SA’s future bright – analyst
August 31 2013 at 05:27pm
By Craig Dodds
JP Landman
What does it mean to be South African?
Durban - Relax. The chances are South Africa is going to make it. In fact, it will probably be a much better place to live in 20 years from now than it is today.
Whatever the consensus of despair that appears to have settled on the country in recent months – after Marikana, the plummeting rand, the vortex of strikes and stumbling economic growth – the long-term trend is positive.
Do newspaper headlines work for society, or do they serve only to set nerves on edge and help newspapers profit from a general sense of gloom?
It’s just one of the questions tackled by analyst JP Landman in The Long View, an antidote to the high-intensity assault on the senses of the daily news.
Landman points to factors that suggest South Africa is on the right path.
The economic growth rate comfortably exceeds population growth, even with immigration. That means per-capita income will continue to rise, increasing the wealth of the nation.
Income per capita in South Africa is above the $6 000 (R61 360) threshold at which studies show the chances of democracy flourishing are 80 percent and rising.
That’s because a wealthier population is more independent of the state, and better able to organise in its own interests.
Asked about the gyrations of the currency, Landman says they are the inevitable consequence of a floating exchange rate – a choice South Africa made many years ago.
“We’re running a huge current account deficit… the difference between what you save and what you invest,” he says.
The government’s massive infrastructure-build programme means investment “far exceeds savings” and produces the huge deficit, funded by capital inflows.
“The danger for South Africa is not having a deficit which is financed, the danger is having a deficit which is not financed. That’s the real danger, that’s the position in which Ireland, Greece and all those countries found themselves – no one was prepared to send money there.”
However, the cheaper rand made the country more attractive for investors “and in that sense it can probably self correct”, Landman said in an interview yesterday.
A balance sheet of factors supporting and hindering economic growth suggests the country would not achieve an average growth rate above 3 percent for the next decade. Unemployment will consequently continue to be painfully high.
“Three percent should create roughly 300 000 jobs a year and so you keep on expanding the labour market, you keep on employing more people. As you employ more people, you expand the taxpaying base and improve the base of society… but I don’t think you will roll back unemployment,” Landman said.
Surprisingly, this, too, is a byproduct of progress.
As more jobs are created and people head to urban centres, more of the working-age population join the ranks of the economically active – those either seeking work or actually employed.
This gives rise to the “paradox of the South African labour market”.
“We are employing more people, we are pushing up… the absorption rate, the percentage of people who are working, but at the same time we also have more unemployed people,” Landman says.
In this period of transition, unemployment would remain high, but it was a part of progress to a modern economy.
Headlines do contribute to a sense of gloom, while what Landman calls “trendlines” – the longer view – help to put events in perspective.
Nevertheless, news and contestation are part of a healthy modern society that is capable of adapting to change, he says in the book.
“Many people find robust, noisy debate unnerving. It undermines confidence and stability. That is true, but in a democracy robust debate is needed, even if it unnerves people in the short term,” Landman writes.
“A cacophony of noise is indicative of a healthy, open society at work, struggling to find solutions to difficult problems.”
Independent on Saturday
www.iol.co.za/ios/news/sa-s-future-brigh...1571196#.UiQgMTYwq3M
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