The Long View by JP Landman - WRFY

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Information about The Long View by JP Landman - WRFY
Business & Mgmt

Published on March 3, 2014

Author: usbed

Source: slideshare.net

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Is South Africa going to make it? Are we going to become a shining example of a modern society, a proud member of the world’s leading countries? Are we going to be OK? Are we already OK? Or are our worst fears going to become a reality? In his new book: The Long View, JP Landman provides simple but compelling answers. He argues that we are missing the bigger picture; that viewing progress through media headlines is neither accurate nor helpful – and does nothing to further our understanding of the country.

By questioning and challenging the pre-conceived ideas and the media-portrayed examples of what members of the public might deem a ‘modern and developed’ society, Landman goes beyond the here and now to give readers a solid, long-term and informed view. He writes: “It’s information that you can hold on to. Something that gives you a proper understanding of the realities of South Africa.”
Although The Long View outlines the glaring realities of our country, it also demonstrates that not everything is going wrong. The author gives us hope that things are on the rise.

In this session of We Read For You, Prof Marius Ungerer unpacks the essence of The Long View, a new book by JP Landman.

The Long View By JP Landman Presented by Prof Marius Ungerer Inspiring thought leadership across Africa Date: February 2014 1

JP Landman is an analyst, renowned for his talks on South Africa.  He has studied economics at Harvard and has an MPhil in future studies from Stellenbosch.  He is a Visiting Professor at Free State University.  In 2013, he was selected as a Public Policy Fellow at the Woodrow Wilson International Centre for Scholars in Washington DC.  Publication Date: August 2013 We read for you by Prof M Ungerer, USB. Feb. 2014 2

The Long View  The book guides us to reflect on tough questions. ◦ Is South Africa going to make it? ◦ Are we going to become a shining example of a modern society, a proud member of the world’s leading countries? ◦ Are we going to be okay? …or are we becoming a failed state? Source: Jacana media We read for you by Prof M Ungerer, USB. Feb. 2014 3

 Through his book, The Long View, JP Landman provides simple but compelling answers.  JP Landman goes beyond the here and now to give readers a solid, long-term, an informed view; or what he calls The Long View. Source: Jacana media We read for you by Prof M Ungerer, USB. Feb. 2014 4

The Long View Getting beyond the drama of South Africa’s headlines The book is structured into four parts Headlines vs trendlines 1. What makes a modern, successful society? 2. The muddle-through economy 3. Living with ambiguity 4. A bigger ambition Conclusion We read for you by Prof M Ungerer, USB. Feb. 2014 5

Part 1: What makes a modern, successful society?  The first part asks what makes a modern, successful society and then examines ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ the economy; demography; labour; open societies; creative individuals; unlearning and learning anew; inequality; and social capital. Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 6 Part 1: What makes a modern, successful society?

Key departure point: We need a longer-term view ‘And, like all instant analysts, the journalist is constantly at risk of over-interpreting the short-term and under-rating the long-term trends … What is needed is a longer view’ - Bill Emmott, former editor of The Economist Headlines vs trendlines If one follows the daily headlines and social media, things may not look good. But there is far more to this complicated country (SA) than just the headlines. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 7

How do you define a modern, successful society?  To me, it’s a country in which people:  have a good standard of living.  Even if you have a low income you have access to decent public services.     The infrastructure is good, there are efficient, wellrun hospitals, the roads are fine. Good universities and schools are within reach of most people. You can walk around at night because your neighbourhood is safe. There is music and art, and it does not have to be in multimillion-rand venues. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 8

The Modernity Journey Modernity therefore is not so much a destination as an on-going journey. As soon as one has recorded some significant progress, it becomes clear that new obstacles must be overcome. Question: Can we achieve modernity whilst holding on to the stuff that makes us uniquely South African? Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 9

Modernity Modernity is, for me, simply about creating a better life. The most common-sense definition of modernity I have come across is that of Professor Molefi Kete Asante from Temple University in Philadelphia. ’I would contend that modernisation is not a byproduct of the West; it is a natural product of societies seeking to make life more comfortable and convenient for their citizens’. As he points out, India and China are modernising, but they are certainly not doing so in a Westernised manner. Success doesn’t require Westernisation; it requires constant change or evolution. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 10

