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Common sense and equality

THE acrimonious split in Cosatu has numerous political implications for South Africa, which have been amply addressed by various commentators.

Underlying the split, of course, is the question which direction our country must take – a free market approach or socialism. Irvin Jim, general secretary of Numsa, the trade union expelled by Cosatu, has been photographed at the weekend sitting at his desk with a portrait of Vladimir Lenin behind him, presumably indicating his adherence to Lenin’s thinking.

The choice between capitalism and socialism is, when all is said and done, about socio-economic equality. Equality, or the lack thereof, is a burning issue all over the world, the more so in South Africa with its history of legal race discrimination.

One may get all emotional and angry about injustice, about people without future or hope. However, emotion should never suppress one’s common sense, and this also applies to the question of equality.

Frank Kalshoven, a Dutch economist, recently wrote a very down-to-earth article about this phenomenon in the quality daily De Volkskrant. He distinguishes three types of inequality.

The first of these is starting-block inequality. The fact is, Kalshoven writes, that children do not compete in a level playing field. Those growing up in poor families are less likely to get a proper education, their language skills are less developed, and they have many more obstacles to overcome to succeed in life than those lucky enough to grow up in wealthy families.

Starting-block inequality leads to income inequality, which is mostly caused by a lack of training and education. Income inequality is offset to a certain extent by progressive taxation, but cannot erase it totally.

The Paris Hilton effect

Lastly, income inequality leads in the long run to wealth inequality. Obviously, earning a large income over several years or even decades enables one to accumulate large sums, which could then be invested to earn interest, instead of spending all your income on food, clothes and a roof above your head.

One may here once again refer to French economist Professor Thomas Piketty’s book, Capital in the 21st Century. His - often disputed - thesis is that inequality all over the world is again on the rise.

To fit his views in Kalshoven’s scheme: Piketty contends that income derived from investments and inheritances is growing faster than that derived from labour, even among rich people. Which means that we are moving beyond income inequality into the realm of wealth inequality.

This is confirmed by a paper of US economists Emmanuel Saez (University of California) and Wojciech Kopczuk (Columbia University), in which they posit that the 16 000 American families making up the richest 0.01% of the population now control 11.2% of total wealth. After having shrunk through much of the 20th century, this is back to the level of 1916.

They show that billionaire heirs like Paris Hilton, who has never done a day’s work in her life, form a substantial part of this super-rich 0.01%.

There can be no question that this growing inequality is unhealthy for any society, especially one as socio-economically and ethnically fractured as ours. The problem is: what do we do about it?

Is Leninism the way?

Judging by the portrait of Lenin hanging in his office, Irvin Jim would like to introduce a Leninist system in South Africa. This would not only not bring about true equality (in the USSR, the politically connected were always more equal than others), but would mean the end of freedom and democracy.

Keeping things as they are is no option either. In the present dispensation, being politically connected is also a guarantee of wealth. Nobody, least of all the ANC, cares for the poor.

Absolute equality is also a pipe dream. We all differ in our level of intelligence, interests and ability to take initiative. Inequality will never be eradicated totally.

But, and this is a big but, what we can do is to try to level the playing field in the first of Kalshoven’s three categories, the starting block, to a certain extent. This can especially be done regarding education and training.

This will require a massive investment (and I am not talking merely about money) in schools and vocational training. By empowering children and young people to take on the digital age and succeed in the 21st-century economy, we can at least make a beginning in ameliorating inequality.

In this way, we may fulfil a cardinal condition for ensuring enduring social stability, even in a fractured society such as South Africa.

However, can we reasonably expect this kind of wisdom from a dysfunctional ruling party?


* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.


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