Local Economies workshop Keynote speech: Nic Dawes – Editor Mail & Guardian I know that anthropology is fascinated with perversities so perhaps I shouldn’t have been very surprised when Deborah asked a journalist to come and talk to you about economics and economic policy today. And as you know, journalists are really pretty much ineluctably caught-up in a set of very unreflected discursive practises, or even rituals in our engagement with the world and – “If it bleeds it leads” – as Hans Magnus Enzensberger said in a different context, “human sacrifice is a thoroughly modern phenomenon”. So there’s a kind of embarrassment structured into this whole engagement and performance, a threat of exposure in front of you. But I know that you’re well schooled in the late twentieth-century ethics of your profession and I understand that those compel upon you a kind of complicated dance of self-undermining and questioning in respect of the object of your curiosity, so I should be OK, even as a representative of that tribe “the newspaper people” who allegedly share no such scruples, and ought therefore to be subject to the scrutiny not just of social scientists but of tribunals and information commissars. But we’re not here to talk about media freedom, or at least not directly, although I think we’ll see that media freedom and freedom of information are concerns right now for reasons that are closely linked to the broad policy and governance themes that are of concern to us. Instead of talking directly about that, though, I’ll tell some stories about South Africa’s recent economic history and in the process try to bring us to what I think is the rather extraordinary juncture of Spring 2010. In the process I want to advance two broad, and I think converging, propositions. The first is that the framework we’ve used to tell the policy story of the last 20 years, useful though it might have been, no longer tells us much about where we are now. The second is that no conversation about our economic policy direction makes any sense anymore without a discussion of how democratic legitimacy is derived and sustained in a single-party dominated system like ours. I won’t go on for very long, you can treat some of this as a provocation and then we can have a conversation about it, hopefully in the remaining time. 1 So let’s do the time warp for a minute. The story we’ve been telling, certainly in the press but I think more broadly in society since 1996, is a story about bilateral symmetry, about left and right and the oscillation, the policy oscillation if you like, between them. And there are several exhaustingly familiar versions of this tale, I’ll run through just one of them to try to set some of the context. One version of it goes like this: the adoption of the Growth Employment And Redistribution strategy in 1996 represented a fundamental break for the ANC with its progressive and socialist past, and set South Africa on a neo-liberal course that’s widened income inequality and left the poor worse off than they were under apartheid. A glance at social development indicators, starting with the decline in life expectancy from 62 to 48 over the past 16 years, is enough for me to confirm that charge. The alternative version of the same story is that Trevor Manuel, backed by the term of Thabo Mbeki and the best team of civil servants in the government, abandoned the ideological touchstones of the governing party and replaced them with pragmatism and some basic economics that dramatically reduced government debt and, with the assistance of SAAM independent monetary policy, created the fiscal space for expanded spending on both basic services and infrastructure. The reward is that we were able to struggle through the 1998 markets’ crisis and the 2001 attack on the Rand, and begin really ramping-up real government expenditure around 2003, both on the social wage and on economic infrastructure. As Manuel told me in the last interview I did with him before he stepped down, his version of this story is “Of course the 1996 project was a class project”, he said, “it was a working class project”. For the record I’m actually in accord with the second assessment as far as it goes - it doesn’t necessarily go all that far. Certainly Manuel’s claim in his October 2008 Mini-Budget Speech, that South Africa was “well-positioned” as a result of all his work to weather the global financial crisis, rings pretty hollow in the face of a million job losses. But the real point I’m trying to make is that this convenient opposition continues to shape analysis of South Africa’s political economy, to the detriment of both our policy situation and of that analysis. And it’s in this framework, this binary framework, that 2 we’re supposed to understand the “battle for the soul of ANC” and the fractures that emerged around the succession race between Thabo Mbeki and Jacob Zuma. The unions and the SACP supported Zuma, we were to understand, because he would return the party to its leftist roots: no more trade reform, public-private partnerships, sales of state assets for fiscal prudence. Instead, parastatals would massively drive job creation, social welfare would expand and so would real wages, the deficit would grow and the Rand would be pushed weaker, interest rates would be cut and exploding domestic demand would fuel a virtue of cyclical growth. Take a look at COSATU’s economic policy statement yesterday, and we’ll see that not much has changed, except that the financial crisis has created a sort of open out crying in market ideologies; and nothing now seems quite as crazy as it did two years ago. But I’m not the first person to point out that Jacob Zuma