HLEG thematic workshop on Measurement of Well Being and Development in Africa, Ben Turok
- 1. Ref c237a 12 oct 2015 Measurement of Well-Being and Development in Africa Conference Durban International Convention Centre 12-14 November 2015 INTRODUCTORY REMARKS SESSION 1V INCOME AND WEALTH INEQUALITY By Ben Turok Institute For African Alternatives (IFAA) 1. I want to make some comments on tracking the evolution of multidimensional inequality and well-being. With respect to inequality the most disconcerting aspect of the South African political economy is the fact that one of the most effective liberation movements in the world has been unable to roll back the inherited inequalities, indeed they have worsened in some respects. Income inequality is higher now than twenty years ago and this is hard to understand or to accept, especially as it is also associated with racial inequality. 2. A recent report by the World Bank examined in considerable detail the effect of fiscal policy on inequality, i.e. how taxes and spending have impacted on poverty and inequality. The finding is that the direct tax system is slightly progressive, the rich bear the brunt of spending, while indirect taxes are slightly regressive. Social spending has significantly reduced poverty levels but income inequality has proved elusive. (South Africa Economic Update; Fiscal Policy and Redistribution in an Unequal Society. The World Bank November 2014) 3. Does this kind of analysis reveal the real profile of South Africa ? On my return to Johannesburg from 25 years in exile, I toured the city to see its development. I was struck by the enormous contrast between the physical appearance of inner city and the industrial areas on the one hand, and the huge informal settlements surrounding Johannesburg on the other. I wrote a paper called South Africa’s Skyscraper Economy which described the situation and noted that Mexico City, Caracas, Abidjan and many other Third World Cities had a similar profile. 4. This phenomenon is not due to income inequalities alone. They reflect huge inequalities in assets of all kinds, and are deeply structural. Income and wealth is deeply political, social, and cultural. 5. The reasons for this structural inequality are well known. But the identification of all its dimensions has not been dealt with adequately. There has been much work on the Gini and even wealth inequality has been examined, although cursorily. Also, unequal provision of services has been analysed, again, separately. But capital assets are the critical factor since inequality here is larger than in incomes, and this is where economic power lies.
- 2. 6. Given the multidimensional aspects of capital and the assets associated with it, we need an overarching examination of the system, including the political system. For ease of further analysis we need a simple characterisation of the system as a whole. 7. Returning to my opening point why is it that the ruling party has been unable to turn back the inequality tide? Indeed it has not achieved the “hat trick” of accelerated economic growth, general poverty reduction and reduced inequality. 8. The ANC view of a future transition was clear- it included both political and economic transformation. (Morogoro) 9. But in the 1988 negotiations economic issues were downplayed. For instance the draft Bill of Rights in Constitutional Guidelines ignored socioeconomic rights. Although there was a surge of thinking about the economy in the early 1990’s in the RDP and Ready to Govern, once the democratic government took office GEAR took over. 10. As a substitute for economic transformation we experimented with BEE which failed in its main objectives and only created a tiny black capitalist class who are by no means economically “patriotic” and who also shovel funds abroad. 11. The frustrations about the lack of structural transformation is leading some, especially Black students, to argue that the government’s objective of a non-racial society is not leading to the emancipation of Black people from poverty and inequality. More drastic action is needed. 12. So we do need more research about inequality in all its dimensions, but in doing so how can we avoid the trap of statistical juggling as in MDG debates?