No equality without redistribution: New Frame

The only way to understand how we continue to ignore inequalities in South Africa is to remember how long ago we accepted apartheid.

Only a country that has survived so long in a system where the United Nations has declared a crime against humanity could accept, like us, the inequality that now characterizes South Africa. The best constitution in the world appears to be of little help, and our militant leaders from before 1994 are now part of the establishment.

We live on borrowed time.

Inequalities are eroding the tense social fabric we are committed to building after the defeat of apartheid, and the elephant in the room is still the question of redistribution. Murray Leibbrandt’s article, however, unfortunately leaves the redistribution like this, an elephant in the room.

Remove distribution from redistribution

South Africa’s redistributive fate has been enshrined in section 25 – the property clause – of the Constitution. Despite a preamble that “recognizes the injustices of our past”, South Africa’s founding document did not prioritize the redistribution of apartheid wealth.

Around the same time, the political principle of “growth through redistribution” in the reconstruction and development agenda gave way to the failed neoliberal idea of ​​”redistribution through growth” which characterized the growth strategy. employment and redistribution.

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Brazil, as Leibbrandt points out, was at the time plagued by similar levels of inequality. Where he is sadly silent, however, is in how the two countries have responded. Where South Africa liberalized its economy, Brazil lifted millions of people out of poverty through well-targeted redistribution policies under the leadership of then-president Luiz Inácio Lula da Silva.

South Africa’s resulting redistribution failure led directly to its growth failure. As monetary policy will tell you, economic growth is a factor in the circulation of money. Put simply, if 67% of South Africa’s income is in the hands of 10% of the population – and it does – that money will not flow as much as it would if it were in the hands of 10% of the population. hands of the remaining 90%.

But while South Africa’s inequality is a function of its economic regression, it has also killed the country’s middle class. The middle class should have been the engine of growth. But redistribution in South Africa has occurred from the middle classes to the richest 10% thanks to a low tax burden on the elite compared to the middle classes, and to the poorest 30% thanks to redistributive social subsidies. We killed the golden goose.

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And so, according to the 2018 World Inequalities Report, while the richest 10% of South Africans live very much like their European counterparts, the plight of the poorest 16% of Europeans is comparable to that of the 90 % of poorest South Africans.

This distorted nature of inequalities in South Africa has two dominant characteristics that speak to our past and should be the pillars of an immediate corrective policy. The first is that the difference in wages is a more important factor of income inequality than unemployment.

The second is that income from wealth contributes more to the income of the richest 10% than wages. But despite clear data linking this current build-up to inherited wealth, top incomes are not heavily taxed, and wealth constantly escapes scrutiny, let alone taxation.

Profits over people

Globally, inequalities have increased with the shameless ascendancy of neoliberal social, economic and political theories and policies.

The growth of Western democracies owes much to the state redistribution of surpluses and services after World War II. But these functions have weakened since the role of the state was replaced by private sector profit in the latter part of the twentieth century under the political aegis of Ronald Reagan and Margaret Thatcher.

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It took the 2008 financial crisis, precipitated by the uncontrolled greed of globalized financial markets and shareholders, to get mainstream thinkers to rethink the wisdom of letting profits thrive on people. Since then, however, people have started to follow money. Wall Street was busy and the indecency of money was exposed. Thomas Piketty, the sage of global inequality, was even celebrated as a prominent guest in South Africa at Nelson Mandela’s annual conference in 2015.

Yet policymakers and politicians seem to have completely ignored Piketty’s dire warnings for the country’s future. Instead, the government decided the best way to raise money amid the capture of the state, under then Finance Minister Malusi Gigaba, was to raise VAT – a regressive levy. which taxes the poor at the same rate as the rich – in 2018.

Cabinet accepted that. Parliament too.

Outrage should be our only answer

Which brings me to Leibbrandt’s article.

Inequality directly concerns distribution and therefore questions of equity, which involve normative judgments about our society. We cannot speak of inequality without committing to the solidity of the system. Otherwise, we are just generating white noise.

The inequality is unjust and undermines both constitutional rights and morality. It has to be said, always. Leibbrandt, unfortunately, says a lot without passing an indignant judgment.

His article raises critical questions. The emphasis on South Africa’s lack of social mobility, for example, recalls President Thabo Mbeki’s 2003 description of the South African economy as a two-story house with no stairs. But without a Marxist analysis of the goal of mercantile capitalism and colonial expansion, or of apartheid racial capitalism, South Africa’s inequality is not put into context.

And context is everything.

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Tunisia should be an instructive case for us. Hailed by many, including within the South African government, as the model of poverty reduction in the 2000s, reforms in this highly uneven country have targeted poverty. But while absolute poverty has been reduced, inequality has not. It was the unacceptable fact of inequality that ultimately led to the overthrow of then-President Zine El Abidine Ben Ali during the 2013 Jasmine Revolution.

South Africa, also plagued by the world’s bleakest inequalities, has raised taxes on poor people as its economic and political elites support and support each other.

We need to be honest about poverty and inequality. Neither is inevitable. Both are the result of political choices and priorities. And there are better steps we should be taking.

A national plan on inequalities in line with the United Nations Sustainable Development Goal on Inequalities, for example, which addresses income and wealth inequalities with clear goals and progress markers, should be developed. Such a development would be a clear commitment to tackle inequalities in reality. The fundamentals that govern tax policy must also be unpacked, and wealth must be taxed while excess income is taxed more gradually.

The country’s wealth must be shared by all. It’s that simple.

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