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Author Topic: South Africa Ten Years On...
Boinker
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posted 28 March 2004 02:40 PM      Profile for Boinker   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Imagine that it is 1994 an you are earning $5000 a year as an average South African family and some one tells you that as a result of the end of apartheid you and the new strategy adopted by Anc on the economic front that in a decade you will be earning 30% LESS than you are now! Who would have believed it in those euphoric times? But in fact that is what has happened.

Read about it here

Today saw the opening of the new Constitutional Court building, yet ten years after the end of Apartheid, many poor South Africans are still denied their constitutional rights to water and other basic services. This is why the APF decided that today's march had to go ahead - Apartheid-era banning orders or not!

This is the direct result of Neoliberal programs foisted on South Africans by the IMF


From: The Junction | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 28 March 2004 04:08 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Where did that statistic come from? When you look at data on South African GDP and population growth, real GDP per capita had an average growth rate of 0.5% per year. Not anything to brag about, but nothing anywhere near a reduction of 30% over this period.

The data from the Penn World Tables are:

code:
 Penn World Tables 6.1

COL0 - YEAR
COL1 - South Africa/REAL GDP PER CAPITA (CONSTANT PRICE: LASPEYRES) (unit )

COL0 COL1

1990 7786.3553694
1991 7599.9164486
1992 7343.2467881
1993 7298.8335289
1994 7250.5273486
1995 7222.4404323
1996 7429.2263529
1997 7507.1742463
1998 7437.314591
1999 7460.0663942
2000 7541.0962741


The real problems took place before 1994.

[ 28 March 2004: Message edited by: Oliver Cromwell ]


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DrConway
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posted 28 March 2004 04:25 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
GDP per capita is not always a good reflector of how well the national income (or national production) is distributed.

An example that was actually used in my economics class was: just because Saudi Arabia has a GDP per capita comparable to Canada's does not mean that they all live in nice houses with clean water like we do, for the most part - it is, after all, well-known that Saudi Arabia's oil wealth largely accrues to the royal family, with dribs and drabs for the majority population.

Further, your table shows that GDP per capita has remained relatively stagnant over the 1990s. By contrast, a country like the USA has found that its per capita GDP has been increasing quite handily.

A better measure of the problems or benefits facing South Africans is to look at the real wage.

[ 28 March 2004: Message edited by: DrConway ]


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Stephen Gordon
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posted 28 March 2004 04:39 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I'd still expect a 30% drop in average household income (or whatever the original claim was) to be associated with some movements in GDP per capita.

I'll see if I can dig up some wage data.


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Stephen Gordon
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posted 28 March 2004 04:58 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Found some

Here are the average annual increases in nominal wages in various sectors:

Agriculture, forestry and fishing: 7.5%
Mining and quarrying: 8.25%
Manufacturing: 7.4%
Construction: 5.8%
Retail/hotel/restaurant: 8.8%
Govt sector: 9.3%

The average rate of CPI inflation over this period was 6.3%

Clearly, these averages can be masking cross-sectional variations, but some people are seeing gains in the real purchasing power of their wages.


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DrConway
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posted 28 March 2004 07:17 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
Backing inflation out makes those percentages look a lot less impressive, incidentally.

1 or 2% per year real wage increase doesn't sound too bad, but not great either.


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Stephen Gordon
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posted 28 March 2004 07:18 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
As I said before, nothing to brag about. But it's hard to reconcile the original claim of a 30% reduction in average household income with these data.
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Boinker
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posted 28 March 2004 09:27 PM      Profile for Boinker   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
See March issue of Monthly Review - "From Racial to Class Apartheid: South Africa's Frustrating Decade of Freedom" by Patrick Bond.

He says, "according to the government's own figures black african household income (1995 - 2000) fell 19% (to $3,714 per year), while white household income rose 15% (to $22,600 per year)."

That is black income was 23% of white income and is now 16% of white income, a 26% relative decrease. This is another capitalist solution?

ANC Illusions

[ 28 March 2004: Message edited by: Boinker ]


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Stephen Gordon
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posted 28 March 2004 10:06 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
The link doesn't work. Could you try again?
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DrConway
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posted 28 March 2004 10:21 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
It's here.
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Stephen Gordon
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posted 28 March 2004 10:29 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I don't see any data sources in that story. But it may not be the one Boinker had in mind - there were no references there to the numbers he gave.
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Stephen Gordon
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posted 28 March 2004 10:48 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Hmm. I've been rummaging around a bit, and I see that employment took a huge hit in 1997-98. So even if wages stayed steady, a lot of households would have been badly hurt.

