When a crisis is not a crisis

It sometimes seems that SA is inherently unstable and beset by calamities that threaten to unravel the whole fabric of society. However, in a conservative and deeply resilient country such as SA, an apparent crisis is usually not a real crisis.

At first sight, President Cyril Ramaphosa’s ambitious drive to boost foreign and domestic investment cannot be reconciled with his calls for land expropriation without compensation. Surely a crisis of confidence in property rights will destroy investor confidence?

The trouble with a real catastrophe is that once it strikes it is usually too late to do much about it.

The most astute politicians and business moguls recognise this fact. For this reason, they try to identify the potential solutions to major challenges in advance. Only then do they engender a sense of crisis that allows a chokehold on policy change to be released.

SA’s apparent crises are often the creations of canny politicians and businesspeople working in cahoots.

Take the democratic transition, in which Ramaphosa played such a crucial role.

The negotiators on both sides could see what a sustainable political settlement would entail. Their real challenge, however, was to bring their own constituencies into line.

How could white racial extremists, leftist anticapitalists and African nationalists be persuaded to support a constitutional settlement based on human rights and commerce? Only by creating a sense of historic crisis.

This admittedly violence-fuelled uncertainty encouraged unexpected compromises to be reached. Ultimately, it resulted in a settlement that could never have been sold to either side based on rational dialogue alone.

Less than a decade later, an HIV/AIDS calamity threatened fiscal crisis, social disintegration and the destruction of democratic politics. A crisis-awakened country responded with massive prevention and care interventions and with the world’s largest treatment programme. Conflict over HIV entrenched the legitimacy of an activist judiciary and established the fallibility of overbearing presidents.

It is arguable that the greatest challenge for AIDS policy in SA today is that the HIV epidemic is no longer viewed as a crisis. New HIV infections have fallen by half since 2010.

However, SA still has the largest epidemic in the world, with more than 7-million people living with the virus.

A little more than half of HIV-positive people are receiving antiretroviral therapies, rather than the nine out of 10 that is the government’s stated goal.

In SA, a crisis is sometimes needed to get the right things done. A land expropriation crisis may therefore be the opposite of what it seems: an opportunity rather than a threat.

Ramaphosa doubtless had little choice but to act on the resolution adopted by the ANC at its conference last December, but the political energy that has been unleashed by the “land question” may now be channelled towards long-anticipated and benign policy changes that have been blocked by entrenched interests.

Vested interests take many forms: traditional leaders who deny their subjects control over their own land in much of rural SA; commercial farmers who have used evictions to reduce their exposure to perceived political risks; municipalities that have failed to document ownership in peri-urban areas; parastatals and government departments that have blocked the use of their land for housing and economic development; and property owners who have used political donations and litigation to protect their private economic advantages.

Engendering a sense of crisis always carries risks, of course.

Having a land crisis in SA, however, may ultimately be far less hazardous than not having one.

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

Public sector wage freezes

As the government and trade union negotiators lock horns in the Public Service Co-ordinating Bargaining Council, there has been a growing clamour in the business community for the public sector wage bill to be slashed. After all, the ANC describes SA as a “developmental state” in which investment should take priority over consumption. Diverting a third of government spending into wages suggests precisely the opposite tendency.

The government has been forced to cut key grants for municipal infrastructure, water services and urban settlements to accommodate higher pay for more numerous public servants. A growing public sector payroll, meanwhile, forces the finance minister to borrow more, thus crowding out private investment.

Unilaterally imposed public sector pay cuts or freezes offer a tempting route to fiscal consolidation. An across-the board 10% wage cut could, in theory, reduce public spending by a whacking 3%.

But governments elsewhere have accumulated a wealth of experience about the risks of sweeping cuts or freezes. The “conditionalities” imposed by international lending institutions have often damaged countries’ longer-term economic and developmental prospects.

Since the global economic crisis unfolded in 2008, numerous countries have experimented with “austerity budgets”, featuring public sector pay freezes or cuts. The results have been at best mixed.