The drivers of modernity 1. 2. 3. 4. 5. 6. The economy. Without an economy, you can’t build a society. Without money or resources, you can’t build modernity. Demography. You cannot reach modernity if your economic growth does not exceed the growth of your population by a margin. Employment – and the lack thereof, which becomes an obstacle. An open society where, among other things, the individual is regarded as more important than the group; and where learning and a change of direction can take place. Creative individuals. These are the people who bring about unlearning and new learning. They push the boundaries, help put something better in its place. They are key to a society’s progress. Unlearning and learning anew. Successful societies have the ability to unlearn the things that have reached their sellby date and embark on a new course. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 11

There are two obstacles, apart from unemployment, standing in the way of South Africa’s drive to modernity. We need to overcome them in order to succeed. 7. 8. The lack of social capital. This is the glue that holds a society together: the shared values and norms. Without that, you cannot put together a modern, successful society. Corruption and the quality of our institutions are hugely influenced by social capital. Inequality. You cannot build a society with a shared sense of purpose if the gap between people is too big. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 12

Becoming a modern, successful society is a multi-generational undertaking. It’s not a quick job. Is South Africa better off today than it was ten and twenty years ago? Will we be better still ten years from now? That’s the test for progress. For the vast majority of its citizens, South Africa is unequivocally a better place now than twenty and thirty years ago. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 13

There are a number of reasons for the turnaround in our economic fortunes 1. 2. 3. 4. The end of sanctions. The significant structural change of the early 1990s. Entire industries like agriculture and transport were deregulated in the run-up to 1994. Prudent fiscal and monetary policies. Our increases in productivity. Between 1970 and 1995 labour productivity increased by less than 1% per year. Then, suddenly, from 1995 onwards it started to increase way more than 3% per annum. For the next ten years, until the mid-2000s, a steady increase of about 3% per year was maintained. Since the 2009 recession it has declined and we have been doing less than 2% per year. Clearly, we have to reverse this trend again. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 14

FACT IN THE 16 YEARS BEFORE DEMOCRACY, GDP GROWTH WAS 1.55% A YEAR; IN THE 16 YEARS THEREAFTER, IT WAS 3.3%. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 15

Economical development and democracy South Africa embarked on its transition to democracy when it had a per capita income of about $3 000. At the end of 2012, per capita income was approaching $6 800 (assuming an exchange rate of R9 to the dollar). Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 16

An essential step to modernity is to get population growth well below economic growth ECONOMIC GROWTH POPULATION GROWTH Part 1: What makes a modern, successful society? DEMORAPHY We read for you by Prof M Ungerer, USB. Feb. 2014 17

South Africa’s demography is pushing the country towards modernity South Africa’s population growth, including immigration, is now just above 1% per year. The three censuses since 1996 reveal a sharply declining growth rate: 2%, 1.5% and now just above 1% per year. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 18

FACT THE MOST SIGNIFICANT VARIABLE IN SOUTH AFRICA’S DEVELOPMENT IS THE GROWTH IN THE NUMBER OF PEOPLE ACTUALLY WORKING. Part 1: What makes a modern, successful society? EMPLOYMENT We read for you by Prof M Ungerer, USB. Feb. 2014 19

First, let’s get a grip on the numbers  Take the 500 000 new jobs South Africa requires every year. Add to that the 4.5 million people currently unemployed.  You now have an idea of the extent of the unemployment problem in South Africa. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 20

Can South Africa come up with 5 million jobs? First look back. South Africa created 4.3 million jobs in the thirteen years between 1995 and 2008. That comes to about 330 000 jobs per year. Of course, these jobs were not created as evenly as the average suggests. Almost 2 million were created in the four years when the economy grew at 5%+. High growth, high job creation. We got 45% more jobs from an economy that was 60% bigger in 2008 than it was in 1995. Then, the Global Financial Crisis of 2008 caused the recession of 2009. The shenanigans of the investment and merchant bankers, ably assisted by the ratings agencies, cost nearly 900 000 people in South Africa their jobs – and millions of people around the world theirs. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 21

