out of 159 countries. It is 13th in Africa despite having the most industrialised economy.

Key factors for EFW are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property. But as the IMF’s David Lipton recently said of SA’s economic system, it “stifles competition and entrepreneurship and keeps one-third of the labour force unemployed or too discouraged to seek work”.

Although the EFW report does not explain how countries with authoritarian regimes can have very high human development, it partially answers the question I asked above: is there a link between democracy, or economically free countries, and human development and economic well-being.

Jonny Steinberg wrote in BDlive: “Looking back, the growth path SA adopted immediately after the transition to democracy contained an unfortunate combination: rapid trade liberalisation on the one hand and a strong, national, centralised bargaining system on the other. I am not sure that those responsible had much choice, and my intention is not to wag a finger at those who exercised power in the 1990s, as is nowadays so cheap and fashionable.”

I disagree with Steinberg’s kind and revisionist assessment. While hindsight is perfect, and SA had international trade obligations to keep and made avoidable mistakes – “naive” and ignorant of economics – the policy regime is home-grown, driven by political and economic paradigms that trammelled growth.

The conclusion is SA could have been similar to Norway, Ireland or New Zealand, perhaps not in GDP per capita, but in the health of its democracy and development – full democracy and very high human development. But the indices and reports are unambiguous: South Africa is at or near the bottom of rankings, and development will continue its slide, because of government’s policies.