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Cees Bruggemans: SA govt stuck in the past, missing the future… at what cost?

In yet another gem from Cees Bruggemans he assesses the South African government’s growth policy. And in true Cees style, he holds back no punches, it is non-existent. He looks at government’s obsession in attaining rich compensation for past inquities but in so doing they fail to understand at what cost – as they continue to live in the past and not prepare South Africa for its future. He says it must not be forgotten but cannot be the primary concern. – Stuart Lowman

By Cees Bruggemans*

Believing in what one says, but doing things that achieve the opposite. In order to understand events, that requires ignoring what is being said in favour of closely examining what is being done. And cumulatively over years, decades even, this mounts up.

The SA government does not have an effective growth policy. Instead, for years, it has been consumed by a legalistic preoccupation best described as achieving restitution or rich compensation for past iniquities, whatever apparently the cost of doing so.

Moreover, there is apparently often no awareness that this approach imposes costs and opportunity losses. Or differently put, the cost is for those not favoured while benefits are obtained for those that are. This is sold as a win-win outcome and can only be understood in historic terms, not futuristic ones.

In so many words, SA’s political leadership continues living in the past rather than being concerned with preparing the country overall for the future.

Restitution and compensation is blind to the allocation of human capital (skills, experience) in the economy. Instead, it reallocates favours and imposes penalties. This represents a continuation of past practices rather than offering a decisive break with the past.

Instead of economic logic being applied, seeking optimum results for the larger population over time, the legalistic approach has often let skills go and allowed a weakening of the human capital base, primarily in the public sector.

The cumulative unintended consequences of this can be observed daily.

There is so far no evidence of a change in this approach. Instead, it would seem single-mindedness rules. The unintended consequences are therefore likely to keep multiplying as society has difficulty in generating the human capital allocation required to efficiently underwrite this legalistic approach.

Only a change of heart can lead to change for the foreseeable future. This does not necessarily mean a shift to unfettered economic logic. Restitution and compensation can remain a major feature of changing South Africa’s complexion, as to be expected, but in a secondary supporting role rather than the sole primary one as so far the case for too many years now increasingly harvesting “an approaching storm”.

And this is before considering the state of the world economy and what it might still do to us.

* Cees Bruggemans is consulting economist at Bruggemans & Associates

* For more in-depth business news, visit biznews.com or simply sign up for the daily newsletter.

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