has never given any indication that he is supportive of a dramatically leftist economic policy, or indeed of any economic policy at all. What he’s opted for instead is what comes most naturally to him, I think, conciliation and the balancing of forces within his cabinet and his party. In Pravin Gordhan you have a former communist who now believes that efficiency is the royal road to equity, and that the opposition between the two is false. That is, you need to stick to your disciplines if you’re going to be delivering improvement in those social development indicators that I alluded to earlier: tax compliance, anti-corruption initiative, fiscal prudence, sound monetary policy. This is the toolkit that he brings to it, backed up very much by a moral vision about equality and development, but also about waste. You could even allude to his past as a pharmacist and a small businessperson when trying to understand his attitude to waste and cash flow. So Gordhan believes in rules not just of governance but of basic accounting and he knows that there are particular limits to what a state can do with the levers of power at its disposal. On the other hand, Ebrahim Patel, if you like the union deployee in cabinet, and Rob Davies, the trade industry minister, have real faith in the capacity of the state to direct the economy. Their unfortunately named ‘Industrial Policy Action Plan’, or IAP 2,is supposed to lay out the framework for state intervention to steer the development course of the economy in an equity-enhancing and job-creating direction. And this seems 3 to me picking sectors that you think are going to achieve the kind of objectives you want, creating conditions under which they can grow: tourism, light manufacturing, chemical, cars. You can then use a mix of policy instruments – tariffs, subsidies, regulatory measures to protect infant industries from the savagery from global competition and in the process of self-discovery - which always sounds a bit naughty to me - figure out what this economy is good at. I can’t help but think of this as a kind of “play-pen economics”. Outside the big kids are playing bruising games of global division of labour and comparative advantage, while inside we have a go at a scale model of the real thing until nanny determines that we’re ready to emerge. And if you listen to Gordhan’s budget speech in February, with its stress on openness and competitiveness, and the IAP announcement two days later with its emphasis on the care and feeding of fragile sectors, you’d be forgiven for thinking that government had two economic policies being run by three different departments. And I actually think that is the case. But the cleavage didn’t really start under Zuma and it’s a mistake to think that it did. It began under Mbeki and it led a senior treasury official to describe the situation to me like this: “The thing about industrial policy is that the DTI pretends to have one and we pretend to fund it.” (That was four years ago, I think.) The fundamental tension in Mbeki’s cabinet, too, was between those who believed that the South African state had massive policy and implementation capacity, just waiting for the cash to swing into action, and those who were handing out that cash and fretting that they weren’t seeing much performance in return. The first group was exemplified by Alec Erwin, and also more broadly by the adoption in 2004 of the term ‘developmental state’ to capture the newly confident stance of the booming late GEAR years, as austerity began to pay off – and to end in fact – and state spending began to shoot up. I recorded a 2006 interview with Erwin in which he invited me to visit Eskom’s grid control centre. He said, “There’s this young woman,” and his eyes were shining with excitement, and he was waving his hands around, “and she sits at the control panel pushing these huge amounts of energy across the grid, you really have to see it.” And I took that as an allegory for his entire approach to policy and 4 perhaps to politics. It’s why he backed the man-made boon (unsure of word) of Gogga and the really expensive (unsure of word) modular reactor. It’s why he could say without a trace of irony, “the unbundling of Isicatiumba was the most successful industrial policy intervention in South African history.” Gogga is still more-or-less empty. And, I owe Erwin a very good bottle of whisky if it ever gets a private sector anchor tenant. He may try to call in the debt when project Mthombo, the planned R80 billion crude oil refinery breaks ground there. But that won’t happen without at least 50% funding from the state, probably more and, Mthombo for all that it’s a new government initiative is very much an Erwin sort of project: it’s huge, relies on massive state investment and a long view, it’s motivated by resource nationalism, sort of an idea that there is something called ‘African oil’ that will somehow flow to us on better terms of trade and more reliably than refined product from the massive stores of excess global capacity. Frankly I think this kind of language is like a warm bath for many of our leading politicians. They had to strain to accommodate themselves to what was seen as the liberalism of Trevor Manuel’s language. But this kind of stuff is familiar and comfortable. It feels like common sense, it’s relaxed, and it’s easy, it’s a discourse that lies ready in hand for people who are trained in the kind of statist approach of the 60’s and 70’s. The same goes for calls to weaken the Rand in order to boost manufacturing or for higher deficits in lying with the new latitude that finance ministers have in the aftermath of the crisis or trade barriers to keep out