SA can learn the following lessons from these experiences:

• Wage cuts tend to affect aggregate demand unexpectedly hard because public sector workers have a high propensity to consume. Cuts should therefore be concentrated among highly paid public servants. Government negotiators’ current proposals, which favour employees on levels one to seven and mildly penalise levels 11 and 12, do not go anywhere near far enough;

• Increased taxes tend to promote better distributional outcomes than spending cuts. Carbon taxes, sin taxes and perhaps even land taxes can also contribute to meeting wider policy objectives;

• Approaches that spread the pain around, such as general recruitment freezes and pay cuts for the workforce as a whole, tend to result in suboptimal outcomes. Pay rises should always be linked in some way to productivity gains. Freezes of frontline posts in education, nursing and policing invariably have negative long-term consequences for human and economic development. Cuts should instead reflect a considered strategy to streamline government operations. President Cyril Ramaphosa’s pledge to “review the configuration, number and size of national government departments” is thus welcome;

• The public service is the key motor for class mobility and it has been the vector through which hundreds of thousands of black citizens entered the middle class. The government needs a clearer sense of what such sociohistorical gains are worth to the country and of how to price them; and

• The less tangible costs of freezing recruitment and pay should not be underestimated. When downsizing or cost-cutting, the best private firms prepare detailed implementation and communication plans, and follow these up with employee care and retraining programmes. Downsizing, however, still affects motivation, institutional memory and performance. In the public sector, pay or recruitment freezes that are experienced as essentially arbitrary will similarly undermine employee loyalty and engagement to the detriment of work quality and performance.

The government needs longer-range strategies for improving the quality of state spending and the performance of public servants.

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

The DA’s crisis

The DA is in crisis. There are challenges to the chairman of the party’s federal council, James Selfe, who has guided the party for more than a decade.

The effectiveness of party president Mmusi Maimane has been questioned by the DA’s own researchers. Controversies swirl around senior party figures, including Western Cape Premier Helen Zille and City of Cape Town mayor Patricia de Lille.

The DA’s strong performance in the 2016 local government elections was built on hypermotivated white voters in Gauteng and their coloured counterparts in the Cape. It is ironic that tribalism in politics is now exhibited most visibly by the DA. But it is wrong, if tempting, to attribute all the party’s problems to racial politics.

Ideas matter. Some party activists remain wedded to the curious variant of liberalism that guided the Democratic Party. The current leadership includes one prominent proponent of creationism and homophobia, a black consciousness activist, and a champion of xenophobia and free market access to hair products. No wonder electors are confused.

 The underlying cause of the DA’s problems perhaps lies in SA’s one-party dominant party system. The liberation movement is everywhere, telling voters what they want to hear, dominating policy debates and belittling opposition politicians. It is curious that the ANC has survived its own appalling governance record and the incoherence of its current policy proposals. It is even more puzzling why no opposition party or coalition has come close to defeating it at national level.

Certain key factors explain the resilience of swaggering, dominant parties such as the ANC. They make full use of the advantages of incumbency, shamelessly allocating jobs, contracts and state resources to party supporters. Their seemingly inevitable victory discourages office-seeking politicians and energetic volunteer activists alike from supporting any other party. Right now, it is still the ANC that offers a route to national office. What rational, young politician would join a party that cannot reliably deliver a seat?

Opposition parties such as the DA and the EFF adopt “noncentrist” policies that do not appeal to typical voters. Because candidates and activists joined with little hope of winning, they tend to be a bit crazy: many of them are ideologues, extremists or sociopaths, such as Julius Malema or Zille. Socioeconomic concerns preoccupy most South African citizens. The DA is obsessed by corruption and a narrow swathe of urban and peri-urban policy issues. Opposition leaders such as Zille indulge in ideological posturing that they must know is damaging to their parties’ electoral prospects.

The DA is also trapped by its funders. It has allowed commercial farmers to waste water resources at great cost to the Western Cape’s economy. The party has bowed and scraped before these dinosaurs, and such grovelling can only be explained by party donations.

The DA’s credibility will rest on its coalition-building strategy. It has benefited handsomely from previous liaisons with the Inkatha Freedom Party, the National Party and the Independent Democrats. But the DA’s alliance of convenience with the EFF is destined to fall apart in the very near future, generating great animosity.

