Whites must make sacrifices to uplift SA’s poor

By Time of article published Aug 14, 2013

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On August 1, the SA Civil Society Information Service’s (Sacsis’s) Fazila Farouk spoke to renowned social commentator and author Professor Sampie Terreblanche, who has spent many years researching and writing about poverty and inequality in South Africa.

Terreblanche argues that the ANC’s embrace of the neoliberal approach for economic development is the wrong model for South Africa. He argues further that the ruling party has used the public purse to facilitate an elite transition through black economic empowerment.

However, he also notes that white South Africans occupy a privileged position and that if the dire situation of the bottom 50 percent of the country’s population is to change, whites will have to make a sacrifice. “There is no other way,” he contends.

Our guest today has been reflecting and writing about South Africa’s poverty and inequality for many, many years. We’re here today to talk to him about how it is that we have arrived at this point, 20 years into democracy, where the status quo hasn’t changed. Welcome to Sacsis, Professor Terreblanche.

Thank you.

Before I ask you about your book, I’d like you to talk a little about yourself, for the benefit of our viewers; about your interest in South Africa’s political economy and looking at poverty and inequality. How did it became your area of specialisation?

I am an emeritus professor in economics at the University of Stellenbosch. I lectured for almost 50 years at the university and I specialised in economic history, history of economic thought and on modern economic systems. I am not lecturing anymore. In April this year, I turned 80 years old and I can look back on a very interesting and challenging life.

There is a special reason why I am writing on the poverty problem. It so happened that I was appointed, in 1973, as a member of the Erika Theron Commission. It looked at the socio-economic position of the coloured society in South Africa and I was chairperson of the group in economics and labour. I became interested in the whole phenomenon of poverty.

I read every American book published on poverty, the so-called vicious circle of poverty. I called it the problem of – the position of chronic community poverty.

So in due time, I also became interested in the problem of poverty in the African population group. I published a book in 2002, A History of Inequality in South Africa, 1652 to 2002, and the book has done quite well. This book, Lost in Transformation, is a re-think about the situation after 10 years and I have reason to be even more pessimistic than what I have been when I wrote my history of inequality.

Before I get into talking about the book and the issues you raise in it, I want to focus on one issue. We’re in South Africa at a sad moment. Nelson Mandela is lying on his deathbed and he, unfortunately, is not going to see his vision of South Africa, which is a fair and just society, and I want to quote something from your book – something that he said.

You say that on February 11, 1990, the day of Mandela’s release from prison, he made the following statement: “The white monopoly of political power must be ended and we need a fundamental restructuring of our political and economic systems to address the inequalities of apartheid and create a genuine democratic South Africa.”

That, of course, didn’t take place in the last 20 years and I want you to focus on one particular thing when you answer this for me today. In the book, you contextualise this statement around the fact that he said this, but soon after that, he was having regular meetings with big capital – Harry Oppenheimer in particular – and you talk about an elite compromise that was reached.

I want you to talk about the early 1990s and the secret meetings and the deals that were struck back then between the ANC and capital in South Africa, because I think that’s instructive for understanding where we are today, why things have not changed.

The whole transition process was orchestrated by the Minerals Energy Complex with Harry Oppenheimer and, to a lesser extent, Anton Rupert. They organised everything. Early in the 1990s there were regular lunches between Mr Mandela and Oppenheimer. When I became aware of it, I remember, I was furious. For what must they have lunches? But these lunches developed into regular meetings at Brenthurst, the Oppenheimer estate.

When too many people attended the secret meetings, the meetings were shifted to the Development Bank of Southern Africa between Johannesburg and Pretoria, normally at night. It was easy to park the cars at the back of the building, and people on the N1 were not aware of (those) important meetings that were taking place there.

And there the ANC was convinced to forget about their ideas of socialism and large-scale government intervention, and so on. You see, America was at… in the beginning of the 1990s in a mood of triumphalism. Their attitude was that the American model has won, that everyone must adapt to the American model. So under the pressure of the South African business sector, with pressure from the Americans, that had quite a vested interest in South Africa, the ANC was to give in.

You see, on the question, “Why have they accepted the neoliberal model of the Americans?” – that is definitely not the correct model for South Africa – is the bargaining power of the business sector and the Americans. But the Americans were also in a position to make use of threatening the ANC, that if you… in a rather diplomatic way they told the ANC… if you are not going to accept our proposals, we can destabilise South Africa.

