South Africa's Economy After Political Monopoly

Economic Policy Shift

• The traditional view of unfettered markets delivering good outcomes for all is now widely discredited.
• Prominent economists, such as Angus Deaton and David Card, have changed their minds about the efficacy of markets and the importance of power in setting prices and wages.

The Role of Power and Regulation

• Markets need to be carefully regulated to ensure economic power is not concentrated, and outcomes are good for all, including those who lack power in market relationships.
• Unregulated markets have led to growing inequality, excessive corporate power, and unacceptable concentrations of wealth in a small elite globally.

South Africa's Economic Challenges

• South Africa has conformed to the pattern of high inequality, excessive corporate power, and concentration of wealth in a small elite over the past 30 years.
• Measures to reduce inequality through social transfers have been effective, but have limited effects on the overall level of inequality.
• The country's high levels of inequality reduce economic growth, as too few people are integrated into the economy.

Breaking the Political Monopoly

• The African National Congress's loss of its majority in recent elections may lead to a more plural political space, allowing for new voices and better economic policies.
• A unity government comprising the African National Congress and the Democratic Alliance might bring about more inclusive economic policies.

Importance of Contestability and Uncertainty

• Political scientist Adam Habib emphasizes the need for uncertainty and contestability in politics to ensure economic growth is not skewed to benefit the elite.
• When governments are responsive to citizens, the probability of success increases, according to economists Daron Acemoglu and James Robinson.

Policy Errors and the Importance of Evidence

• Examples of costly policy errors in South Africa include the decision on free higher education and the denial of HIV-Aids treatment.
• A more plural political space will pressure political actors to base their decisions on evidence, rather than unilateral policy actions.

Looking Ahead

• South Africa's government will need to make policy choices that evaluate options carefully, based on good research and evidence, in a complex international political space.
• The country's strong institutions, including universities, civil society, legal institutions, trade unions, and business communities, can contribute to policy development.
• The quote by John Maynard Keynes highlights the importance of considering the intellectual influence of economists on policy decisions.

The quiz explores the potential impact of South Africa's broken political monopoly on its economy. It discusses the shift in economists' views on unfettered markets and their effectiveness.