The ideological distance between the two parties will grow if Cyril Ramaphosa keeps occupying more of the political middle ground. Who will be the DA’s partner now?

The DA and the EFF will have to be more ruthless if they are to continue to grow. They need to find out where the rough centre of ground in SA politics lies, drag themselves towards it, message smartly to different constituencies and silence their egregiously self-indulgent leaders.

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

Energy system reform hurdles

The challenges facing new Energy Minister Jeff Radebe were thrown into stark relief this week by the World Economic Forum’s (WEF) report on Fostering Effective Energy Transitions.

The report highlighted a global need to reach a billion people currently without access to energy, to keep costs affordable, to reduce carbon emissions, and to accommodate and exploit new technologies.

The Forum’s Energy Transition Index (ETI) measures how well national energy systems promote inclusive economic growth, secure reliable access to energy, and advance environmental sustainability.

It also assesses “transition readiness” — the ability of a country to secure the capital, skills, effective regulatory mechanisms, stable institutions, and supportive infrastructure required to facilitate a transition to a low-carbon economy.

Like many such composite indices, ETI rests on questionable methodological foundations, but it can, nevertheless, help governments understand how they are performing relative to peers and learn lessons from others.

It is worth reflecting on why SA placed second to last out of 114 countries in WEF’s league table.

SA’s energy challenges encompass coal production and the governance of the liquid fuels sector. But the most pressing problems lie in electricity. These problems were worsened by, but did not originate in, Jacob Zuma’s two dismal terms as president.

 

These market-friendly proposals reflected international trends, and were driven by environmental considerations, new technologies that reduce capital intensity in generation, and advances in computer-based control systems that undercut conventional “natural monopoly” justifications for energy dinosaurs such as Eskom.

An unholy alliance in SA blocked desirable reforms. Unions bewailed “privatisation”. Energy-intensive businesses protected their opaque — and often apparently corrupt — long-term contracts with Eskom. ANC elites had already begun to use parastatals such as Eskom as a source of patronage and rents.

In this way, a sadly predictable ANC alliance of leftists, crooks, and big business empowerment partners insisted that Eskom must be left in control of generation and the grid. Private investment was effectively blocked.

The key consequences, in short, have been an absurdly inefficient parastatal, a tripling of electricity prices that has hit economic growth and the poor, load shedding, cash flow crises, debt junking, and systemic risks to the entire economy.

The one bright light has been some investment in renewables by private power generators.

The Electricity Regulation Act of 2006, and associated regulations promulgated in 2009, empowered the energy minister, in 2011, to formulate an Integrated Resource Plan (IRP) that set out a proposed generation mix in the light of demand and cost projections.

In consequence, the government invited R150bn of private investment in wind, photo-voltaic, and concentrated solar power in the years that followed. This represented just 3% of energy supplied to the grid — but it set out a potential future path to a sustainable economy.

Eskom adopted its usual blocking strategy, generating dubious statistics, menacing private generators, and eventually, in 2016, threatening to exclude private generators from the transmission grid.

The IRP became a political football. Zuma’s five morally challenged energy ministers, shadowy energy officials, and wily Eskom senior managers, together defended apparent abuses of procurement powers and perpetuated Zuma’s personal project of nuclear power procurement from the Russian Federation.

While Zuma’s ministerial underlings were undermining SA’s prospects of sustainable and affordable energy, the rest of the world had woken up. Renewable prices fell globally as a result of technological breakthroughs in solar and wind generation, and falls in the cost of storing electricity.

While some South African “expert” consultants promoted coal and nuclear generation, and disparaged renewable “utopias”, international orthodoxy was radically changing. As Bloomberg’s New Energy Finance observed last year, renewables will probably account for 72% of global power-generation investment by 2040.

Renewables are already cheaper than coal and nuclear by any sane measures. Renewable generation costs are likely to drop by two thirds for both solar and wind power over the next two decades.

It is little wonder that even in nuclear-friendly China, wind-power investments have outstripped nuclear since 2012.