And there is a third possibility that no one can prove and I can only speculate. The question is, how (much) money went under the table?

So there are three reasons: convincing the ANC with arguments, threatening them, and buying them out. Two or all three were at play at that time, because from May 1992, the ANC published a document, Ready to Govern. In it it was clear, previously the ANC talked about growth through redistribution – redistribution through growth. And, you know, the Gear (the ANC government’s Growth, Employment and Redistribution) policy was announced in 1996 – the so-called trickle-down. If there is growth in the capitalist sector then there will be a trickle-down to the poor. It is not necessary to have comprehensive redistributive measures, the typical American approach that with growth there will be trickle-down.

In November 1993, South Africa was governed by the Transitional Executive Council, the TEC. There (were) eight National Party members and eight senior members of the ANC and they had a meeting to ask the International Monetary Fund (IMF) for a loan of $850 million (about R2.9bn at the time), that we needed for the transition and the IMF – of course everything was arranged – was prepared to give the loan, but they had a document, Statement on Economic Policy. They said, yes, we will give you the money, if everyone, all 16, sign the document. And if one reads that document carefully, it is Gear in embryo form. It is the neoliberal policy. And so, the ANC had no choice.

It was, you know, after… in 1986 when Gorbachev and Reagan reached an agreement to seek a negotiated settlement for all the flash points in the world. After that (Gorbachev) informed the ANC that he can’t… the Soviet Union can’t any longer support the ANC (militarily and) financially.

Now the ANC doesn’t want us to mention that, as they said Gorbachev only told them to look for a diplomatic solution instead of a military solution. But the truth is that Gorbachev realised at that stage that the Soviet Union, after 20 years of Brezhnev, was in a near-bankrupt situation. And it’s rather remarkable that the American government put quite a lot of pressure on the National Party from Washington, and that Gorbachev from Moscow was putting pressure on the ANC to seek a solution. But it was a solution, in the end, that the Americans (wanted).

Professor Terreblanche, you’ve been talking about the pressure that the ANC came under in the early 1990s, which forced it, rather than persuaded it, to take on a more neoliberal agenda. However, in the past 10 years or so, particularly, the global geo-politics has shifted substantially. South Africa has joined the emerging nations, the Brics [Brazil, Russia, India, China and South Africa] group. It’s a group that’s meant to be providing a counterbalance in global politics. Why has this new development not in any way influenced the way that the South African economy has developed, particularly over the past few years; and why is that not resulting in any changes that benefit more South Africans?

You see, America is in such a powerful position; all the colonial colonies that became independent since World War II, (have) in fact been recolonised by the American empire. All these colonies have become satellites, dependent satellites, of the American Empire. Their financial power, the corporative power, the military power, of the US is so awful. After South Africa has been slotted in, the Americans can’t be bothered with what we do, that we join the Brics countries. I think that is a large mistake. If there is, in the future, a confrontation, between Brics and the US, the US can smash us with their financial power, their corporative power.

The US lets us do our thing, but are content that it has South Africa completely under its control.

Let’s talk in terms of a domestic focus, at capital in South Africa from a domestic perspective – tell us more about what it will take to bring about some transformation and more of a patriotic orientation in South African capital towards the country. Is it likely to happen?

The South African capitalist sector is doing excellently. In the past 20 years, in spite of the great recession in America, the South African capitalist sector – look at the prices on the stock exchange – has done excellently. But they are now making their huge profits in foreign countries. We are a sub-empire of the American empire. South African business corporations have become transnational corporations – have production lines, in China, in Poland, in Brazil, everywhere. So, we are not our own (masters) any longer.

What about then, the power of the people and, particularly, the power of more empowered groups in South Africa, for example, South Africa’s middle class?

South Africa’s middle class, you see… let me put it this way, that 20 percent of the population is the rich elite, then there (is) 30 percent that’s neither here nor there. They are what one can call a petite bourgeoisie and there is the 50 percent that is very much impoverished.

That top 20 percent – 10 million people – receive 75 percent of total income, 3,7 million of them are white and 6.3 million are black, but the whites are the richer part of that group. The lower 50 percent of the population (receive) only 8 percent – less than 8 percent – of total income. Now it is a shocking situation.

We had a political transformation. Apartheid has been abolished, but the political economic system that was put in its place is an ANC-dominated political system and an economic system that (has become) internationalised, that became Americanised, so from the point of view of the lower 50 percent, nothing of worth (has) happened.