Continued ……. By the end of 2012 we had recovered 70% of those lost jobs. But we were still 30% or 270 000 jobs down on where we had been before the recession struck. So we are clawing our way back, but slowly. The slow speed should not really surprise us: for the three years to the end of 2012 the South African economy grew at an average of only 2.8% per year. Slow growth, slow job creation. What can we expect for the future? There is a simple instrument to help us navigate this issue. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 22

The employment coefficient     The employment coefficient measures the relationship between economic growth and job creation. The National Planning Commission has found that South Africa enjoyed a coefficient of between 0.6 and 0.7 during the decade 1997 to 2008. In other words, for every 1% economic growth, jobs grew at 0.6% to 0.7%. For the three years since 2010, the three postrecession years, the coefficient has been about 0.55. Covering a much longer period, the 60 years from the end of the Second World War to 2007, Professor Frederick Fourie of Free State University puts the coefficient at 0.5. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 23

How much will our labour market grow if our economy grows?    So we know that as long as we keep growing, we will create jobs. The employment coefficient demolishes the “jobless growth” argument. If you have growth, you create jobs. It is impossible to talk about “jobless growth” of 4.3 million jobs were created between 1995 and 2008 and again after the recession of 2009, in spite of meagre growth. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 24

If we are to create jobs, we must overcome three sets of constraints: SLOW GROWTH A POORLY FUNCTIONING LABOUR MARKET THE POVERTY-INEQUALITY TRAP Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 25

Growth is not enough Research and debate on (un)employment in South Africa can be divided into three distinct discourses which give us three different views of the labour market:  The macroeconomic view. “High growth (and lower wages) will lead to higher welfare, more employment and more income for all, including the poor”.  The labour market view. “Whatever the growth rate or business cycle phase, the complex (mal)functioning of the labour market causes unemployment and inequality”.  The poverty-inequality view. “Whatever the growth rate or business cycle phase, the poor, marginalised, powerless and unemployed do not benefit much from the economy”. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 26

The National Planning Commission addresses all three sets of constraints The National Planning Commission recommends, among others things, higher public and privatesector investment. This addresses the macroeconomic view and the need for higher growth. 2. The Commission also recommends improved public transport, better access to employment, densifying cities and locating jobs closer to where people live. 3. The Commission’s recommendations on health, education and crime arguably address the third view – helping to break the poverty-inequality trap. There are no quick fixes. The only way to address the problem of unemployment is a determined, systematic chipping away at the obstacles. 1. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 27

It is possible to have rising employment and unemployment at the same time Year People working % Employed Unemployed % Unemployed 1995 9.5 million 39% 1.9 million 17.7% 2008 13.8 million 45% 3.9 million 21.9% 2012 13.5 million 40.5% 4.5 million 25.7% Social change brings more people into the labour market – urbanisation, women, youth. The more successful we are in our move to modernity, the more people will look for jobs. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 28

FACT MORE THAN 60% OF SOUTH AFRICA’S TAX REVENUE COMES FROM PETROL, VAT, EXCISE AND COMPANY TAXES Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 29

We will have to find non-economic ways of dealing with 5 million unemployed people. Many of the newcomers and currently unemployed will have to be absorbed in low-pay public works projects and community works programmes – the Elastoplast measures. These programmes will acquire greater importance in years to come, not less. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 30

What is an open society? The financier George Soros describes an open society as a universal idea. He translates Popper’s principles into seven specific conditions for an open society:  Regular, free and fair elections  Free and pluralistic media  The rule of law, upheld by an independent judiciary  Constitutional protection for minority rights  A market economy that respects property rights and provides opportunities and a safety net for the disadvantaged  A commitment to the peaceful resolution of conflicts  Laws that are enforced to curb corruption South Africa meets most of these conditions. Even ferocious critics of our current situation admit that we are a much more open society than we once were. Part 1: What makes a modern, successful society? OPEN SOCIETIES We read for you by Prof M Ungerer, USB. Feb. 2014 31

