Comparing two different polities, especially with different demographics, history and economies, can be fraught and error-ridden.
Writing in Politicsweb recently, RW Johnson dismissed as “very silly” attempts to find “alleged SA analogies” in sovereign and leadership comparisons “as if everything that happens in the world needs to be translated into what it means for SA”.
The real value of any such comparison — without panel-beating the facts to smooth out inconvenient differences — is that it lifts the often sterile, increasingly rage-filled local debate to a less parochial space. And it’s a reminder of the ancient biblical injunction of King Solomon that “there is nothing new under the sun”.
Brazil is one comparator, far away but joined to SA a decade ago in what promised to be the most significant quintet of developing-world economies, the Brics grouping. But that was when Lula da Silva was in the presidential saddle, whose fusing of pro-market policies with the upliftment of its favelas was hailed by both Thabo Mbeki and Cosatu here no less than Wall Street investors.
Da Silva ended up in a jail cell after being convicted of corruption before being released on a technicality last week pending further appeal. Jail is the destination some have in mind for our former president as SA reels from corruption in which he was enmeshed, though Da Silva’s antics make our version of state capture seem picayune by comparison.
The election in late 2018 of the oft-described “Trump of the Tropics”, a hitherto obscure congressman called Jair Bolsonaro — a man of extreme views on all topics, from a hatred of gays to reverence for Brazil’s military dictatorship — was a signal of how the voters had turned on the political establishment in general, and Lula’s Workers’ Party specifically.
Brazil’s corruption or “car wash” scandal rode hand in hand with the cratering of its economy; universally acclaimed for its achievement of a GDP growth rate of 7.6% in 2010, by 2016 this had crashed to a 3.5% contraction and 1.5-million Brazilians had lost their jobs.
The lure of populism and the corruption of its governing party provide some measure of useful comparison with our own backyard. Now Brazil also offers a similar but distinct exemplar of fiscal distress to our own dire straits, as laid out in unsparing detail by Tito Mboweni in his recent medium-term budget policy statement.
The bleakest number in the whole speech was the soaring government debt, which will balloon to R4.5-trillion within three years and costs R204bn to finance every year. The two elements that fuel this expenditure are Eskom and the public service wage bill.
Mboweni’s stance is similar to a diagnosing physician who can with accuracy describe the symptoms of his critically ill patient, but unlike a good doctor is bereft of the tools to prescribe the cure. That lies in the remit of the president and his party, who either lack the will or the courage to fix things.
Cue here the outrageous Bolsonaro, who has an Eskom-size fiscal disaster all of his own, even more gargantuan than our ailing electricity utility. It is the public pensions system of the South American giant, which is the largest economy in Latin America. For 10 years Brazil’s congress and its three previous presidents had tried to reform this unsustainable system, hugely popular with workers and disastrous for the fiscus. Finally, in October Bolsonaro, between profanity-laced tweets against the country’s judiciary, managed — or more accurately his impressive economy minister, Paulo Guedes, piloted — the biggest pension reform ever achieved.
Congress broke a decade-old deadlock and increased the retirement age for men from 56 to 65, and for women from 53 to 62. This single measure will mean whopping savings for the state and a chance to right-size its ruinous public finances. According to the Financial Times, it will save the state $194bn over the next 10 years, plus $90bn in ancillary savings over the same period.
But it is not what was achieved by this historic vote that mattered as much as what would have happened in its absence: without the pension reform, Brazil would have seen its gross public debt soar to 120% of GDP.
SA’s public debt — absent the fiscus clawing back an estimated R150bn in savings over the next three years — will mushroom to 70% in the same period, but that is without factoring in the endless financial demands of Eskom. In other words, with an unreformed Eskom, without deep cuts to the public sector wage bill, and in the event of a credit rating downgrade, we might scale the fiscal cliff Brazil has just averted.
Brazil and SA enjoy some useful measures of comparison — developing economies, complex histories and racial dynamics, and both democratised in the same era. Britain and SA, beyond the ties of history and the recent Rugby World Cup final, are far less comparable. But political leadership crucially matters in both places.
As Britain enters an election campaign with a wildly uncertain outcome, it might seem obtuse, if not perverse, to find comfort in the words of the self-immolating British prime minister David Cameron, whose Brexit referendum caused much of its present travails.
All political leaders want to be remembered for the many things that in their estimation they did right. History, alas, remembers them generally for the one big thing they got wrong: Iraq for Tony Blair, Brexit for Cameron. Still, Cameron has written a remarkably good account of his years at the helm, For The Record. It is self-reflective, honest and highly readable.
And as his successor but one, Boris Johnson, and Labour leader Jeremy Corbyn outbid each other to shower leaves from the “magic money tree” on voters, Cameron provides a useful reminder of quite how bad UK’s public finances were when he entered Number 10 in 2010.
“Our debt was heading towards 100% of our national income and here was the danger: investors won’t invest in your country, and lenders won’t lend, or will ask for much higher interest rates in return for the risk they are taking,” Cameron writes of his rude awakening on entering office.
“The higher rates choke off growth, tax revenues fall and the deficit (which in his case had crested at 10% in 2010) rises, putting further pressure on interest rates — in this situation the economy can enter a form of death spiral.”
And he did it right at the outset of his first term, by the end of which, in 2015, he writes, “the results were remarkable”. For every job lost in the public sector, five were created in the private sector. By 2014 the country was creating more new jobs than the rest of the EU put together, and unemployment had tumbled to its lowest level since 1975.
Of course, there is a big row about the sort of jobs created, though as Trevor Manuel reminds us, “the more adjectives you put in front of the word job (such as “decent”) the more difficult they are to create”.
Different countries with different pathologies, to be sure, but there are indeed useful and often profound analogies to be found in the wider world, some worth emulating.
Leon, a former leader of the opposition, now chairs Resolve Communications.
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