Chinese T-shirts and New Zealand lamb. Very few are bothered to think about the fact that the weaker rand and lower interest rates will probably rapidly fuel inflation, push up wages and interest costs, and erase any competitive advantage that they may have briefly granted us. I think plain people forget that the term ‘developmental state’ was coined by Chalmers Johnson for post-war Japan where egg-heads at the Ministry of Trade and Industry played a central role in charting that country’s rise as an industrial power. What we share with Japan in that period is a single-party dominant system, which ought to help in pushing through programmes with determination, but we don’t share the cadre of very highly trained civil servants who managed that process. Whether in mega projects or the employment of complex industrial policy, we simply don’t have the people. A communist who works in the very senior level of the economic cluster told me six months after the 2000 election 5 and his elevation from parliament to government, “I’m starting to believe in God, because it sure as hell isn’t us that’s running this thing.” There’s also a difference, along with democracy, between South Africa in 2010 and China, where Thabo Mbeki and his successors turn when they want to talk about ‘developmental states’. In fact, whether in the Mbeki years or now, the caricature of left and right within government or between government and COSATU, or to step a little bit outside the charmed circle, between government and social movements like Abahlahli, has obscured the enormous redistribution of income that has been going on, particularly over the past decade. The social welfare budget has grown 10% annually in real economic terms. Grants now account for more than R80 billion of the budget. And it’s not really surprising, I think, that demands for a basic income grant have faded away; they’re pretty paltry compared with what is now being paid out. Meanwhile the tax burden has actually grown, particularly since 2007 from around 24% of GDP to 28 or 29% today, that’s more than a 10% increase in the portion of the economy going to tax, without any increases being implemented, and the taxpayer base remains especially narrow. Spending on health, education and housing dominate the budget. So the immediate and redistributive intent of this government is clearly evident in its fiscal process, but the outcomes are disappointing and understanding the reason for that disappointment takes us closer to a realisation that the oscillation between left and right oughtn’t at present to be our primary focus. What we should be thinking about instead is the quality of governance and the democratic legitimacy that flows from it or - as is the case right now - doesn’t flow from it. And inextricably mixed up in that question is the narrowness, the weakness and I think, the incoherence, of our social contract. Formally that contract is captured in the NEDLAC arrangement between government, big business and organised labour, the social partners who are supposed to work together to guide the transition to democracy by providing the economic conditions that will keep everyone on side. It’s a pretty narrow deal, and if you’ll forgive me some violent journalistic short-hand words like this, formal sector workers get decent wage settlements, business gets a reasonably friendly operating environment, and government gets empowerment and tax compliance while ensuring that the poor don’t rise up and 6 overthrow the whole thing. And that deal is to some degree mirrored in the arrangement of the tripartite alliance, and I think its breakdown is also reflected in the strain that the alliance is now under. There’s no clear set of principles underpinning this set-up except that ‘we could do best if we could all find a way to get along in a more-or-less marketoriented economy with strong labour rights and social protections’. None of the very specific and detailed mechanisms of Rhineland corporatism, for example, are in evidence. We don’t have worker or state representatives on board, we don’t have wage or price restraint packs, we don’t have hard targets; these kind of things just don’t feature. Nor does a clear statement about a shared economic policy vision. So, what’s the result? We get pretty steady real wage growth in the formal sector, but also serious constraints on the growth of formal sector employment, along with a fairly regulatory business environment, a gradual introduction of competition, etc. We also get sticky inflation, a frustrated central bank. More recently, though, we’ve seen double-digit wage increases and massive strikes come hot on the heels of massive job loss and low inflation. These things can’t be explained in the register of economics or of social partnership. Workers - whether in the state or private sector - ought to have no pricing power now when a million people have just been thrown out of work, and yet the promise of an increase equivalent to twice CPI is enough only to suspend the public sector strike, not to end it. The public sector wage bill is now around R270 billion, up from around R140 billion three years ago: an extraordinary increase. A large and growing number of people are left out of this deal, and they’re angry. Without the massive transfer of funds they get from the state via social grants they would be angrier still. Dampening that anger, rather than rolling it toward the hospital, school and education services that they barely use, is what South Africa’s small tax base actually pays for. But it’s not just those outside the iron triangle of big business, the state and organised labour who are cross. Government workers, despite the nominal wage increase of 60% over the past four years, are among the angriest. What’s the point, you might ask yourself, of a tripartite alliance that cannot find a solution to this impasse and cut a plausible deal between the workers, the state and citizens? The embarrassing fact is that it 7 tried. The union leaders, including Zwelinzima Vavi, helped to come up with the 7.5% and R800 housing subsidy offer that their members still haven’t accepted. And for me, a strike poster pictured on the front page of The Sowetan just as settlement talk around those figures was getting under way, captured the moment we find ourselves in: it said this: ‘Vavi, if you accept that offer, give it to Zakumi Zuma so he can use it to build showers and fight HIV.’ I think that really cuts to the heart of the matter. It’s got nothing to do with whether we adopt a relatively more liberal or more statist path. Remember Vavi was central to the cutting of this deal, what the poster tells him is that he no longer has a legitimate basis to represent workers. And, it tells Jacob Zuma that he no longer has legitimacy either. In this case the remarks, his remarks, around showering, to prevent HIV, are raised as a question of credibility and his trip to China - where the (2010 FIFA) World Cup mascot Zakumi was of course manufactured - is alluded to. Other similar posters alluded to Zuma’s polygynous lifestyle. Some said things like ‘Come back from China and marry me too’, and others alluded to his family’s fast-growing business empire. In the negotiations themselves and on public platforms, unions, negotiators and leaders consistently referred to the flash cars driven by ministers to their expensive hotel stays, when they wanted to argue that the proposition from the state that its coffers were empty wouldn’t stand up. So, the question of legitimacy and the position from which you negotiate has been fundamental to a pretty severe breakdown in the arrangement, however flawed and partial we’ve had over the past 16 years. And I think the anger of the social movements isn’t so much about the size of budgetary allocations for housing and basic services, but about the quality of delivery of those services, which we now know is seriously affected by corruption, incompetence, deployment, etc. South African visitors to Beijing are enthralled by the capacity of the Chinese state to get things done, that’s why the ANC is sending its cadres to political school there. But the Chinese government can use pure power to achieve these aims, things are different here. Here we need to use other mechanisms, democratic mechanisms. 8 Another anecdote – in 2004 I attended an ANC fundraiser held appropriately enough at the Grand West Casino in Cape Town. Thabo Mbeki, helped by Trevor Manuel and Iraj Abedian, one of the architects of GEAR, was entertaining the Cape Town business worthies for cash. If I recall correctly there was an auction of paintings and memorabilia and things like that. And Mbeki explained, “You ought to give your support to the ANC,” he said, “because the people have patience with us. We have enough credibility with them as a result of the struggle to get them to accept the gradual course that we’ve adopted.” Not any more. In democracy you need legitimacy to make the deals stick and a popular mandate every five years is no longer enough to ensure that, it seems. There is a crisis of legitimacy on the commanding heights and it flows from government’s failure of all kinds, from simple incompetence, from stupid statements about showering to prevent HIV, to outright corruption and cronyism. So to the extent that widespread reporting on ministerial lifestyles and the enrichment of cronies tends to call into question the legitimacy of our rulers’ conduct, it’s not surprising that some of them want a Media Tribunal. In this environment where almost no one can claim to speak credibly, the demagogic politics and indeed economics of nationalisation, of super-taxes and of media restrictions find ready audiences. That’s why the split in government and the government party that really matters is not between left and right, it’s between the governors and the looters. It’ll make a difference of a few percentage points of GDP here or there if the forces of the disciplined left prevail on trade policy for example, against the centrists at the treasury who’d like to see a more open economy. The survival of the democratic project, and with it our development trajectory, is at stake if the rentier class is allowed to sharpen its teeth further and become, as Zwelinzima Vavi suggests, a truly predatory elite. So the biggest economic policy question of our time isn’t whether South Africa has an economic policy (it has several - you can pick your own), but whether it can credibly implement any kind of policy. And if you needed proof that this question wasn’t just bugging paranoid investigative journalists, it arrived in the ArcelorMittal deal last 9 month. You probably all know the story. Briefly, on all the available evidence, a fiddle by a few ANC insiders to take advantage of an ill-feeling between Kumba and Arcelor, filing a dodgy prospecting application on an existing mine, was then aggressively turned into a massive scheme to enrich the friends and family of President Zuma. His son Dumisani, his benefactors the Guptas, and Zandile Zungu, a businessman very well connected in cabinet, are the biggest beneficiaries. And Mittall was all too happy to buy off this crew in order to keep its access to cheap iron ore. The results cut to the heart of our industrial economy, and industrial policy in fact, crucially efforts to drive down steel prices, they also