All of this rests on the recognition of individual rights and responsibilities South Africa made an enormous breakthrough to individualism in 1994. The dignity and freedom of the individual has become the new cornerstone of society, not the group to which the individual belonged. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 32

Arrested societies In South Africa, race and ethnicity play a complex role in this dynamic. On one hand, they keep societies closed – and closed off from each other. None of us has escaped from them. They reinforce groups and group-think. On the other hand, all South Africa’s race and ethnic groups have started on the journey to openness, from the tribe to the individual. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 33

The ability to respond to challenges A society’s ability to transform itself – to take different decisions and thus to create different outcomes – depends on how open or closed it is. An open society can change course more easily and move faster in a different direction than a closed one. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 34

Part of openness is the enormous noise that comes from vigorous contestation  Many people find robust, noisy debate unnerving. It undermines confidence and stability.  That is true, but in a democracy robust debate is needed, even if it unnerves people in the short term.  A noisy democracy is a health democracy. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 35

Creative individuals ‘A society is not a collection of persons, but is a network of relations …’ Thus it is ‘human individuals, not human societies that “make” history’. Toynbee refers to the ‘creative personality’; individuals who provide the leadership, vision and energy that enable a society to transfigure itself. Part 1: What makes a modern, successful society? CREATIVE INDIVIDUALS We read for you by Prof M Ungerer, USB. Feb. 2014 36

Moving from group thinking to individual judgement    Creative individuals liberated by that openness then have the freedom to facilitate unlearning and relearning. They become conscious of what has passed for conventional wisdom, for cultural assumption, for habit, for often sacrosanct value and belief. The process of unlearning and learning anew ensures that a society is constantly on the road to renewal and that its culture is continually evolving and being transformed. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 37

The two great moments of unlearning that freed South Africa to start its journey to modernity Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 38

The National Development Plan    The Planning Commission was officially mandated at the ANC conference in Polokwane in 2007. These origins are not unimportant. From this Diagnostic Report flowed a draft national plan on how the country should forge a new path for itself. After wide consultation this was presented to Parliament in August 2012, accepted by cabinet in September 2012 and officially endorsed by the ANC at its five-yearly conference in Mangaung in December 2012. Full circle: the idea of a National Plan had its origin in the ANC, and the ANC signed off on it five years later. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 39

Not consensus, but slow movement  The critical issue is to what extent the state bureaucracy follows the National Plan and makes it ◦ the basis of annual reports, ◦ budget allocations and ◦ performance measurement.  This as happening to a reasonable degree - the NDP will have a significant impact on our future. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 40

FACT EVEN IF ONLY HALF OF THE NATIONAL PLAN IS IMPLEMENTED OVER THE NEXT TEN YEARS, THE COUNTRY WILL BECOME A BETTER PLACE. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 41

Inequality hammers away at modernity  Two obstacles sit squarely in the middle of South Africa’s road to modernity: ◦ our society’s inequality and ◦ its lack of social capital.  In South Africa our levels of inequality are a source of discomfort and concern for many. ◦ They are also preventing a very large number of people from realising their capabilities and contributing to our society.  South Africa will always have inequality, but we need to reduce it. Too much of it is a severe handicap. That’s the bottom line. Part 1: What makes a modern, successful society? INEQUALITY We read for you by Prof M Ungerer, USB. Feb. 2014 42

BRICS inequality Measured by Gini 2008 1 = worst Brazil 0.55 Russia 0.42 India 0.38 China 0.47 South Africa 0.70 Measurement of inequality Inequality is measured by the Gini coefficient, where 1 is the worst position, the most unequal, and 0 is absolute equality, with everyone earning the same. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 43

Yes, it does matter Inequality undermines our safety and stability. Inequality undermines our growth and development. Inequality undermines the society we would like to become. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 44

Yes, it does matter      The reason why inequality matters was expressed by Dr Anton Rupert, one of South Africa’s greatest entrepreneurs and citizens, in 1966: “As jou buurman nie eet nie, kan jy nie rustig slaap nie” (‘If your neighbour does not eat, you cannot sleep peacefully’). Inequality undermines the ideals of what kind of society we want to be. Our inequality belies the ideal of one society and one humanity that our Constitution envisages. It is a huge obstacle in the road ahead. It is entirely appropriate, therefore, that reduction in inequality is one of two key objectives of the National Development Plan. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 45