The real motivations for nuclear power generation have disappeared with Zuma’s resignation. It will, however, take time for propagandist and compromised officials to be removed, and for the disinformation campaign that government officials and industry consultants have engaged in for more than a decade to be neutralised.

Reason and evidence will hopefully now play a more decisive role in decisions about SA’s future energy mix.

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

Zombie MPs

What on earth has happened to ANC MPs? Two decades ago, the party’s legislators helped forge SA’s new Constitution and overhauled a vast swathe of apartheid-era legislation.

Soon after these triumphs, however, many of the governing party’s MPs moved into a dormant or even vegetative state. Party whips and the caucus code of conduct damped any enthusiasm they might have felt for parliamentary oversight.

Any committee chairman showing abnormal signs of intellectual activity was quickly appointed a deputy minister. The quality of ANC MPs steadily declined as the legislature became a retirement home for divisive provincial politicians.

Even the arrival of the noisy EFF in 2014 did not rouse most ANC members from their slumbers. But almost all parliamentary zombies have now been jolted into life by the shock of Cyril Ramaphosa’s elevation to the presidency.

Every day now, a torrent of statements pours out of the parliamentary media office. Earlier this week, the portfolio committees on police and on justice and correctional services castigated ministers and former ministers for “inadequate responses” to questions about the prosecution of alleged state-capture malefactors.

The portfolio committee on social development also hauled South African Social Security Agency directors over the coals for inadequate audit processes. The portfolio committee on public enterprises said it was “not happy or impressed” by how former Eskom board chairman Ben Ngubane had responded to its questions.

There are four possible explanations for the extraordinary revitalisation of once lethargic committee members and chairmen.

First, we may have arrived at a genuine watershed moment with regard to the moral character of SA’s political elites. MPs may have been shocked by how close the country came to full-scale state capture. Recognising how little they did to avert such a disastrous situation, ANC MPs are now driven by a redoubled personal determination to serve the people and by a deeper than ever moral rectitude.

Second, the ANC still lies in a post-conference interregnum. Since Ramaphosa has yet to secure an electoral mandate, party activists are now free to “follow their conscience”, although sceptics may feel that many MPs may not know what this entity is or where to find it.

Third, the reanimation of zombie MPs may have been initiated by paranormal clairvoyance about their presence on or absence from future candidate lists. After the Polokwane conference in 2007, when Jacob Zuma became ANC president, even doddery ANC parliamentarians staggered to their feet to lambast Thabo Mbeki’s loyalist ministers — often in the hope of future rewards from Zuma. Today, a Ramaphosa-controlled list process for the 2019 elections is again concentrating MPs’ minds.

Finally, ANC MPs may have been recruited to perform walk-on roles in the most ambitious theatrical performances yet conceived in post-apartheid SA. Given that state capture and parastatal looting were instigated and realised by multitudes of ANC politicians and their allies, these numerous malfeasants simply cannot all be punished without putting much of the party behind bars.

For this reason, a spectacular drama of parliamentary interrogation, castigation and humiliation is required to avert the need for a comprehensive (and also bourgeois-liberal) programme of prosecution and punishment.

Such a drama will smooth the way for a more thorough and legalistic covering of the tracks, one that can be accomplished only by a presidential commission of selective inquiry into state capture.

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

Opposition party weakness

Cyril Ramaphosa’s elevation to the presidency of the ANC was a close call. Some of his backers were swayed by their fear that a victory for Nkosazana Dlamini-Zuma would plunge the ANC to defeat in the 2019 elections.

Fear of the electorate also hastened Jacob Zuma’s removal from the state presidency. A “dignified exit” in reality allowed the ANC as a whole to turn on its former leader, so marking a clear dividing line between a discredited “old ANC” and Ramaphosa’s allegedly quite different party.

Wednesday’s painful budget also sent a signal to the people. Tax rises were spun as a result of Zuma’s disastrous decisions and his corrupt administration. Acting Finance Minister Malusi Gigaba — perhaps in exchange for the promise of a smaller but still gratifying blue light convoy — blamed Zuma for the unanticipated higher education funding announcement in December.