Yes, I must say, there are the social grants for elderly people and the social grants for children. That’s the only positive thing that happened. But it is not good enough. The living conditions of that lower 50 percent, 25 million people, of which 24 million (are) Africans, (is) rather shocking.

I’d like to shift the conversation to talking about solutions. When we were talking earlier on in preparation for the interview, and you said you are going to be reprinting your book and its going to be translated into Afrikaans; and you’re going to be adding a few extra pages, a new chapter if you like, and you’re going to be talking a little bit about solutions.

I’d like you to tell us what you’re going to cover by way of resolving the problems we face in South Africa. But in addition to that, an interesting thing that you mentioned took place in 1997; you made a presentation at the Truth and Reconciliation Commission, and in talking about South Africa’s problems there, what you suggested was that what we needed was a wealth tax. Can you elaborate on that?

Yes, I gave evidence in November 1997, a 20-page document, I had the opportunity to read it to the audience. There were business people, Anglo American and others were there. They (were) furious (with) what I was saying. And in the end I proposed a wealth tax.

Now people are saying – some rich people – we shouldn’t have been so negative about Sampie’s wealth tax. But it’s too late. But the government needs more money to upgrade the living conditions of the poor.

You see, what one must not forget is that when we accepted the American model, we also accepted the Washington Consensus [10 policies that the US government and the international financial institutions based in the US capital believed were necessary elements of “first stage policy reform” that all countries should adopt to grow economically] and according to that, the ANC can’t tax more than 25 to 26 percent of the gross domestic product (GDP). If we (do) it, credit evaluation firms like Standard & Poors and Moody’s will (downgrade) us. So we are trapped.

The government – it is not possible for it. Even if the ANC government was put in charge of the budget. They can tax people and they can spend it as they like as long as it’s not more than 26 percent.

Now the ANC government has used a large part of the taxed government income in their control for elite transformation. For black economic empowerment, affirmative action, corruption, waste, and they are not pressurised to spend more on the poor, and they are also not in a position to increase taxation to 30 percent of GDP.

I would have been happy if it was possible for the government to increase taxation by 4 or 5 percentage points and at least furnish the squatter camps with an infrastructure – with water, sewerage, roads, and so on, and to improve the health situation for the mass of people.

Now there is perhaps the possibility that the ANC can get less than 55 percent next year. If that happened, one can say there is a light at the end of the tunnel. At the moment there is no light.

And what is that light?

That light is that the ANC government can be put out of office at an election; that we can become an effective democracy, or a functioning democracy.

Would you see it as we need a change of government or we need the threat of change to put… to get this government to be more responsive to people’s needs.

Well, take the scenario that they get less than 55 percent – we would be surprised when they are looking in the barrel of a gun, they can lose in the 2019 elections. It is perhaps not necessary to have another government, but a government that… the electorate start to call them accountable.

Professor Terreblanche, one of the things you mention in your book, not in exact words, but you talk about white privilege. You say white South Africans are not willing to give up their privileges. Can you talk more about that?

You see, for a hundred years from say 1894 to 1994, the English speakers and the Afrikaans speakers, were in an (extraordinarily) privileged position. They have entrenched access to power. They have an entrenched access to property. They have an entrenched access to opportunities, educational and others, and to valuable information. While at the same time, the Africans were statutorily excluded from power, property, opportunities, valuable information. The coloureds had a little bit of it and the Indians. Only in the 1980s, the blacks started to get access to power, property, opportunities, information.

In that one hundred years, the whites became rich, became very wealthy, very arrogant, with a rich man’s cult of wealth that they don’t deserve. Because they became rich, there was unbelievable exploitation of the black majority.

The whites were, in the beginning of the 20th century, 20 percent of the population. When the transition took place in 1949, they (were) only 10 percent. Ten percent of the population has all these entrenched privileges. And to look at all these 4x4 cars that can’t be bigger than they are, to look at (the) monstrosities of houses that are built – the arrogance of the white people. They are not educated about their history. None of us deserves what we have because it was a cruel system. It was a system… (unjust) as can be. So the whites will have to make a sacrifice. We cannot grow out of this situation. We will have to do something at the top to improve the position of the 50 percent at the bottom. There is no other way.

Professor Terreblanche, thank you so much for spending this time talking to us at Sacsis. If you want more social justice news and analysis, visit our website at www.sacsis.org.za.

EDITOR’S NOTE: This article is reprinted with permission from the SA Civil Society Information Service.

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