There has to be some way out of here 1. 2. 3. South Africa’s economy must grow much stronger. The National Planning Commission emphasises that intensive or labour-absorbing growth will be important. Social-democratic policies aimed at redistribution can also help to reduce inequality. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 46

Money is financial capital. You keep that in your bank account. Skills are your human capital. You keep that in your head. Social capital is what binds you to other people. It is kept in your relationships with others. Part 1: What makes a modern, successful society? SOCIAL CAPITAL We read for you by Prof M Ungerer, USB. Feb. 2014 47

Social Capital – the glue of society  In a homogeneous society, social capital is strong because the values and norms are self-evident. Everyone takes them for granted.  In a heterogeneous society like ours, building social capital has to be a conscious effort.  Stolvels are social capital made visible. Members come together on a basis of mutual trust. They form close-knit social networks, with strongly held mutual values. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 48

Putting social capital and economic growth together GETTING RICHER Steady progress WEAK SOCIAL CAPITAL STRONG SOCIAL CAPITAL Decline & decay GETTING POORER It is clear which quadrant every society would like to be in – and which quadrant it would rather not be in. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 49

Social capital and economic growth  The message is clear. It is not enough for South Africa to focus on economic growth, direct investment and the other more tangible drivers that economists always emphasise.  Progress is about getting richer, but it is also about having more glue, more social capital.  Social capital may be a frustratingly amorphous and intangible force for number-crunching analysts, economists and business people, but it would be extremely unwise to push it aside for these reasons. It’s an idea whose time has come. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 50

Corruption It doesn’t help to compare South Africa with the UK or the United States. Let’s compare apples with apples. How does corruption in South Africa compare with the other BRICS countries?  In 2012 Transparency International, which measures how free countries are of corruption, ranked Russia 133rd of 176 countries. South Africa shared the 69th position with Brazil – highest of the BRICS countries.  The 2012 World Economic Forum Competitive Report asked business people, ‘What are the most problematic factors when doing business?’ South Africa scored much better than Russia and India on corruption, and about the same as China, although behind Brazil.  The Heritage Foundation, an American research house, did a similar exercise. South Africa scores best of the BRICS countries.  Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 51

South Africa compared to the BRICS Corruption is not about the colour of your skin, but about the strength of your social norms. Russia proves that conclusively. Transparency International RANKING WEF Com Report Heritage Foundation Average: 40.3 Brazil 69 6.0% 57.1 Russia 133 20.5% 51.1 India 94 15.8% 55.2 China 80 9.2% 51.9 South Africa 69 9.0% 61.8 Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 52

Putting social capital and economic growth together GETTING RICHER STRONG SOCIAL CAPITAL WEAK SOCIAL CAPITAL Steady progress SA 2000s SA 1980s Decline & decay GETTING POORER Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 53

There is no Super Glue … but there is you There are some definite things they can do:  Act visibly against corruption and nepotism.  Be ruthless with incompetence.  Make merit a much bigger cornerstone of our civil service (I long for the day when we will have entrance exams before people can join the civil service, as most successful and developed countries have).  Have our children recite the Constitution in our schools and then discuss it in class. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 54

Social capital is also your responsibility begin small  Do not litter, pay your traffic fines, respect others.  Isn’t that simple – you do not have to wait for government – just go about your daily life.  Your biggest contribution may be to avoid cynicism – it destroys social capital because you distance yourself from that which is common. Not helpful. Required Mental model Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 55

Part 1: What makes a modern, successful society?  The result of this examination is that, in general, South Africa, has what it takes to be a modern successful society and the best way of achieving this is to follow the National Development Plan.  "Even if only half of the national plan is implemented over the next ten years, the country will become a better place," is Landman’s confident prediction. Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 56 Part 1: What makes a modern, successful society?