Ramaphosa’s political priority is presumably to deliver a resounding victory to the ANC in the 2019 elections.

His first cabinet reshuffle, delayed only by the budget, will be gratifying for almost everyone.

Meanwhile, Ramaphosa has already ducked blame for the abuses of the Zuma era – despite being Zuma’s deputy since 2014.

As general secretary of the National Union of Mineworkers in the 1980s, Ramaphosa handled negotiations with the bosses. His sidekicks, such as James Motlatsi, sold the deals that he struck to union activists. Now that Ramaphosa is state president, his juniors will once again justify his actions to ANC members. His focus will be on key actors outside the ANC: opposition parties, investors, and swing voters.

Smiling warmly, in the manner of an affectionate crocodile, the president has reached out to the two key opposition parties in Parliament, the DA and the EFF. It has been widely reported that he “held out an olive branch” to them in a “spirit of national unity”.

If the DA participates in Ramaphosa’s talk-shops and policy conventions, the party will find it hard to criticise him when the election campaign begins. If the party refuses to participate, DA leaders will be portrayed as unpatriotic cynics, turning their backs on the new spirit of national unity. It is already easy to imagine the DA’s young leader, Mmusi Maimane, turning to the ANC leader for wise counsel.

The Ramaphosa crocodile is even more dangerous for the EFF. He is a son of Soweto, whose parents moved to Johannesburg from what is today Limpopo. His personal shadow falls over the EFF’s most promising regional and ethnic footprints.

Enthusing about a murky ANC resolution on the expropriation of land without compensation, Ramaphosa is now stealing the EFF’s policy thunder.

To sidestep Ramaphosa’s dubious advances, the DA may feel compelled to move right and the EFF left. A conservative and centrist electorate might then be enticed to remain with a centrist “new” ANC.

The opposition parties’ disarray will worsen when the quasi-coalitions they formed in major metropolitan authorities in 2016 start to fall apart. Despite steering shy of formal coalition agreements, the EFF supported DA candidates for mayor, in effect handing minority control of some of SA’s biggest urban centres to the official opposition.

The red berets have to destroy these sinful collaborations with white monopoly capital before the national and provincial election campaigns begin. This means attacking the DA.

While the opposition parties fight mock battles on the margins of politics, a rejuvenated — if essentially unreformed — ANC could walk to an easy victory through the middle ground of politics.

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

Boiling frogs and lobsters

In one of the most exciting Swiss news stories to break in decades, the country’s Federal Council issued an order in January banning cooks from placing live lobsters into pots of boiling water.

British lobby group Crustacean Compassion celebrated this animal rights triumph, noting that Switzerland has joined a small number of progressive states that have extended animal welfare protection to decapod crustaceans.

Biological anthropologist Barbara King, author of Personalities on the Plate: The Lives and Minds of Animals We Eat, believes that crustaceans feel pain. Many scientists and philosophers disagree, but an official from the Swiss Federal Office of Food Safety and Veterinary Affairs says policy-makers should act on the basis of a precautionary principle.

The enlightened treatment of lobsters has obvious policy implications for the ANC. In his memoirs, the late Mario Oriani-Ambrosini, the parliamentarian, recalls Cyril Ramaphosa’s account of the ANC’s strategy for dealing with whites. “It would be like boiling a frog alive, which is done by raising the temperature very slowly.”

Oriani-Ambrosini believed that the ANC would gradually introduce laws transferring land and economic power from white to black hands, “but without taking too much from them at any given time to cause them to rebel or fight”.

The underlying premise is that an amphibian dropped into boiling water will leap out of the pot. If it is put in warm water that is gradually brought to a boil, the frog will be cooked alive. Perhaps understandably, this metaphor does not always go down very well with the frogs — or in this case whites.

Scientists point out that the fable is based on ignorance. Ectotherms rely on thermoregulation through location change. In other words, a frog that is gradually heated up will soon jump out of the pot. The opposite is true when a frog is dropped into boiling water. Biologist Douglas Melton has confirmed that, “if you put a frog in boiling water, it won’t jump out. It will die.” When you think about it, this is obvious.

