ANTHONY BUTLER: If the cuts start, praise will stop, and blame begin

The finance minister’s chances of implementing reform are small, as shrinking the public sector will hit resistance

Business Day

02 JULY 2020

In a democracy, the survival of political parties and their leaders turns on praise and blame. When times are good, politicians claim credit for citizens’ happy circumstances to boost their popularity. When times are hard, however, they have to evade blame to survive.

Finance minister Tito Mboweni’s supplementary budget last week indicates that we are entering a new era of blame-centred politics. GDP per capita will probably not return to pre-Covid-19 levels for about a decade — and that’s on relatively optimistic growth assumptions.

Advancing a “passive scenario”, the minister warned that the hippo jaws of spiralling debt may eat our children’s futures: business as usual will bring a sovereign debt crisis. Mboweni envisaged, but did not detail, an “active scenario”, in which a government-led reform programme and fiscal consolidation would stabilise debt by 2024.

Given the major expenditure cuts and policy shifts it demands, does this scenario have any credibility? The politics of praise and blame suggests not.

Although the ANC thinks it has a developmental state, our state is not in fact geared towards growth and investment. It is primarily a welfare state. Ministers cherish welfare programmes that bring them popularity, such as free electricity, water and sanitation, and social assistance programmes that reached over 17-million beneficiaries before lockdown.

Basic education may be an “investment” that is crucial for a productive economy, but budgets have increasingly become devoted to the welfare of teachers. Even explicitly developmental institutions such as the parastatals have become welfare state vehicles, offering high levels of remuneration and employment and providing corporate welfare through their supply chains.

Creating a welfare state is relatively easy. Politicians give money and jobs to specific groups of people who are very grateful. Opposition from widely dispersed taxpayers can be ignored.

Taking benefits or jobs away is a very different matter, because it threatens elected officials with severe unpopularity. Psychologists have identified a “negativity bias”: people will fight much harder to retain what they have than they fought to get it in the first place.

Reform politicians have to battle concentrated groups of current beneficiaries, while diffuse and uncertain gains, such as “fiscal stabilisation”, have few organised champions.

How then can politicians bring change without being blocked and blamed? They can occasionally attribute responsibility to someone or something else. Blaming the Covid-19 virus for painful changes may work for a few months.

In a crisis, meanwhile, reforms can be presented as an attempt to save the welfare state for our children, rather than as a cruel project to dismantle it. But this requires a united front between government and opposition parties, and the EFF and DA are poised to capitalise on popular discontent with the ANC leadership. So too are unscrupulous ANC leaders who say there is an easy way out — if only Cyril Ramaphosa could be removed.

The now routine strategy of blaming “white monopoly capital” for human suffering is no longer emotionally powerful. It would also be ruinously counterproductive to escalate this blame game, because worsened business sentiment will quickly deepen the crisis.

Mboweni’s “active scenario” reform project is not absolutely impossible to advance, but its success is highly improbable. The government cannot undertake the necessary reforms to stabilise debt and promote economic growth without opening itself up to a huge and multifaceted political counter-reaction.

Like many other governing parties before it, the ANC leadership does not know how to salvage the situation while also surviving. In the past, it has blamed businesses, blamed the ratings agencies, and blamed the banks. As the crisis deepens and unfolds, it is very likely to follow another well-trodden pathway: it will blame the IMF.

• Butler teaches public policy at the University of Cape Town.