seriously undermine the credibility of our mining regulators. So this kind of conduct isn’t marginal anymore, it’s a substantive threat right now to the basis of our constitutional arrangements and even to the narrow social pact that we currently have. And I could carry on about the independence of the judiciary, or I could talk about how the free-flow of information is the lifeblood of markets, but perhaps it’s enough to say that these are actually economic development questions not just political ones. So I think our development past needs to sustain a more leftward push or rightward one, but it needs a government that governs, not a hollowed-out set of institutions that serve as a feeding-perch for corrupt elites. So I say again, and for the last time, the most urgent economic question of 2010 is governance and democratic legitimacy. It’s time that the governors realised that, and united to defy the looters. Deborah: Thanks very much, Nic, for a very interesting and provocative talk. Your talk gave a fabulous backdrop to the kinds of complexities that we’ll be exploring in a more detailed manner today. Being anthropologists, we tend to look at micro-aspects, but many of the things that you talk about, especially the huge contrast between discourses that favour the state on one hand, and ideas about South Africa’s classically neo-liberal character on the other, have been a central conundrum for a range of social scientists, not least anthropologists. Just to throw something into the mix: the anthropologist James Ferguson tends to see the prevalence of social grants in South African society as an example of a classically 10 neo-liberal phenomenon, despite the role played by the state. Many anthropologists and social scientists tend to view this society in that way, and it’s interesting to hear your talk which suggests there is considerable divergence between those two different angles: state and market. Perhaps anthropologists have taken an overly simplistic view of it, because they tend to think of neo-liberalism as a more pervasive phenomenon which forces people to self-discipline at every level. Even if people are protesting they might still be subjects of neoliberal governmentality. That is certainly one kind of analysis I’ve come across. Ilana van Wyk: I have a question about legitimacy, you seem to identify that as particularly problematic. But we still find most South Africans voting for the very party that is totally illegitimate in a sense, how do you explain that? Nic: Here I’m really at risk of embarrassment in front of anthropologists. But I think that - and I’ll try and allude to what Deborah said as well - people’s relations to power and the identities that they perform in those relationships are much more complicated than an overwhelming interpolation by neo-liberalism, or by anything else. And my sense is that people go into a voting booth and live out a particular political identity that’s available within that voting booth. So you stand there in front of your piece of paper, and you’ve got a set of choices available to you, which constrain the performance of your political identity, right? And what you do when you make your cross next to the ANC is you live out the most plausible choice that’s available to you under the circumstances. And then tomorrow you go and burn down the library and throw the councillor out of town. And that happens because you are very clear about the fact that that person lacks legitimacy and that those state agencies with which you interact lack legitimacy. And there’s a different set of choices and opportunities for you to act out and live a political identity in relation to action in the street than there is in the voting booth, and I think people are complicated so I suspect that that’s what’s going on, but that’s a very hand-waving analysis. Penny Hawkins: Well, I have to confess that I’m an economist not an anthropologist. The issue that I really want to address is connected to your cry “let’s have policy of a sort, let’s have governance of a sort that is better than its been, let’s have more decision11 taking”. My concern is that, because there is this multiple thread of poor governance, a disconnect with what it means to be democratic, the same democratic movement that led to the first democracy in South Africa can now say “But we must actually stop the flow of information, arbitrarily, on an annual basis as and when we choose”. From an economic perspective, what worries me is that that also undermines any ability to take decision risks within the government structures. So there are clear options that appear to be expressed to them all the time, consultants are scrambling over each other to give opinions and analysis and advice to the state, but the problem is that, I believe, their ability to make decisions has become more and more moribund, so they are simply cast in conservativism. I don’t know if the people who are left in the Treasury are neo-liberal. I think it’s just that they’re too afraid to say anything, just like all the other departments. Nic: That’s my impression too. When you had a broad-shouldered Trevor Manuel clearing the path for his bureaucrats, people were prepared to say quite a lot and do quite a lot. During the recent strike, one statement came out of the Treasury and it was issued through GCIS, it didn’t come directly from the Treasury. Anecdotally, I have a sense that there’s a real anxiety in the Treasury right now, a kind of crisis of confidence that wasn’t there three or four years ago. Now, some other government departments might be celebrating that because of the resentments that there are of the privileged position that Treasury