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Real growth might mean a ‘race to the bottom’

Jul 15 2018 06:10
Terry Bell

There seems to be a consensus among labour and business that “we” – meaning the majority of South Africans – are in for a tough time.

Even Klaus Schwab, the head honcho of that rich boys’ club, the World Economic Forum, breezed into Johannesburg late last month to note: “The country [South Africa] is not any more considered in the right terms.”

What he means is that South Africa is no longer seen as a potentially profitable investment destiny. But Schwab blamed this all on the Jacob Zuma years, when “the narrative had become negative”. He said this was compared with “when Nelson Mandela came to power, when there was such a positive narrative about South Africa”.

The real reasons

This implies that, if global big business looks positively at who is leading South Africa, all will be well as the country tries to cope with the reality of the fourth industrial revolution. However, Business Unity SA (Busa) this month outlined some of the more prosaic reasons businesses no longer smile so sweetly on South Africa: legislative uncertainty and inefficiency.

But Schwab, along with Busa, sees nothing fundamentally wrong with the economic system, merely in the way it is managed. They list economic growth and job creation at the top of their agendas. In the context of increasing automation, mechanisation and the explosion of artificial intelligence, this seems to be a contradiction in terms.

As everyone should by now be aware of, the economy in South Africa has grown, along with economies around the world. At the same time, so have job losses and the greater immiseration of millions of working people.

Another widely known fact is that, certainly over the past decade and more, the gap between the rich and the poor has widened into a gulf – and continues to grow.

In the eyes of free marketeers such as the World Economic Forum, this is because there has been too little growth. In other words, there are insufficient crumbs available to fall off the tables of the rich.

Schwab said: “Accelerated growth is absolutely necessary.”

Busa, government and, apparently, some sections of the labour movement agree.

Race to the bottom

The problem here is that accelerated growth and job creation can only come about if what South Africa produces can be globally competitive. This means that workers should be cheaper to use than machines and should be prepared to work at wage levels lower than those of any competitors.

Welcome to the notorious “race to the bottom”.

In a world where surplus capacity exists to produce virtually every necessary product and where surplus production already exists in many sectors, the whole notion of accelerating production to create jobs seems nonsensical.

Yet this is the logic of a system that is now leading to developing “trade wars”, to real conflicts and to the rise of such poisonous notions as anti-immigrant xenophobia.

This at a time when, despite all the plundering, waste and pollution of the world’s natural resources, there is still enough food to provide every human being with enough to eat. Just as there are enough resources and expertise to adequately house, clothe and educate a global population.

That is the bigger picture and should always be borne in mind. But in local conditions, we can see clearly – and try to combat – some of the idiocy of the system we live in.

Outsourcing by clothing retailers is one. Check proclaimed “proudly South African” shops and find out where much of their stock originates from.

Then there is the 22% tax on textiles needed by local manufacturers to produce domestic garments. Unions should surely find common cause here, even with some bosses.

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