Providing free cash has replaced remedying our political economy

In his column in Business Day, SA excels at circling overhead dropping money, author and academic Jonny Steinberg says no one has suggested cutting cash transfers to the poor. 

 

The ANC would not agree because its voting support among the lower income group and poor is based on being a munificent patriarch at taxpayer expense: the "ANC cares and provides a better life for all".  Refer to allegations by the opposition the ANC handed out food parcels during election rallies.

 

We know a cleaner who for years after the 1994 elections complained Mandela (not sure if himself or ANC) promised her a house and a fridge - yes, a fridge - if she voted for the ANC.  According to her, he promised this during election campaigning in Mitchell's Plain. This single mother of two lived in someone's backyard in a Wendy house, paying exorbitant rent, not including electricity, which was a substantial portion of her landlord's own bill when the latter was unwilling to pay his portion himself.

 

She received her free state house in 2013.  Ironically, by then, her wages slightly exceeded R3500 a month, the cut-off point for free housing, and her children - the other criteria for free housing - had grown up and moved out. 

 

South Africa's social benefits are not limited to pensions and grants.  By the way, there are only 3 million old age pensioners ("grants for older person") - 18% - of the total grant beneficiaries of 17 million.

 

Social benefits include grants, housing, expanded public work programme (EPWP) "work opportunity" wages and free basic services.

 

During a master's degree course at UCT in 2006, facing intense questioning, a former director of national housing admitted to participants that, with hindsight, government's post-1994 housing policy may not have been the best option available, but "we had no choice" - that is, in terms of commitments made to the public.

 

Guest lecturer Prof Julio Davila, head of the University College London's Development Planning Unit, an expert on urban infrastructure and development planning, said no developing country in the world has undertaken the scale of free housing that South Africa has.  He said the poor, when left to their own devises, "find their own solutions".  This is not what the ANC decided for South Africans.

 

I agree with Steinberg that rather than being proud of - which ANC and sociologists are - we ought to be ashamed 32% of the country's population of 53 million are receiving grants.  It's an indictment of ANC policy, and incompetence, that the post-1994 economic model promoted big business' and labour's interests to the exclusion of small business, entrepreneurship and job creation. 

 

Last month Cape Town mayor Patricia de Lille boasted of the city's EPWP programme  and work opportunities created for 160 000 beneficiaries at a cost of R555 million.  However, by focusing on isolated cases, she dissembled and avoided saying how effective the programmes are in creating sustainable, permanent jobs and in reducing poverty, which is the purported objective of the national programme. 

 

I wrote to the Cape Argus' letters page saying the EPWP is a form of dole and will not reduce long-term unemployment and poverty.  I suggested what the country should be doing, and it has failed to deal with entrenched structural issues. South Africa, or specifically the ANC, believes throwing money at problems is the solution, only to see problems persist, and they wonder why. 

 

The problem with social grants and transfers like free services and housing is that beneficiaries do not and cannot acquire and accumulate livelihood assets and opportunities to alter entrenched inequality and deprivation that only a sustained and permanent employment over a long period allows. 

 

De Lille replied to my letter but repeated the corporate line without providing research evidence, which she claimed to have, that EPWPs and the huge sums spent on it alter entrenched unemployment and poverty.  If it had, our overall indicators would be better.

 

Public sector salaries and social grants are the largest expenditure items and significant contributors to government debt.  Finance minister Pravin Gordhan's shocking proposal to cut social spending will probably not get very far because it would be unpalatable for the alliance and ANC supporters, particularly before elections.  But clearly, it must be done.

 

Studies have shown social grants and free services have been successful in reducing the manifestations of extreme poverty.  But it has failed to reduce unemployment, which is worse now than 1994, and poverty is still critically high.  There is little hope the situation will change in the near future - the unskilled, unemployed and poor are doomed to serfdom and welfare.

 

By the way, it's laughable big business, which so far has been steadfastly uninvolved in our political economy but which benefited from policy that encouraged oligarchic and cartel-like practices, is self-servingly portraying itself as a white knight with its bullet-point action plans. 

 

Steinberg is right government's paternalistic attitude of providing free cash has replaced real action in remedying the country's ills.  But his opinion "nobody" has suggested cutting transfers to the poor is incorrect.  Some have, only we are not being heard.