Part 2: The muddle-through economy  The second part is called The Muddle-Through Economy.  "To appreciate South Africa’s possible growth rate in the future we must, again, look back and see what has been achieved. Part 2: The muddlethrough economy We read for you by Prof M Ungerer, USB. Feb. 2014 57

SA Economics Overview of growth performance History Average 16 years before 1993 1.6% Average from 1995 to 2010 (16 yrs) 3.3% Current Since crisis actual average p.a. 2.8% For 2013 2.7% Forecasts for next two years 3.5% Future National Plan 2030 envisages 5.4% "Clearly, the advent of democracy has brought about a considerable improvement in economic growth rates. In fact, growth has more than doubled," Part 2: The muddlethrough economy We read for you by Prof M Ungerer, USB. Feb. 2014 58

Balance sheet of South Africa’s growth forces Pushing SA growth down Global environment Domestically: political confusion even post-Mangaung, strikes, social unrest Huge social and human deficits Poverty, inequality, unemployment Crime, health, education Ineffective public-sector institutions (e.g. local government) Social capital or social cohesion: - Corruption (although better than our peers, it’s a problem) - Distrust between major players Tensions of transition: mining and agriculture Lower productivity: now below 2% Part 2: The muddlethrough economy We read for you by Prof M Ungerer, USB. Feb. 2014 59

If we want a higher growth rate, we must first change the balance sheet. There is a way to do this, and that is by implementing the National Development Plan. The extent to which we implement the Plan will be the extent to which we change the balance sheet. Part 2: The muddlethrough economy We read for you by Prof M Ungerer, USB. Feb. 2014 60

Part 3: Living with ambiguity  The third part is called Living with Ambiguity.  To illustrate what he means, Landman shows two photographs taken on the same day in February 2010. One shows President Jacob Zuma in the cockpit of a new R1bn SAA airbus, while the other shows a service delivery protest at Ermelo.  If you want to live in South Africa you need to live with the ambiguity of these two pictures. Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 61 Part 3: Living with ambiguity

To live in this country, you need the ability to live with ambiguity If you can’t cope with ambiguity, I recommend Canada or Australia. Part 3: Living with ambiguity We read for you by Prof M Ungerer, USB. Feb. 2014 62

It is my belief that the psychological and spiritual maturity of an individual, of a group, even of a nation, is found precisely in its capacity to tolerate ambiguity and ambivalence – and the anxiety generated by both of them. - James Hollis, Through a Dark Wood Part 3: Living with ambiguity We read for you by Prof M Ungerer, USB. Feb. 2014 63

Part 4: A bigger ambition  The final part is called A Bigger Ambition.  A student asked Landman how South Africa develops a bigger ambition. At the time he was not able to respond to the question, but now Landman believes that if we want to realise a bigger ambition, we must consciously choose to do so.  If not, "we will be characterised as the generation that surrendered South Africa to mediocrity." Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 64 Part 4: A bigger ambition

Three stepping stones to meet our ambitions Currently the South African government is building its growth strategy on three big stepping stones:   A massive infrastructure development plan. It entails new power stations, electricity transmission lines, transport infrastructure, water supply and rehabilitation of dams, amongst others. There is also huge investment in social infrastructure involving housing, schools, two new universities, solar water geysers for poor households and the like. Part 4: A bigger ambition We read for you by Prof M Ungerer, USB. Feb. 2014 65

Three stepping stones to meet our ambitions (continued)  The industrial policy action plan. Known as IPAP, the plan aims to stimulate manufacturing and promote the industrialisation of South Africa.  Various proposals under the National Development Plan. These cover a range of areas, ◦ ◦ ◦ ◦ from promoting exports to support for small business and a more responsive labour market. At the heart of its vision for South Africa by 2030 is a growth rate of 5.4% p.a. Part 4: A bigger ambition We read for you by Prof M Ungerer, USB. Feb. 2014 66

Moving beyond economics   Growth also requires the fulfilment of some intangible and non-concrete conditions. Pesky items like confidence, trust, commitment, a sense of the future. The issue is further complicated by the fact that although growth is a political responsibility, it is mostly achieved by the private sector.  The two sectors are very dependent on each other.  That is particularly true in a mixed economy like South Africa’s.  Therefore we need confidence and trust between government and the private sector.   Leaders from both sides will have to bridge this gap if we want to prosper. We may find that by focusing on social capital, we get economic growth as the by-product. Part 4: A bigger ambition We read for you by Prof M Ungerer, USB. Feb. 2014 67