I don't know enough (more precisely, I know nothing) about what happened in SA in 1997-98, so I can't speculate about causes.

It's odd that it doesn't show up in the GDP per capita numbers, though.

Edited to add: Oh. It does. But it picks up pretty quickly after. Employment is still low, though. The glass-half-full story would be about an marked increase in worker productivity. The glass-half-empty story would be the marginalisation of low-skilled black workers - which would mean that huge efforts in education and training are required.

[ 28 March 2004: Message edited by: Oliver Cromwell ]


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Rufus Polson
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posted 28 March 2004 10:57 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
I haven't seen anything on any of the links which says anything about statistical shrinkage in the income of an average family.
However, I can envision two bases for such a claim that does not contradict any of the data that's been brought forward. Not saying they're so, just mentioning. First, it seems as if unemployment and "informal" labour have increased considerably; I see claims that more than half the population is in that situation. Does average income include those people? Certainly it would limit the relevance of wage increases in formal employment sectors if most people aren't in formal employment at all.
Second, the initial claim related to "an average family". Now, the average income isn't necessarily the income of an average family--for that, you may want median income, which does shift when income distribution shifts put more money in the hands of a small number at the top and less in everyone else's.
Finally, I find family and household income a potentially misleading measure. A household made up of two parents, no kids with upper-middle-class jobs may have the same income as a household made up of half a dozen students and/or immigrants with lousy jobs pooling their rent money. But I would consider the DINKs more prosperous. Seems to me that if the economy starts to suck ass, more people are quite likely to group together like that to help ends meet, but household income statistics rarely give any indications that would let you tell if it's happening or not.

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Boinker
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posted 29 March 2004 09:05 PM      Profile for Boinker   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
The author of the article did not give a specific source but this is very familiar stuff when the IMF gets involved with "nation building". Things get worse.

Take water and eletricity as an example. The IMF requires that these things be privatized without providing the means by which the poor can obtain these necessities.

Here is a link that discusses the problems:
Municipal Services Project

quote:
Different service models and policies can have dramatically different health outcomes. They can determine who gets access to a service and who does not, and whether the stated health goals of a government will be supported by, or undermined by, a municipal service delivery programme.

quote:
The privatization of services and housing delivery, for example, has led to problems of accessibility and affordability in some cases, while cost recovery measures have resulted in the cutting off of water and electricity to several million households in South Africa in the past few years.

quote:
African areas remain the most under-serviced, with approximately two-thirds of African households living without access to electricity, flush toilets, refuse removal or indoor plumbing. Service delivery tends to be better in coloured and Asian areas, but overcrowded and dilapidated public housing remains prevalent in these communities - as do an increasing number of informal settlements with little or no service delivery

quote:
Mental health is adversely affected by the lack of adequate services, as the drudgery of dirty, treeless streets wears on the psyche of young and old alike.

There are some positive conclusions but again it is difficult to feel confident that ANC has enough remaining political smarts necessary to adequately critique and parry IMF demands.


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Stephen Gordon
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posted 29 March 2004 10:26 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
This is probably how the IMF sees the situation:

- The infrastructure for delivering water to the rural poor is either nonexistent or falling apart.

- Rectifying this situation requires significant capital investment.

- Public sector finances are strained (otherwise the IMF wouldn't even be involved).

Since the SA govt isn't in a position to undertake the investments required *and* to run the system at a loss, the choices seem to be:

a) Do nothing.

b) See if the private sector is willing to give it a try.

The IMF suggests b).

I'm sure they - and the people of South Africa - would be extremely interested in more attractive alternatives.


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DrConway
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posted 29 March 2004 11:50 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
The SA government certainly didn't seem to have any problem doing all of its own projects and funding back before the ANC took power. Perhaps the IMF's strictures were deliberately designed to hobble the nascent multiracial South African state.

And letting the private sector get its mitts on water or electricity is just freakin' nuts, period.