took for itself. But I think you’re right. We talk about it crudely in the media as a leadership crisis. Let me step back. Jeremy Cronin speaking about ZANU PF, I think in about 2004, said that ZANU PF is no longer confidently fostering a progressive hegemony. I think that you could say something similar about the ANC right now. And I think that it’s like a body that’s not in control of itself anymore. It feels, like, this limb twitching and that leg thrashing around, and you can almost hear the sort of bodily metaphors emerging in its language of lack of self-control and the overarching principle seems to be “how do we regain some kind of coherence, political coherence, over that body?” And any policy statement of any substance is seen by those who might adopt it to be a threat to a certain coherence because somebody might disagree. I think it’s a very dangerous situation. 12 Joe Trapido: I’m probably one of the few people who knows nothing about South Africa. But you said that corruption was the key problem of the government. My question is, lots of countries have experienced very fast economic growth while being quite corrupt. Indonesia or India spring to mind. What’s special about South Africa? Nic: I thought about that as I was writing and I think that the difference is here. When Indonesia was experiencing vast economic growth and corruption, it also wasn’t very democratic, the same goes for Malaysia. And there was a kind of directedness to the corruption. So, for example, in Malaysia, party bosses who were deployed into business and had to return a portion of their winnings to the party, did so in quite a disciplined party structure and with quite clear outcomes in mind - that’s one sort of difference. It’s less managed here and there are clear views among some jockeying factions within the party that, for example, you need to build an alternative capital base to your factional opponents. So people will tell you, and people have told me, that the Kumba deal was legitimate because it helped build an alternative capital base to Tokyo. The other thing is that I think we are at a different point, that the sequencing is different. So those countries to which you refer had a period of primitive accumulation along with limited democracy and gradually became more open and democratic. We opened up enormously, and built our experiment on an idea of democratic legitimacy and on a struggle that was supposed to produce democratic legitimacy. To move back from that, I think, is a much more difficult and awkward process. South Korea is another good example. They had their period of primitive accumulation before the democracy became more fully formed. So I think we’ve got problems with discipline on the one hand and with management of corruption, and on the other hand with the sequencing in which cronyism appears in our democratic history. Gerda Piprek: We need to look at corruption not as the cause of the problem, that is not necessarily what leads to the demise of a government, it is a symptom. And there could be different diseases that lead to corruption, so there are underlying currents of which this is a symptom, and these underlying currents are very concerning. Those differ dramatically between these various countries. 13 Nic: It’s also not just corruption per se, that’s the reason that I referred to the shower incident. It’s a sense that leadership is credible at a whole set of levels. It also has to do with competence, has to do with a deployment policy that in some cases has produced many good civil servants, but in many has resulted in people who may not be corrupt but who are simply not equipped to do the kind of work that they ought to do. Deborah: One of the points that’s sometimes made in anthropology is that when people talk a lot about corruption in any human society, it has the effect, to some degree, of reinstating the belief in a non-corrupt type of state. It is true in India that everybody everywhere continues talking about corruption but one effect of this, if not a function of it, is to increase everyone’s beliefs that there is some type of state out there that is possible: a reaffirmation of people’s beliefs. Nic, a lot of what you say is tied into macro-policy: I’m interested in finding out how people at lower levels experience all of this. And whether people perhaps think of the state, irrespective of who is in power, as a relatively stable phenomenon, which allows income to trickle steadily into people’s bank accounts. So whether you’re a civil servant who gets a regular wage or whether you’re a person who gets a social grant – a much less amount of money – that wage is coming through, irrespective of who’s in the government. What I’ve noticed in my research is that vast numbers of people make it their business to extract that from the people who are getting it as a regular thing. So, in some instances it seems as if there is a very stable order, despite all these kind of anxieties and tensions that you describe. Nic: I think it’s a stabilising order. I do think that the massive impact of the growth in the social wage is much too readily dismissed by critics of the fiscal policy, particularly of the last seven years or so. I think it has had a stabilising effect. In fact there is quite good data to show that although South Africa’s GDP co-efficient has grown, the impact of state spending has been to reduce it. So I think it is stabilising. The question is whether it’s stabilising enough for people’s confidence in our current constitutional arrangements to persist, and whether it is stabilising enough to squeeze out the kind of demagogic politics that we are hearing more and more of. 14