Comprehension of South Africa's current fiscal policy stratum might seem a bit nuanced, if the theoretical paradoxes in the ANC and its alliance partners are not sufficiently understood. Every so often, our political economic discourse is dominated by interesting episodes, with the most colourful one being another phoney ideological pledge towards "radical economic transformation".
Making for an interesting tale, are the underlying issues that make debates in the political troika – the ANC, the South African Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu) – unnecessarily sophisticated, particularly after the most recent Budget speech. The ANC, it appears, finds it difficult to reconcile the contradictions within itself, and is constantly found wanting on a dizzying array of technical issues.
Not so long ago, we had to allay the systematic disaster and panic that was contrived by some unserviceable idiots renowned as Bell Pottinger. We can all remember how the notion of "white monopoly capital" was punted in consort with "radical economic transformation", albeit devoid of a proper perspective. Both initiatives appear to have been intensified only in the name of generating unwarranted political expediency.
South Africa, now the 29th-largest economy in the world, once boasted an average rate of 5 percent economic growth per annum pre-2007. It is thus clear that the Mbeki administration, almost bereft of protracted disasters, attracted grander foreign direct investments (FDI) and made South Africa the focal point of African growth.
Furthermore, despite inheriting a fiscal surplus from the Mbeki administration, that figurehead of economic ineptitude, maladministration and corruption – Jacob Zuma – has assiduously steered us into a perilous course, where we had to contend with growth rate of 1.1 percent in 2017, coupled with debt burden of R180.1-billion by the time he left office. More so, with future projections for growth on a meagre 2.1 percent for 2020, our country is slowly edging towards an endemic general crisis.
Equally, our most recent Budget speech appears to indicate that the "radical economic transformation" battle cry is another pointless bit of rhetorical hyperbole – for the most part, because government's debt load and other spending commitments will now be shouldered by the poor.
Sad as it might sound, big businesses in South Africa are on a perennial tax holiday, at the dreadful expense of the poor.
The increasein VAT from 14 percent to 15 percent is nowhere close to enough to assist with poverty alleviation. We say this also very cognisant of the fact that the government's financial vulnerability should be countered by limits on public debt and budget deficits – and in the long term, by a progressive economic convergence strategy between government and business.
However, despite the catastrophic nature of credit downgrades that unquestionably must be repelled, the terrible logic advanced by our government is that business should at all times have a greater consideration and be exempted from any impending problems.
This despite the fact that the private sector is still very much dependent on government for capital injection. Let alone some diverse classifications – South Africa's "royal balcony", which encompasses the top 25 listed companies on the JSE (concentrating on market capitalisation), are all co-owned by the Public Investment Cooperation (PIC).
So in essence, it is the pension funds of the working class that actually sustain the big conglomerates.
Ironically, the champion and father of capitalism, Adam Smith, inscribed in book five of his seminal work "The Wealth of Nations" that "the subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, – that is, in proportion to the revenue which they respectively enjoy under the protection of the state".
A similar consideration was also pronounced by Karl Marx in his writing "Critique Of The Gotha Programme", in which he identified basic outlines of how national wealth should be produced and disseminated. Te injunction is properly seized by the catchphrase "from each one according to his ability, to each one according to his needs".
So government's reluctance to imbue strict corporate tax measures against big business defies meaningful logic, particularly considering the fact that countries like India, Brazil and Japan have higher cooperate taxes, and thus are responsive to the authoritative warnings captured by both Adam Smith and Karl Marx. Sad as it might sound, big businesses in South Africa are on a perennial tax holiday, at the dreadful expense of the poor.
Where is the sworn radical economic transformation?
Treasury and its principals, even as they might defy Smith, are vividly activated by what appears to be a neoliberal shock therapy, which they pursue without proper regard to the material factors of the poor.
A below-inflation increase in the personal income tax for the working class and an above-average increase in social grants might present itself as the much-anticipated cure-all remedy – however, not even such initiatives can ever negotiate the poor out of their awful predicament, as an increase in VAT will inevitably increase manufacturing and transportation costs of goods and services.
Question is, are we all in the grasp of some awful psychology of contradiction? How do we connect radical economic rhetoric to a business-obsessive fiscal paradigm? RET is still very consumed by the market-radical variant of neoliberalism, which Gigaba and his principals still endeavour to ignore.
The theory has relentlessly educated throughout history that a sustained inclination towards laissez-faire economic tinges portends social disorder, political instability, a severe legitimacy crisis, with a possibility of breeding uncontrolled social outcomes.
Apart from being predisposed to appeasing only business and rating agencies, and considering such a measure as perhaps the sole panacea to macroeconomic stabilisation, in such trying times (of unprecedented poverty and inequality), corporate-sector tax should have been amplified to beanbag the poor in the course of difficulties.
It is plausibly also the best time to revert to some warnings advanced by the most influential economist of the 20th century, John Maynard Keynes, when he identified "Capitalism as the astounding belief that the wickedest of men will do the wickedest of things for the greatest good of everyone".
The sad reality remains that the ordinary amongst us are fed a poisonous web of laissez-faire market designs, maybe to sing and clap with a passion to the soulless secular hymn that "the poor should at all times shoulder all the burden of the country".
Where is the sworn radical economic transformation?