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A Few Tough-Love Questions

South Africa at 20

by PATRICK BOND

Two decades ago, liberation was won in South Africa. In two weeks, the May 7 election will confirm the popularity of the African National Congress (ANC) with a landslide victory. But times are changing: a serious leftist party – the Economic Freedom Fighters founded by ousted ANC youth leader Julius Malema – has appeared on the landscape and the largest union, the 340,000-strong metalworkers, has refused the to support the ANC on grounds it has sold out, especially in the wake of the August 2012 Marikana massacre of mineworkers by police on behalf of the platinum mining corporation Lonmin.

What kind of patronage system now exists, to help explain why the ANC gets votes in spite of disastrous pro-business economic policies that worsened already world-leading inequality and unemployment after 1994? Post-apartheid social policy – especially 15 million new grants, mainly for the mothers of poor children – is the main plot within what president Jacob Zuma calls the ANC’s “very good story.” In reality, it’s a tall tale of tokenism, once we get to know the devil in the details.

But hyperbole rules in this election year. Government has adopted “a northern European approach to social development”, according to Alan Hirsch in Season of Hope, the main insider survey of post-apartheid policy to date. Aside from welfare grants, the provision of Free Basic Water and roll-out of essential services are also the stuff of wild claims by the government and its backers, including the SA Institute of Race Relations.

The claim we have an operative social democracy is contradicted by the relatively small amount spent on grants:  R118 billion (US$10.9bn) in 2013/14 against an expected R2.1 trillion (US$194bn) GDP. If we were really Northern European in approach, that spending would rise by a factor of nearly five.

South Africa spends more on society in relation to GDP than only India, China, Mexico and South Korea amongst the world’s 40 main economies, in spite of having much higher inequality. The ANC government spends less than half of as much as do Brazil’s and Russia’s in relative terms, according to a 2011 survey by the Organisation for Economic Cooperation and Development.

This sort of tokenism in social policy occurs not because the government has hit a fiscal ceiling. Overall, the public sector’s annual deficit and total domestic debt are relatively modest in comparison to peer economies.

Even if the state appears under-committed in fiscal terms, the grants do buy loyalty, it seems. Small as they may be in aggregate, the monthly grants are by no means tokenistic to recipients: the poor who are elderly or severely disabled (R1350 or $125) or kids (R310 – $29 – to low-income mothers and R830 or $77 for foster caregivers). Still, they keep recipients just below or hovering around a poverty line; the poverty rate hasn’t budged since 1994.

These social grants were inherited from the apartheid regime, but then were shrunk and widened. They widened because no longer are most of them limited to race groups exclusive of black Africans; after 2000 (a bit late in the day), the extension of child grants to low-income Africans explains the massive rise in recipients. But the grants shrunk; they’ve fallen in real (inflation-adjusted) terms since 1994 – and if one converts to US dollars to compare internationally, the miserly child grant now is around 40 percent lower than 1994’s level.

The lack of generosity is a function of procedures established to keep the poor at bay, such as “indigency” conditions. As a result, spending on social transfers rose by only around 3 percent of GDP since 1994. Putting on the brake was a political choice, for when rebooting the child welfare system in 1997, government’s Lund Committee complained that “fiscal discipline imposed by the government’s macroeconomic growth strategy makes it impossible to reach all poor children.”

The underlying problem remains Washington-Consensus policies adopted by the National Party in the late 1980s and amplified by the ANC government after 1994. Excessive mechanisation and industry-wrecking imports left businesses unwilling to create jobs. This unwillingness has nothing to do with an “inflexible” labour market, as is often alleged, because amongst the world’s 40 main economies, only New Zealand, the US, Canada, England, Australia, Chile, Saudi Arabia and Brazil make it easier to fire workers than here.

Instead, it reflects the neoliberal Treasury’s excessive power and its propensity towards austerity. Pretoria’s capacity to serve its citizenry steadily fell in comparison to the size of the economy, with government general services as a share of GDP falling from 16.2 percent in 1994 to 13.7 percent in 2012. The share of GDP spent on the mainly state functions of electricity, gas and water also fell, from 3.5 percent to 1.8 percent of GDP from 1994 to 2012.

What happens within state expenditures is also critical: social-grant spending was, over time, less progressive – i.e., less directed to the poorest – in 2006 than in 1995, by quite substantial amounts, according to Stellenbosch economist Servaas van der Berg. Moreover, Treasury has directed far more funding to meet capital’s needs. Most of the economic infrastructure created through taxation – roads, rails and other transport, industrial districts, the world’s cheapest electricity until recently, R&D subsidies, etc – overwhelmingly benefits business and its shareholders, as do many tax loopholes. Corporate welfare is rampant.

The delivery of social services is also under pressure due to privatization. One recent result was the apparently corrupt R10 billion ($930 mn) outsourcing of a benefits-payment system to Net1 (a Nasdaq New York-listed multinational), which bilked recipients with phone airtime overcharging and a usurious loan scheme. The situation is so extreme that even the SA Constitutional Court recommended a re-tender last week.

As Rhodes professor Jane Duncan recently observed: “The very act of placing public functions in private hands means that social security inevitably becomes debased by the profit motive. South Africa’s social security-dependent poor are a massive captive market for profit-seeking companies. In the name of efficiency, the SA Social Security Agency has entrusted the administration of millions of South Africans’ livelihoods to a private sector that appears to be more concerned about lining its own pockets than serving the poor and vulnerable.”

