In an open letter to the South African President, Mphuthumi Nthabeni cautions President Cyril Ramaphosa about being too worried or paying disproportionate atttention to seemingly dominating and overly-pessimistic narratives concerning our current state of economic affairs. He also uses the letter as an opportunity to convey what he sees as the wisdom of Catholic Social Teaching with respect to the economy, that it needs always to be at the service of the common good.
Dear President Ramaphosa
I was extremely glad to hear that you had secured an R370-billion investment from China to stimulate our slumping economy. This on the heels of the Eskom and Transnet loans of R33.4 and R4-billion respectively.
Predictably, the naysayers have as usual found something negative to say about it. Their fashionable grandstanding labels this ‘debt-trap-diplomacy' by the Chinese. Had you received the money from the Western capitalists they would have applauded it for bringing much needed ‘investment’ to our country.
The plagues you inherited, almost immediately after your inaugural parade, were credit freezing, lowering consumer confidence, rampant unemployment and a rapidly shrinking economy after a period of stagnancy.
Lest they forget. In times of crises, like these, the only sensible response is the good old advice of Keynes, the godfather of fiscal stimulus. Let’s “prime the pump” by pouring gobs of public money into the economy, since private money is in hiding anyway.
We need to halt the classic death spiral, where businesses in declining demand retrench workers. This only further weakens demand, as laid-off workers stop spending, and perpetuates the fatal cycle.
Mr President, any economist worth their salt knows that debt incurred for the purposes of infrastructure development is not an entirely bad thing. It has the power to create jobs and stimulate economic growth. You were put in an unenviable position by your corrupt and financially illiterate predecessor.
He left you with a huge whole to repair – not only on the national fiscus but also on state-owned enterprises that are tottering into bankruptcy and dragging down the whole nation with them.
Our current national fiscus simply cannot provide the capital needed to invest in infrastructure. Borrowing was the only option.
It was reported in the media that the DA is demanding transparency as to the terms of the loans by the Chinese Development Bank. This is most strange to me. Did they ever ask for this when we borrowed money from the Bretton Woods Institutions (IMF, World Bank, etc)?
I know that ‘transparency’ strengthens democracy but it can otherwise be couched as ‘mistrust’.
Another strength of democracies is the possibility it has for giving us recourse to multiple avenues in addressing our grievances. The DA is within their rights to make a legal application in terms of the Promotion of Access to Information Act to call for full disclosure on the terms of the loan agreement. Let it be tested in the court of law whether their demand is reasonable or not.
My informed intuition is that they’ll lose the application and be forced to pay costs. Courts of law are extremely sensitive with regard to separation of powers and will give the Executive reasonable leeway to govern uninterrupted.
Personally, I am more interested to know why African states are not jointly approaching China when negotiating for investment? If the Chinese Belt and Road project teaches us anything, it is that they’re amiable to the notion of doing block foreign investments in Africa.
In that way, African states could also share their joint expertise and experience to negotiate for the best mutually beneficial deals.
We could also use such a corporate grouping to springboard the idea of a single Southern African currency and to compel our African member states into fulfilling certain human and democratic standards before they can reap the benefits of such a currency.
This will not only be internally beneficial to citizens of our respective countries, but it will also give us the much needed bigger and stronger economic muscle as the world will treat us as one economic block.
Now, as a Catholic, permit me to address this matter in terms of our own social teachings.
The Catholic Church counsels on the necessity for government intervention when creating a just economy. This is stated forcefully in a document released early this year: Quaestiones.
The strength of Catholic Social Teaching is in its brilliant ability to avoid the two extremes that plague the common worldview of our era.
Libertarianism, which denies the principle of “solidarity” (the common good); and communism, which denies the principle of “subsidiarity” (all levels working together instead of a top-down, big government solution).
This is the essence of CST, and why it is sometimes called a “third way” between libertarianism (or individualism) and communism (or “collectivism”). CST teaches that the integral role of governments is solidarity and subsidiarity.
It is refreshing to see religious institutions engage with economic and political realities in a direct and unapologetic way. But the responsibility for attaining the common good, Mr President, belongs to the State.
The common good, since the dawn of democracy in Athens, is the reason that political authorities exist. It would be good if your administration were to adopt for its mantra the drive in CST to see the mission of the Market, however abstract and globalised it may have become, as fundamentally to serve humanity.
Once you adopt this view you’ll not be lead astray by the clever ruses of those with vested ego-driven interests for greedily securing profit. That said, there is nothing wrong with profit but it must not be unethically pursued at the detriment of all else.
Let yours then be the administration that aims to serve and to build communion among individuals, strata of society and nations. As you said earlier this week, your mission is in service of the poorest and eradicating poverty for all.
That after all, is the fundamental reason for which all institutions and markets must exist, far beyond mere profiteering. Lastly, I want to warn you of what in economic terms, is in a sleight of hand referred to as “prudential judgment.”
This is when the principals of financial industry affirm the principles of fairness and democracy with their lips, and then propose standard free-market, anti-government, anti-poor policies that undermine those principles. That is really how they have treated your ruling party since the presidency of Mandela.
I pray you to be astute enough to avoid falling for this stunt. Sadly, your predecessor Thabo Mbeki wasn’t. The principals of our market system pulled a fast one on him. He wisened only too late to the damage.
We’re in desperate need for that New Dawn you promised us. Please, stay the course and be bold in innovation. Forge a bond with the masses on the ground, for there lies your democratic strength. Develop a healthy mistrust for credentialed experts and their vested agendas.
The old financial ways are not serving us. Let us be bold in challenging them where they fail and humble enough to continue in their classical wisdom when it works.