Are you an optimist or a declinist? Or to use the old cliché, do you see the bottle as half full or half empty.
The lens we use to view events can inform our decisions. That, at any rate, is the view of SA’s economic cheerleader, Adrian Gore, founder and head of the Discovery medical aid scheme, bank, insurance company and other baubles housed in his behemoth.
Speaking at the recent investment summit hosted by President Cyril Ramaphosa, he cautioned against undue pessimism, suggesting, as he has often done, that bad attitudes shape outcomes that tend to be negatively self-fulfilling. In 2019 he warned that “attitude drives fundamentals, not the other way round”.
Two weeks ago, at the investment pow wow, he struck a similar note, citing the country’s economic upside and its “tremendous potential and opportunities”. Again he criticised the narrative encasing our prospects, which he suggested was “much worse than the reality’’. He urged his audience to park their emotions and “crunch the data” to objectively see that “the economy is far less risky than people tend to think”.
Gore is par excellence a data-driven guy and his actuarial wizardry, boundless imagination and risk strategising have allowed him to quickly build one of this country’s largest and most innovative companies.
As for outlook shaping actions, I was recently sent a blog by American author and business guru Seth Godin, warning of the dangers of what he terms “catastrophisation”. He suggests that a sure way to grab attention is to cite every problem or tragedy as a catastrophe — and we catastrophise issues to “shift our attention and activate our emotions”. “It’s a bright red button that causes forward motion to seize up.”
In other words, if you believe the country, or the planet for that matter, is en route to hell in the proverbial handbasket, there is nothing to be done and you might as well disengage or emigrate.
The debate here on whether the country is headed to failed state status has some of these elements. It induces despair, desperation and the shoulder shrug of passive acceptance of forthcoming tragedy or catastrophe.
Investment strategist Magnus Heystek challenged Gore’s rosy outlook. He suggested Gore was talking to his own book, given he is a market leader in an industry heavily regulated by government and about to be visited with the horrors of the latest state-led invention, National Health Insurance (NHI).
As an aside, it is worth pausing on the NHI, now being discussed in parliament, to remember that in its original outline, it proposed to collapse all private and public health systems into a single fund (to be funded by the taxpayer), with the minister of health in charge of a R450bn scheme. Digital Vibes has nothing on this fantastic construct, which public health expert Prof Alex van den Heever suggested was “a fantasy” which could only have been proposed by “a failing health department”.
Indeed, patients denied food, linen and proper treatment at Johannesburg’s Chris Hani Baragwanath, the largest state hospital, where at one stage nurses had to club together to buy food for them, is the grim prologue of what is likely to happen across the board should the state take over the entire hospital industry. Then of course, the state track record in running anything other than into the ground does not reassure.
Heystek suggests that despite his admiration for Gore’s business smarts, he is not buying the sunny uplands scenario. He described the optimistic outlook as thin on data and feeble on facts. He suggested metrics which matter — sky-high unemployment, embedded corruption, low growth, disinvesting companies (which declare enormous dividends or share buybacks rather than risking funding new or greenfield projects), collapsed infrastructure and emigrating taxpayers (9,000 taxpayers earning more than R750,000 a year emigrated in past two years), et al — indicate a far gloomier outlook.
“The more I delve into the numbers, the more I remain convinced that SA’s trajectory towards becoming a failed state in parts will not be arrested or stopped altogether,” Heystek wrote in BizNews.
I always remember a top National Treasury mandarin once observing that “Cyril loves big numbers”. We might also observe that unlike his unlamented predecessor, Jacob Zuma, he can actually read them out with meaning.
So it was hardly a surprise that at the same investment conference where Gore spoke, Ramaphosa trumpeted that his investment target of R1.2-trillion had been 95% achieved in just four years, one year ahead of his five-year deadline. He channelled his inner Gore, advising delegates: “I could feel your exudence and optimism and hope. You are essentially confident that South Africa is on the right track.”
Looking at those figures, Financial Mail editor Rob Rose struck a far more bearish note. He slated the investment pledges as largely political hot air — money that would have been spent on sustaining operations anyway, particularly in the case of the mining sector.
He suggested that instead of giving the conference and business academic investment pledges, he should rather provide more electricity.
Since February 24 I have warned that Ramaphosa is going to rue the day he decided to side with the tyrannous regime of Vladimir Putin and his unmasked aggression against sovereign Ukraine, and that this, over time, will cost us plenty on the investment front.
But when I discussed the issue with a foreign emissary recently, he disagreed. He said long before any investor looked at our pro-Kremlin stance as a deterrent, there were plenty more and immediate red flags. He cited the Heystek list and added some more: bottled ports inhibiting exports, criminal cartels disrupting Richards Bay, tearing up the property clause of the constitution and reneging on bilateral investment treaty obligations.
Still, a hardy optimist can find plenty of facts and data to offset the gloom: there is a revenue over-collection of R200bn more than forecast in the 2021 budget and government has held the line on out-of-control public servants’ wages. The volatile rand, spurred by the same commodity price surge that helped the Sars collection, remains an outperformer of its emerging market peers and far ahead of its previous hurtle towards R20/$1 just two years ago.
And on the corruption front, we have the exemplary conviction of ANC heavyweight Bathabile Dlamini for perjury, suggesting the gloves at last might be off in regard to ANC untouchables. And we now have a new police commissioner who actually has a background in policing rather than politics, and is not a “wellbeing consultant” executive (remember the ill-starred tenure of Riah Phiyega?)
And many days late and many dollars short, the state of disaster has finally been lifted.
Of course, little of this is due to the magnificence of government performance. Rather, it’s because some institutions still function and our revenues owe far more to the price of metals, which reflects not a jot on the functioning of the state.
If, like Gore, Heystek and Ramaphosa you are driven by data or a love of numbers, one that conjured up a sense of disbelief was revealed in parliament last week. Introducing his motion of no confidence in the cabinet, opposition leader John Steenhuisen told MPs SA has a gargantuan cabinet of 38 ministers and about 30 deputy ministers, representing one of the most inflated executives in the world.
By contrast, China (population 1.4-billion) makes do with 21 cabinet members, Brazil (population 200-million) has 23 ministries, the US (population 329-million) has just 15 cabinet members at federal level and Germany, Europe’s powerhouse, makes do with just 16.
So if big government is the solution, we would be living in paradise. Not in today’s SA.
But back to the question, who has the more realistic outlook — the declinists or the optimists?
The objectively correct answer is probably both, since the evidence offers support for both, with a tilt towards a more bearish outlook, though there is nothing inevitable or assured about decline.
Perhaps the best outlook was offered a long while back, in 1999, by economic historian David Landes. In his magisterial book The Wealth and Poverty of Nations, he suggested that a measured not heedless optimism offered the best outlook. Having deep-dived into an array of countries and economies, he concluded: “The one lesson that emerges is the need to keep trying. No miracles. No perfection. No millennium. No apocalypse. We must cultivate a sceptical faith, avoid dogma, watch well, try to clarify and define ends, the better to choose means.”
That is a pretty good recipe for good governance. Here’s hoping.
Leon, a former leader of the opposition, now chairs Resolve Communications.
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