E Rasool: EFSA Gala Dinner

17 February 2007

Thank you very much and good evening and a special welcome to Minister
Muller, Dr Greiner, Mr Elzayat, the entire delegation from Germany,
particularly Bavaria, as well as the South Africans who are here. I think no
one will mind if something that is normally seen as background takes the
foreground because of the excellence of their voices, the precision of their
rendition and the integration of a world that is possible if we all simply try
to make it happen - The Libertas Choir. Thank you very much for being here with
us.

I think that the last time that I spoke here they made the choir stand here
for the duration of my speech. I was under enormous pressure to finish very
quickly because I was particularly aware of that last row, precariously poised
and that could fall any moment, if I became too boring. I'm very happy that
they have allowed you to sit this time, so that the pressure on me is less.
Nonetheless I will try to be very quick, because I think that they have given
all of our guests here an appetiser and I'm sure they want Minister Muller and
myself to finish very early, so that they could listen to you.

I think that I'm dealing with a topic that is very important but less
exciting than the last one. The last one I spoke about was: How do we make this
Western Cape and indeed the world a home for all? How do we deal with the
politics of inclusivity, the politics of identity, the politics of belonging
and how do you do this at the level of religion, how do you do it at the level
of race, how do you deal with migration, particularly across Europe and so on?
And how do you build inclusivity and how indeed do you overcome the problems
when fundamentalisms clash whether it is the fundamentalisms of the East or the
fundamentalisms of the West and how to deal with the fall-out of the clashing
fundamentalisms?

I think the discussion tonight is a lot more grounded. The discussion
tonight in a sense goes to the material roots of what creates exclusivity or
what can create inclusivity. And that is the notion of the economy. How do we
deal with the world economy? And particularly, how do we deal with national
economies in ways that create the bases for inclusivity rather than
marginalisation and exclusivity. I must start off by saying that what nations
can do becomes a lot more limited when their economies are globalised. Before,
when an economy was uni-dimensional, you could in a sense choose between
whether you like the capitalist mode of production, or whether you like the
socialist mode of production.

I think that in a fairly uni-polar world, you've got to ask yourself the
question: "What do you do within the context of a dominant market economy?" You
cannot, in a sense, speak about economies outside of that dominant
market-driven mode. And to an extent, if China is anything to go by, the
discourse has shifted from the market as the enemy to the market as a
facilitator of growth. The questions then begin to change. The question is: how
do you put the market at the disposal of the most vulnerable? How do you put
the market at the disposal of the poorest of the poor in the world, so that
indeed we are able to make sure that no one is excluded?

The truth of the matter is that globalisation has to a large extent become a
power that has demonstrated a lot more exclusion in the world. Entire
continents, like the African continent, remain excluded from globalisation.
There are entire countries, particularly those in the South, who are excluded
from the centre of globalisation. And then there are communities within
countries, whether in the North, whether in the South, whether in the East or
whether in the West, who are excluded. To a large extent fundamentalism feeds
off the economic exclusion of marginalised communities, whether they live in
Britain, America and Germany or where ever else; exclusion from the economy is
the basis for inclusion into terrorism, into fundamentalisms, into ideologies
of certainty. Thus, what we are fighting for is a globalised market that would
rather include than exclude. And so the debate is no longer about communism or
capitalism. I think the debate is how to make the market do what it needs to do
to include rather than exclude. And it is here that the two key variables of
the debate are brought to the centre and those two key variables are, on the
one hand, growth, and on the other hand, distribution. So you are no longer
speaking about capitalism or communism, you are speaking about how to remove
the tension between growth on the one hand and distribution on the other hand.
And I think this is what we have not gotten right in the world, we've not
gotten it right in South Africa and the question is: can you get it right in a
country, if it is not gotten right at a global level? Can you determine that
you will have good distribution and growth in South Africa if, for example,
trade agreements at a global level don't allow South Africa and African
countries and the countries of the South an equal footing on which to compete
for world markets.

If they tell you that in South Africa you must drop your tariffs and simply
open your markets to any goods that come in, but the French continue to
subsidise their cows, can you do it? And that I think is the enormous tension
to resolve. So, the key thing is how you deal with these two variables: growth,
on the one hand, and distribution, on the other hand. Gloucester, a character
in Shakespeare's King Lear, had a very simple approach. He said that
distribution should undo excess and all shall have enough. That is the ideal.
Gloucester would have understood that, whatever may happen in the global
economy, distribution, the way you distribute the benefits of growth, the way
you distribute the fruits of a society should in the first instance undo
excess.

That way, if you have too much, you should "undo it" in order to distribute
it so that "all shall have enough." That's the ideal. And if we can all accept
that what ever perspectives we adopt; that distribution is the primary method
of undoing excess and ensuring sharing across society, then I think we probably
have a common point of departure. It is often when you don't have that shared
point of departure that you have the clash and the tension across the world
between societies, between continents and within countries between communities.
So let us except Gloucester's thesis that distribution should undo excess, so
that all should have enough.

I think that what the world struggles with today is the way in which we take
growth and we take distribution and far too often set them up as binaries
opposites; we put them up as polar opposites. For example, Argentina learned a
major lesson up to the crisis, because Argentina using the prescripts of the
World Bank and the International Monetary Fund (IMF) focused entirely on
growth. They focused so much on growth and they had rising growth rates and
paid absolutely no attention to issues of distribution. They obviously did not
read King Lear.