Whites, it transpires, are more like real frogs than metaphorical ones. They have some sensitivity to their environment, which has helped them become the principal beneficiaries of the post-apartheid settlement. Their near monopoly of access to high-quality education has allowed them to dominate employment in the knowledge economy. The new geography of privatised urban spaces has allowed them to relocate to gated communities and business parks, while armed security guards shield them from the world outside.

Their quiescence is interrupted only by sporadic threats to disturb the infrastructure of private estates or to regulate the security, health, leisure and workplace systems that preserve their lifestyles.

ANC policy makers have remained acutely, if uncomfortably, aware that SA is heavily dependent on its white population. The privileges that whites have enjoyed across centuries have turned them into irreplaceable national assets. They have skills and capacities that result from generations of public educational investment. Their privileged upbringing gives them a deep-seated self-confidence that makes them excellent managers and innovators.

They cannot be brought slowly to the boil. The lobsters among them will die. The frogs will jump out of the pot, taking their skills and assets with them.

Ramaphosa has been a powerful proponent of black economic empowerment but he has been dogged by the fact that so many whites intuitively trust him. If white relief at his elevation to the presidency turns into complacency or even a return to arrogance, this will bring political costs both for him and for the country.

 Butler teaches public policy at the University of Cape Town.

Zuma still controls the real centre of power

Is the ANC really a strategic centre of power, as its officials like to claim? As is now convention, the national executive committee’s (NEC) recent lekgotla resolved that, “the actions of government must, at all times, affirm the ANC as strategic centre of power with authority over the state”.

To make this dream come true, the NEC has once again proposed “a clear accountability framework for all cadres operating in the state” that will apparently “be developed within eight months”. The ANC will also ostensibly “build its internal capacity to give policy direction to its elected representatives as well as creating a monitoring mechanism”.

The ANC makes the same fantastical claims every five years. The doctrine of ANC supremacy is embedded in the sacred text known as “strategy and tactics”, an object of deep veneration for delegates at elective conferences.

In the early years of SA’s democracy, it is true, political commentators and journalists often made an elementary but contrary mistake: they viewed the system of government set out in the country’s new Constitution as a map that could help explain the exercise of power.

According to this map, the people elected a parliament, the parliament elected a president, and the president governed together with a cabinet that he alone appointed. The role of the ANC in the process was discounted.

When Thabo Mbeki was elected president of the ANC in 1997, and started to dominate the political agenda, astute political analysts began to attribute greater influence to the liberation movement’s own doctrines, policy processes and ideological positions.

In particular, the ANC’s repeated claims to occupy the centre space of society — representing the people as a whole, serving as the key site of power and decision-making, generating knowledge, and securing dominance over social institutions — was increasingly touted by commentators and academics.

In reality, however, Mbeki’s power flowed almost entirely from the state presidency. It helped that he was able to subdue party factions and dominate the top six during both terms. But his control over the party — while it lasted — was deepened by his control over Cabinet appointments: in NEC elections, delegates voted for candidates made famous as ministers.

Jacob Zuma’s victory at the Polokwane conference in 2007 was a useful reminder of the brute power a political party can periodically exercise in a parliamentary system of government. A majority party or coalition has the power to appoint or remove a sitting president or prime minister. Short of pushing this Armageddon button, however, it is really very hard for a mere party to monitor and control the actions of the leader of the executive branch of the state.

The ANC, it is true, has a rudimentary system for policy deliberation. The NEC’s policy committees allegedly oversee the activities of the state and ensure party policy preferences are translated into action.

Read ANC statements after NEC lekgotla, however, and you will see that members were “briefed” or “received presentations” about government performance, financial issues, and the implementation of key policies. Party activists do not determine — or even much understand — what government does.

In truth, it is hard to find many instances of the party successfully asserting its will. The head of policy in recent years has been Jeff Radebe, a minister almost pathologically uninterested in public policy. Most NEC committees scarcely meet, and when they do it is mostly to prepare vague and poorly drafted discussion documents for conference consumption. (One exception has been the economic transformation committee.)

When conference has voted in favour of a dramatic policy change, that policy usually originated in government rather than in the party.

