1 / 39

Prospects for Growth in SA

Prospects for Growth in SA. Jim Harris. ?. ?. ?. A Happy Future?. your confidence and positive feelings about race relations, discrimination, safety, economics, politics?. (Markinor biannual survey, reported 30.8.00). Three-quarters of South Africans say YES.

imala
Download Presentation

Prospects for Growth in SA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Prospects for Growth in SA Jim Harris ? ? ?

  2. A Happy Future? your confidence and positive feelings about race relations, discrimination, safety, economics, politics? (Markinor biannual survey, reported 30.8.00) Three-quarters of South Africans say YES Less than 50% of whites & indians agree

  3. Optimists can be wrong … or at least premature! JH “imminent” list to TW on 14.10.97 1 Review may reinstate capital punishment 2 Tariffs on imported chicken may go 3 Clothing and textile protection may go 4 Satra may stop Telkom killing Internet … y(15.10.97) 5 Interns may win conscription challenge to Zuma 6 Megacity may be prevented

  4. The Yoke of Pessimism (BOE’s Rian le Roux) “Unless issues such as poor economic growth, slow privatisation, limited labour market reform, controversy on the HIV/AIDS crisis, and even speculation over the possible reintroduction of prescribed assets are tackled with urgency, foreign investment will be reduced.”

  5. Stuck in No-man’s Land (SG Securities Nico Czypionka) “Despite the new-look but vague privatisation plan, investors perceive SA to be outright boring and underperforming from a growth point of view, an unexciting prospect for equities and direct investment. SA’s solid fundamentals only limit the risks. Government policies are gradualist and full of compromises. A reduced deficit (2.5% of GDP) still does not balance the budget. The economy urgently needs a kicker.”

  6. EFW2000’s 1997 economic freedom rating* Ranking of Heritage Index of Economic Freedom 2000 SADC countries Mauritius Botswana South Africa Namibia Swaziland* Zimbabwe Lesotho* Zambia Tanzania Malawi Mozambique* * freedom not rated 1998 GDP per capita (US$) GDP growth ‘90-’98 %pa

  7. Regional GDP pc World $5021 G7 EU Asia Latin America E Europe Middle East Africa $451 | SA$2880 $30 000

  8. Regional Growth (1990-97) World 3.3% G7 EU Asia Latin America E Europe Middle East Africa 2.5% | SA2% 0% 10%

  9. Growth and Wealth Growth brings wealth, but wealth does not guarantee growth

  10. Freedom and Wealth In time, economic freedom increases wealth Free Mostly Free Mostly Unfree Repressed

  11. OETS Albert J Nock Samuel R Konkin III New Libertarian Manifesto, 1983 Our Enemy The State Pew Research Centre, 1997 American/European views about government distrusted 56%/45% inefficient & wasteful 64%/54% has too much control of our lives 64%/61%

  12. SA Economic Freedom

  13. SA Govt as % GDP

  14. Spending and borrowing less

  15. Govt (% GDP) and Freedom 1990 1985 1995 1997 1975 1980 1970 2005?

  16. Freest Countries’ Growth (1990-96) Hong Kong 9.4 Singapore New Zealand United States United Kingdom Ireland Australia 8.6 Canada Luxembourg Netherlands Switzerland Argentina Denmark Belgium 8.3 El Salvador Japan Panama Chile Finland Spain 8.2 3.7 6.3 1.1 1.0 1.1 5.4 1.3 -0.3 ? 1.6 -0.4 3.5 1.8 1.5 4.0 1.8 3.1 5.2 -0.6 1.6 Avg. 8.6 - 2.2 SA 7.3 - 1.3

  17. Freedom Makes You Rich 20 freest countries South Africa Freedom rating 8.6 7.3 Growth rate % 2.2 1.3 GDP pc $ 19296 7830 Govt consump % 20 25 Govt expend % 39 32

  18. Growing Countries’ Freedom (1997) China 11.2 Malaysia Vietnam Chile Singapore Indonesia Lesotho 7.2 Sudan South Korea Uganda Ireland Thailand Laos Syria 6.2 Argentina Peru Chad Jordan Israel India 5.5 6.2 7.5 ? 8.2 9.4 7.2 ? ? 7.3 6.1 8.7 8.2 ? 4.4 8.4 7.9 4.5 6.1 6.5 5.8 Avg. 7.1 7.0 SA 1.3 7.3

  19. Government stifles Growth 20 fastest growing countries South Africa Growth rate % 7.1 1.3 Freedom rating 7.0 7.3 GDP pc $ 7346 7830 Govt consump % 18 25 Govt expend % 29 32

  20. Size of government • SA govt spending fell from peak 38.1% of GDP in 1996 to 36.1% in 1998 • Finance Dept projects more falls to 33.8% in 2001. ..projected..