The message is clear. We must just carry on. Put one foot in front of the other. With a sense of confidence. Part 4: A bigger ambition We read for you by Prof M Ungerer, USB. Feb. 2014 68

Final advice from the author     The Long View is information that you can hold on to. It gives you the trendlines rather than the headlines. You can disagree with me if you like. But that is how I see things. Next time you’re standing around a braai or sitting around the dinner table and someone starts gaaning aan about the latest drama, you don’t need to go into a tailspin. Answer him with the facts. Then carry on making the most of your meal. And of this country. – JP Landman We read for you by Prof M Ungerer, USB. Feb. 2014 69

Additional material from the book 70

Establishing the authority of the individual The Magna Carta granted the recognition of ‘freemen’ and limits to the power of the king.  This embodied the move from a kind of tribal authority based on magical considerations (the king was ordained by God, with divine status) to a recognition of the authority of the individual.  Many, many societies since then have travelled the road from the authority of the Divine King or Chief or Big Man or ‘Ons Leiers’ (our leaders) to the authority of the individual. Large parts of South Africa are still travelling that road, and have certainly not completed the journey, but they journey is happening.  Just like King John, there are some who try to wriggle out of the values and implied behaviour of the South African Constitution. But almost twenty years on from its promulgation, the Constitution is largely intact. Part 1: What makes a  modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 71

It is interesting to see what government redistribution can do      If you bring the social grants to the poorest in society into the equation, the Gini figure goes down to 0.65. Add free services, water, electricity and sanitation, and it goes down to 0.61. Add progressive income tax, and the Gini goes down to 0.59. Government redistribution through the budget brings down our Gini coefficient. The conclusion is not that our inequality is not that bad (it is), but that orderly redistribution through the budget can certainly roll it back. Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 72

50 50% of South Africa’s income goes to 10% of the population. 50% of South Africa’s population earns 10% of its income. 50 Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 73

….. things are ‘a-changing’ 200% --------------------------------------------------------------------------------------------------------------------------------------- DEVELOPMENT OVER THE TEN YEARS 2001 TO 2011 118% The average increase in the income of coloured households 145% The average increase in the income of Indian households 169% The average increase in the income of black households 150% --------------------------------------------------------------------------------------------------------------------------------------------- 88% The average increase in the income 100% ---------------------------------------------------------------------------------------------------------------------------------------------- 0% 78% Inflation 50% ------------------------------------------------------------------------------------------------------------------------------------------------ Part 1: What makes a modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 74

It’s easy to see when the glue is missing Many of the failings of South Africa’s weak government institutions can be ascribed to a fundamental lack of social capital.  Corruption is an obvious example. If civil servants hold values of service and a belief that ‘we are here to serve the public’, their behaviour leads to effective institutions and government. If they use their positions to enrich themselves and extract money from the public through bribes, it obviously leads to less effective government.  The work ethic is another example. We are one of the highest spending nations in the world when it comes to education. Money is not the problem. It is the work ethic: the teachers who are not there; the principals who do not manage; the children who do not attend class.  Social capital makes it possible to have better social organisations, including more efficient institutions. Part 1: What makes a  modern, successful society? We read for you by Prof M Ungerer, USB. Feb. 2014 75

 "A growth in the economy of 3% gives South Africa an extra R11 million every hour of every day," is his summing up of what a muddle-through economy generates. Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 76 Part 2: The muddlethrough economy

Part 2: The muddle-through economy   In his balance sheet of South Africa’s growth forces, Landman lists the global environment; political confusion post-Mangaung social and human deficits; crime; health; education; ineffective public-sector institutions; corruption; distrust between major players; tensions of transition; and lower productivity as forces pushing growth down. On the positive side, he lists infrastructure investment; rising employment; property rights and a sound legal system; an ability to adopt new technologies; South Africa’s increasing relations with the Brics countries; and its trade links to the rest of sub-Saharan Africa. "Growing at 3% doesn’t mean we’re stuck in the mud or going backwards. It means we’ll muddle through. We’ll make progress." Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 77 Part 2: The muddlethrough economy