These are uncomfortable facts for defenders of SA social policy, and are rarely addressed. By ignoring the left critique, those to the ANC’s right can firmly hint that enough is enough on social spending. South African Institute of Race Relations (SAIRR) director Frans Cronje, for example, has been cited approvingly not only by natural allies at Business Day, but also recently by Public Service Minister Lindiwe Sisulu and even by SA Communist Party leader Blade Nzimande.

I have written Cronje on several occasions asking him for more rigour in his analysis, but invariably end up disappointed. For example, in 2012 he claimed: “A myth has taken hold in South Africa that service delivery was a failure. However research we have published over the past several years suggests that this is not the case.”

Right then, I asked Cronje, “do you have data on service delivery not just in terms of the capital investment and services installation, but also service standards (e.g. flush toilet in contrast to pit latrine) and the operations and maintenance of services, e.g. pricing, breakdowns, disconnections and other service disruptions?” The reply: “All good questions. Truth is few answers exist in SA. Would have to do the field work to establish the answer.”

Though calling itself “SA’s leading research and policy organisation,” SAIRR never did the field work, and instead, Cronje lauds the ANC for raising the rate of access to water pipes to 89 percent of the population (Zuma recently claimed 95, the ANC posters claim 92, whatever). But the state itself admits that the water access rate falls to 65 percent if you expect water to actually flow through the pipes.

If you then ask where the pipes are located (e.g. within 200 meters, which often means no more than one tap per thousand in a typical shack settlement?), then the genuine access rate falls further, probably well below 50 percent, since water minister Edna Molewa appears uncommitted to satisfying the medium term Reconstruction and Development Programme goal of on-site water supply for all.

Such merely tokenistic social policies leave many ordinary people infuriated, but they satisfy those with power, wealth and strong status quo orientations (no matter their declared ideology). “In terms of basic services and welfare, the ANC has done better than it often understands,” asserted Cronje in January – making it utterly illogical for the masses to protest on average 35 times a day, of which more than five per day are “violent,” according to the most recent “Gatherings Act incidents” reported by the SA Police Service (my sense from working this beat as an academic is that there is serious under-reporting by SAPS). But Cronje told Business Day in January that there are fewer than four protests per day. I questioned him on the discrepancy with SAPS, but no reply.

And in 2012 Cronje also pronounced that “the proportion of South Africans living on less than $2/day has declined from 12 percent in 1994, and a peak of 17 percent in 2002, to just 5 percent today.” Last month, even Stats SA had to sheepishly admit the figure is 46 percent. I respectfully questioned Cronje about this divergence; again, silence.

There is one very good South African social policy story, to be sure: the rise in life expectancy from 52 to 61 the last decade. But it is not government’s to claim. Without the Treatment Action Campaign’s struggle starting in early 1999, six million HIV+ South Africans would have had no hope of getting access to life-saving medicines. Furious HIV+ people fought for their lives against a national health policy termed “genocidal” at the time by the heads of the Medical Research Council (Malegapuru Makgoba), SA Medical Association (Kgosi Letlape) and Pan Africanist Congress health desk (Costa Gazi).

The battle for free generic (not branded) AIDS medicines was won by activists against Big Pharma, the Clinton-Gore government in Washington, the World Trade Organisation, Intellectual Property rights in general and the ANC’s leadership of Thabo Mbeki, health minister Manto Tshabalala-Msimang and trade minister Alec Erwin team. That is indeed a very very good story to tell, certainly the best news from SA since April 1994. But then the logical question would follow: how many of Zuma’s current cabinet spoke out against Mbeki when it mattered? Hmmm.

So SA healthcare is often inspiring from below, but too often paralysed from above. For example, when it comes to the badly needed National Health Insurance promised by the ANC back in 2007 at the ruling party’s Polokwane conference and only haltingly implemented in inappropriate micro pilot projects in the country’s poorest neighbourhoods, we can again point to Treasury as the saboteur. For how much money did finance minister Pravin Gordhan allocate to assist minister Aaron Motsoaledi in ending health-insurance apartheid? Next to nada.

There are so many other ways that the SA Treasury reproduces class apartheid – e.g. through tax, inflation and interest rate policies, exchange control liberalisation, corporate tax cuts, massive export-oriented infrastructure and other White Elephant projects – that it is really no surprise to learn from the World Economic Forum that over the past two years, the SA working class is rated the world’s most militant. Or to learn that PricewaterhouseCoopers recently assessed the SA capitalist class to be the world’s most fraudulent. Or that the World Bank calculates SA way atop the world inequality rankings.

The Marikana massacre was just one of thousands of strikes, protests and violent confrontations with a police force willing to take extraordinary steps to defend capital’s property rights and state elites. Earlier this year, nine service delivery protesters were killed by police using live ammunition; five of these cases were close to Marikana, where activists were by the same police force which still awaits punishment for the premeditated massacre in which they killed 34 workers, injured 78, planted evidence on corpses, and tortured 44 of the arrested miners.

If the ANC’s bragging about its social policy continues without substantial reforms, then long into the future, violent protests will continue rising. The ANC’s neoliberal-tokenistic social policy, along with failed macroeconomic policy, allowed racial apartheid to decisively transform into class apartheid twenty years ago. But a new anti-apartheid movement is rising quickly: a class struggle with enormous potential.

Patrick Bond’s new couathored book (with John Saul) is South Africa – The present as history (James Currey and Jacana publishers, 2014).