  21. Morecambe, 1968 • Enoch Powell - the virus that kills socialism • Parkinson on tax and disaster • Colin Clark and John Maynard Keynes on a 25% limit • income tax at 4/3 (21%) in the £ - from 8/3 (41%) • denationalise, sell public housing • abolish investment grants, farm price supports • end development assistance, foreign aid, production grants • reduce the number of civil servants • stop spending on wrong and harmful policies

  22. Bigger government, slower growth Gwartney, Lawson and Holcombe (1998) Grouped 1960-1996 data for 23 long-standing OECD member countries.

  23. 7% “natural growth” with no government,plus possible effect of (Lal) Platonic Guardian state or predatory government enhancement no harm little harm SA much harm 0 10 20 30 40 50 60 70 80 90 100

  24. The way to go 1995’s fastest-growing countries (& a few 1960s OECD countries), had <20% government. Few big-government countries (like SA) grow fast. Fast growth seems easier (not easy) by reducing government size than by improving its performance (reducing the harm). Thailand Spain’60 Chile, S Korea, Singapore China Taiwan Ireland NZ SA Cameroon Estonia Zaire Russia Lithuania 0 10 20 30 40 50 60 70 80 90 100

  25. A commonly-held alternative assumption - inescapable differences between countries - different “natural growth rates” - dooming SA etc never to achieve fast “Asian” growth Thailand Spain’60 Chile, S Korea, Singapore China Taiwan Ireland OECD NZ Ethnic Chinese? SA OECD Cameroon Estonia European? Zaire Russia Lithuania Slav? African? 0 10 20 30 40 50 60 70 80 90 100 unconstructive & racially offensive

  26. Fast African Growth (1990-97) Lesotho 7.2% Sudan Uganda Chad Botswana Mozambique Mauritius Benin Tunisia Ghana Malawi Africa 2.5% World 3.3% | SA 8% 0%

  27. But still inequality grows GDP of $30000pc is ca. $82 or R580/day 2.8 billion people live on <$2/day 1.2 billion people live on <$1day 20 richest / 20 poorest countries x 19 (1960) x 37 (2000)

  28. Poor forever? • 200 years of rapid global growth • widening income gaps between rich and poor countries • some once-poor countries are making progress • but overall income inequality has failed to diminish • the rich get richer, and so do the poor ……. • ……. but the poor never catch up WRONG ANSWER! says Chicago U’s Robert Lucas

  29. Incomes per head $30000 Bigger gap - faster catch-up … once you start! $600 1800 1900 2000

  30. World income per head much inequality is transitional Annual growth rate 3% 2% Inequality (log std dev) 1% 0.5% 1800 1900 2000 2100

  31. Why catch-up is likely • demonstration effect and technology diffusion • capital seeking comparative advantage • pressure from citizens eager to benefit • movement of resources and people as needed • irrelevance of individuals and IQ, race, etc • ever fewer local niche constraints i.e the invisible hand of globalised Darwinian survival of the fittest memes - liberal democratic capitalism … or better still?

  32. The Demonstration Effect As the cock said to the hens when he held up an ostrich egg; “I am not disparaging, neither am I criticising; I am merely bringing to your attention what is being done elsewhere.”

  33. OETS individualism without limit? 15% state … to 5% state … to 0% state ? ? ? More freedom and more growth … and then?

  34. Coming, ready or not! • government is following religion into decline • but may linger on in pockets • consensual, non-coercive solutions may proliferate • we may not have to confront government-believers • rainbow-anarchy is cheaper than revolution • it may arrive sooner than you think 5-20% government may be optimal, but that’s probably not the way to bet. Human nature is more perfectable than government

  35. After statism and collectivism The core libertarian ideas individual rights order emerging spontaneously from the enjoyment of rights limited government or market agencies to protect rights and allow order to emerge

  36. Fukuyama’s ‘yes, but …’ • industrial economy (1950s) to information society • for social values, the Great Disruption • lost social capital (informal norms > cooperation) • crime, family, trust, moral miniaturisation • new norms, self-organisation, spontaneity • the (capitalist) Great Reconstruction? Market exchange is not, but is not unrelated to, a moral community’s reciprocal altruism. And self-interest may promote moral behaviour

  37. Fukuyama’s Universe of Norms RATIONAL - DEBATED & COMPARED IN ADVANCE HIERARCHICALLY GENERATED SPONTANEOUSLY GENERATED ARATIONAL - SOCIALLY INHERITED

  38. disciplines Political science Economics Sociology Anthropology,biology Order, Disciplines, Norms RATIONAL Social engineering The market order Constitutionalism CARS4 Formal law Common law Historical tradition Revealed Incest taboos religion Folk religion Biologically grounded norms H I E G R E A N R E C R H A I T C E A D L L Y S P O G N E T N A E N R E A O T U E S D L Y Political Self-organised norms Religious Natural ARATIONAL

  39. Prospects for Growth in SA $30 000+ Harris That’s all, folks! Jim ? ?

More Related