Part 2: The muddle-through economy          Landman points to factors that suggest South Africa is on the right path. The economic growth rate comfortably exceeds population growth, even with immigration. That means per-capita income will continue to rise, increasing the wealth of the nation. Income per capita in South Africa is above the $6 000 (R61 360) threshold at which studies show the chances of democracy flourishing are 80 percent and rising. That’s because a wealthier population is more independent of the state, and better able to organise in its own interests. Asked about the gyrations of the currency, Landman says they are the inevitable consequence of a floating exchange rate – a choice South Africa made many years ago. “We’re running a huge current account deficit… the difference between what you save and what you invest,” he says. The government’s massive infrastructure-build programme means investment “far exceeds savings” and produces the huge deficit, funded by capital inflows. “The danger for South Africa is not having a deficit which is financed, the danger is having a deficit which is not financed. That’s the real danger, that’s the position in which Ireland, Greece and all those countries found themselves – no one was prepared to send money there.” However, the cheaper rand made the country more attractive for investors “and in that sense it can probably self correct”, Landman said in an interview yesterday. Source: Independent on Saturday SA’s future bright – analyst August 31 2013 at 05:27pm By Craig Dodds We read for you by Prof M Ungerer, USB. Feb. 2014 78 Part 2: The muddlethrough economy

Part 2: The muddle-through economy        A balance sheet of factors supporting and hindering economic growth suggests the country would not achieve an average growth rate above 3 percent for the next decade. Unemployment will consequently continue to be painfully high. “Three percent should create roughly 300 000 jobs a year and so you keep on expanding the labour market, you keep on employing more people. As you employ more people, you expand the taxpaying base and improve the base of society… but I don’t think you will roll back unemployment,” Landman said. Surprisingly, this, too, is a byproduct of progress. As more jobs are created and people head to urban centres, more of the working-age population join the ranks of the economically active – those either seeking work or actually employed. This gives rise to the “paradox of the South African labour market”. “We are employing more people, we are pushing up… the absorption rate, the percentage of people who are working, but at the same time we also have more unemployed people,” Landman says. In this period of transition, unemployment would remain high, but it was a part of progress to a modern economy We read for you by Prof M Ungerer, USB. Feb. 2014 Source: Independent on Saturday SA’s future bright – analyst August 31 2013 at 05:27pm By Craig Dodds 79 Part 2: The muddlethrough economy

‘… the optimists have it, not because they are always right, but because they are positive. Even when wrong, they are positive, and that is the way of achievement, correction, improvement and success. The one lesson … is the need to keep trying. No miracles. No perfection. No millennium. No apocalypse. We must cultivate a sceptical faith, avoid dogma, listen and watch well, try to clarify and define ends, the better to choose the means’. - David Landes, The Wealth and Poverty of Nations – Why some are so rich and some so poor Part 4: A bigger ambition We read for you by Prof M Ungerer, USB. Feb. 2014 80

    Headlines do contribute to a sense of gloom, while what Landman calls “trendlines” – the longer view – help to put events in perspective. Nevertheless, news and contestation are part of a healthy modern society that is capable of adapting to change, he says in the book. “Many people find robust, noisy debate unnerving. It undermines confidence and stability. That is true, but in a democracy robust debate is needed, even if it unnerves people in the short term,” Landman writes. “A cacophony of noise is indicative of a healthy, open society at work, struggling to find solutions to difficult problems.” Source: Independent on Saturday SA’s future bright – analyst August 31 2013 at 05:27pm By Craig Dodds We read for you by Prof M Ungerer, USB. Feb. 2014 81

 "Over a ten-year horizon we will see progress, but it will be incremental, and, in some respects, it will be excruciatingly slow".  This sentence is the conclusion that Landman reaches after delving beyond the headlines to assess South Africa’s structural constraints and opportunities. Source: BOOK REVIEW: The Long View by Helmo Preuss, 03 September 2013, We read for you by Prof M Ungerer, USB. Feb. 2014 82

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