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Rufus Polson
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posted 30 March 2004 02:30 AM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:
This is probably how the IMF sees the situation:

It is unlikely that is how the IMF sees the situation. Mr. Cromwell, economics is one thing, politics another. The IMF is about the latter. To find out how the IMF, and the World Bank, see situations, you need to concentrate on things like the disparities between their own reports, which describe the major problems caused by their past interventions and make recommendations about how they should change their approach, and their actions, which continue to take the same approaches their own reports have indicted. Looking closely, it is difficult to resist the conclusion that the IMF and World Bank are not in the business of improving the economies of third world countries; they are in the business of maximizing the profits first world businesses can extract from third world countries.

IMF official rationales for privatization tend to focus on the theoretical efficiency of the private sector more than on whether the public sector is in a position to make the investment. And in any case of water privatization, I have yet to see any instance of the new private sector owners investing in the infrastructure. Quite the reverse--every case I have heard of, from England to Bolivia, the infrastructure has gotten worse. After all, why spend a bunch of money extending infrastructure to places where the locals can't pay your sky-high rates?


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Stephen Gordon
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posted 30 March 2004 08:47 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
As I said, we'd all be very interested in a better policy. Got one?
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Rufus Polson
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posted 30 March 2004 08:30 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
One hardly needs a better policy than one which actively makes things worse. Simply doing nothing is a better policy.
But in any case--South Africa is by no means fundamentally a deeply impoverished nation. They have masses of gold and uranium and stuff, and have always played a large role in what goes on in Africa because of their comparative affluence. There is no reason the public sector would have been incapable of investing in infrastructure, except that the IMF etc. were threatening them with a credit boycott if they tried.

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Stephen Gordon
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posted 30 March 2004 10:32 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I don't understand how investing in water-delivery systems is going to worsen the water shortage problem.

If it absolutely must be done using public funds, who would the SA govt borrow the money from? In 1994, the deficit/GDP ratio was around 10%. If they could have found borrowers willing to finance that deficit, the IMF wouldn't even be involved.


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DrConway
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posted 31 March 2004 04:31 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
It's not like South Africa suddenly went broke in 1994. All the gold and diamond backing the nation's wealth was still there. It didn't go gallivanting off to Pluto.

This idiocy of pretending a nation is broke when its potential national production of goods and services is unchanged by a change of government is not too far removed from the idiocy of the Great Depression. All the factories and workers were still there, but because of heightened insecurity, nobody was putting any money into those factories and paying those workers.

If the IMF had gotten its mitts on the USA in the 1930s I guarantee you there would have been a Second American Revolution by the 1940s.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Boinker
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posted 31 March 2004 08:21 AM      Profile for Boinker   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Public-Public Partnerships (PuPs)

A final research gap that will be explored in the second phase of the Project is what is increasingly being referred to as public-public partnerships (PuPs). As the term implies, the emphasis with PuPs is on maintaining public control and public ownership of services and infrastructure, while at the same time revamping conventional models of public service by expanding the role of labour, community organizations and other public and government stakeholders in the planning, implementation and financing of services.

The trend in Southern Africa, by contrast, has been towards public-private partnerships (PPPs), a model that promotes an increased role for private firms and private finance in the delivery of services. With considerable institutional and financial support from organizations such as the World Bank and USAID there has been a significant increase in the number of PPPs in the region over the past ten years.

PuPs, on the other hand, have received very little support from the state or from donors with only two PuPs having been implemented in South Africa since 1994 and no PuPs having been developed in any other SADC countries. There is, however, a growing interest in PuPs amongst labour, civic, NGO and governmental organizations in the region and internationally.

Very little is know about the possible health benefits of PuPs or what the experience has been on the health front in cities/countries that have introduced PuPs in the past. These issues will be examined in the second phase of the Project.



This is a fascinating alternative that might work well in Canada as well...


From: The Junction | Registered: May 2001  |  IP: Logged
Michelle
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posted 31 March 2004 07:47 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I'm just going to move this to "the rest of the world" forum since this isn't about a rabble column.
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Boinker
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posted 31 March 2004 10:45 PM      Profile for Boinker   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
It is peculiar how the Babble is structured and curious how things get moved around. Why do they need to get moved.There was a source column from Monthly Review so I at least felt it was "on topic". Now it seems to have been dropped off the end of the world. What is a topic called "the rest of the world" anyway?

Why can't moderators just chill out and let things alone?


From: The Junction | Registered: May 2001  |  IP: Logged

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