In any event, ministers and officials more often than not ignore or circumvent inconvenient conference resolutions. They are far more likely to do what the state president tells them to do — not least because he can fire them.

The executive authority of the Republic is vested in the state president, and he exercises it together with a cabinet that he appoints. An active president can dominate the appointment process for deputy ministers and senior officials.

Where there are conflicts within government, the presidency intervenes in the name of “policy co-ordination”. Ministers can be locked in by national development plans that are controlled by presidential appointees. The performance of ministers and officials is conducted by state-based institutions rather than by the denizens of Luthuli House.

What Zuma has taught us, above all, is that other key centres of power, in the criminal justice system, intelligence services, parastatals, revenue authorities, and the treasury, are vulnerable to a determined president using the appointment and dismissal powers of the state president.

The elaborate self-deception that the ANC is the strategic centre of power — determining who does what, and when — may sometimes make ANC leaders feel better about themselves. Right now, however, they need to remember where real power lies, and to make sure that Zuma is no longer able to exercise it.

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

The limitations of Davos

Swiss police guard the Davos Congress Hotel during the World Economic Forum 2018 annual meeting in Davos, Switzerland, on January 25 2018. Picture: REUTERS

Swiss police guard the Davos Congress Hotel during the World Economic Forum 2018 annual meeting in Davos, Switzerland, on January 25 2018. Picture: REUTERS

 

The World Economic Forum’s (WEF’s) annual jamboree in the Swiss ski resort of Davos always presents a depressing spectacle. The business hosts who pay for the thing are drawn from the biggest companies. Top-flight central bankers, international financiers, media bosses and institutional investors from around the world join them.

Drop-in politicians in 2018 include leaders from the Group of Seven countries, Latin American and Asian emerging economies and even the once-shunned small states of the global South. Despite a few trade unionists, charity bosses and “ethical business” gurus, this meeting is between money and political power, showcasing the WEF’s general mission of “improving the state of the world”.

Davos offers some valuable reminders of important truths. Multinationals, international banks and institutional investors act quietly but they are the most powerful actors in global affairs. The inane reflections of almost all Davos participants confirm a second unwelcome fact: the world’s businesses, like her peoples, are not led by intellectual giants.

A decade ago, democracy and markets were inexorable. Today, relatively modest economic and political setbacks in the West apparently point to an equally inexorable, if variously characterised, socioeconomic cataclysm.

In the postcolonial South, ordinary people know that economic processes are international in nature and that the fates of nations are decided by forces and actors that lie outside their borders.

The view from the charmed zone of the Organisation of Economic Co-operation and Development has been different. For decades, citizens believed democratic elections gave them some real say in how their countries were run. This rosy post-1945 notion has now been thrown into question. Hundreds of millions of Asians may have gained from trade and investment flows in recent decades, but the middle and working classes in established democracies have wage stagnation and growing inequality. The challenges posed by technological change are mounting.

American elites have suffered another delusion about “liberal internationalism”. Trade and economic openness they have believed, perhaps rightly, were the keys to their own countries’ postwar stability, peace and economic growth. Less plausibly, they believed the spread of democracy and markets would eventually bring the various “fly-on-the-wall countries” of the global South into the circle of prosperity.

Davos delegates have been seeking out solutions this week to the crisis of confidence in both democracy and capitalism they see today in wealthy societies. One popular Davos diagnosis of the West’s current travails is that liberal internationalism is suffering from a “crisis of success”. The spread of global markets and democratic mobilisation has led to such “complexity” that existing institutions can’t cope.

Others claim international economic integration threatens domestic political stability because Asian wages are rising while western workers and middle classes face stagnation. Domestic populations need to be reassured their elites have the interests of locals in mind.

Resurgent nationalism has been treated as a sociological product of deep and intractable processes and rarely as an outcome of weak education systems, the changing dynamics of democratic competition or — God forbid! — lamentable and unethical political leadership.

The WEF’s thought leaders have mostly skirted around the problem of growing inequality and the extraordinary accrual of wealth by the very top 1% of citizens — people like themselves — over the past two decades. Perhaps we will all just have to live with it.

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