They paid no attention to distribution and perfected a model of growth and
missed the underlying tension that was building up in that society. Until the
crisis hit and the World Bank could not save them. Transfers of money from
America could not save them. Transfers of money from the IMF could not save
them. Nothing could shore up the fundamental instability in Argentinean society
and the crisis ruptured.

I deliberately did not use a successful capitalist country as an example to
speak about the trickle-down effect. I particularly wanted to use a Latin
American country in order to illustrate the point that I am making, namely that
when you are focused one-dimensionally on one of those variables, in this case
growth, you create such levels of exclusion that it leads to the kind of crisis
in society that we saw in Argentina.

Of course, I think that Brazilian society was facing much the same kind of
thing with the creation of these massive elites in society. The were few
beneficiaries of a growth-led economy, but in that case the social crisis and
the economic crisis was averted through the election of President Lula, who
held out the promise of distribution. And he just won another term, because he
was able to persuade Brazilian society that this market is a tough thing. To
get the kind of redistribution he wants is a long-term process.

Let us be patient, he said and he won another term. And so, if he does not
start getting the distribution process right in Brazil, then its crisis will
also come knocking. On the other hand, a similar tension can arise in society
if you take your eye off the ball of growth, when you don't focus on growing
the economy, but you try too much and too unilaterally to focus on
distribution. Many people personalise the tensions in Zimbabwe and the problems
of Zimbabwe by saying Oh, Mugabe is bad. Many people think that it is simply a
problem of corruption. Zanu PF is corrupt. Many people characterise Zimbabwe
simply as a lot of banditry and lawlessness, but while those may be elements,
they are certainly not causes. They are symptoms of something more fundamental
that has gone wrong in that society. And what has gone wrong in that society is
that Zimbabwe has tried to distribute what it didn't grow.

They distributed free healthcare, they distributed free education, free
welfare for this and welfare for that in their first 20 of liberation, so much
so that they distributed only what they borrowed. They distributed only what
they got in aid and invested very little in the productive capacity of the
country in order to facilitate an independent growth path for themselves as
well. And the ruptures in society came when the international community, the
IMF and the World Bank, began to close the tap of lending, of borrowing, of aid
and Zimbabwe had nothing more to give to the people.

No more free health, no more free welfare, no more free this, no more free
that and suddenly you began to see the implosion of a society that had
distributed what they did not grow. So, if Argentina is lifted out as an
example of the extreme of a growth path that excluded distribution and only
created elites until it ruptured in that way, then Zimbabwe is possibly the
example and the extreme of a country that distributed without growing.

It is in that context that I think that the discussion that we are having
today about shared growth becomes relevant. Because the fundamental thesis is
that you cannot grow without sharing (as in Argentina) and you cannot
distribute what you have not grown (as in Zimbabwe). And so the point is that
shared growth has become the new discourse for countries like South Africa in
order for us to avoid choosing any of those two extremes and finding a middle
path in which growth and distribution are fused. And so we find that even in
advanced capitalist societies, like Britain I think that Germany may have
displayed some elements of this that where they have pursued a growth path
because of their resources, they often tried to compensate by effective
distribution to the lower ends of society, the poorest of society, through the
creation of two 'states.'

One is a growth-oriented state for the wealthy and a welfare state for the
poor. And so, in a sense, they have tried to find other methods of some
distribution within the context of a welfare state. But that has its own
problems, because it also dehumanises in its own way by making people
dependent, by blunting the productive capacity of ordinary citizens and making
them wait for the next pension queue, for the next welfare queue, for the next
unemployment fund, etc.
And I think that to a large extent what we sit with in South Africa is an
attempt to find a formula for shared growth with elements of a safety net. But
without extending and deepening that safety net to such an extent that entire
layers of society are rendered unproductive and they lose even the hope of
wanting to participate in the economy and become so absolutely dependent on the
state that they abdicate all their life's ambitions to what the state
provides.

And whatever the pros and cons of the technical debates are around the basic
income grant, the philosophical point of departure has to be a fundamental
question � what path do we want to put South Africa on? And that is why we have
only come with elements of free education 13 years after democracy. We have
decided not to go the Zimbabwean route by giving free education from the
outset.

It is only now that we are beginning to say, Let's get the poorest 40% of
schools not to pay any fees. That is why we introduced free healthcare first to
the most vulnerable children under six and to pregnant mothers. We sent out
that signal right at the beginning. We would not otherwise be in the good
macro-economic situation that we find ourselves in today, because we would have
lost the battle in the attitude of our people, in the philosophy of our nation
and in the orientation of the poorest of the poor.

And I think that that becomes the critical thing in all of the debates that
we would need to understand. And so this idea of shared growth isn�t simply a
mechanism of letting one part, the first economy, get on with the basis of
growing and reaping the fruits and participating in the global economy and
making money and creating elites, while on the other side you create a welfare
system for the poor. That dichotomy is a dangerous dichotomy in society. And so
the question then emerges: what is this notion of shared growth? I think that
the difference to that dichotomous society of an advanced capitalist state and
a welfare state for the poor is one in which you understand that the
fundamental aspect to a nation has to be that it grows its economy on the basis
of good macro-economic factors: monetary, inflation, interest rates, all of
those things.

You don't compromise on these things. But also that you build into it the
elements of sharing. You don�t add onto it the elements of sharing, because
that is the dichotomous society that is the pre-1997 society. You build into
it, you structure into it the elements of sharing, and that means therefore
that on the input side of growth you build in sharing, as well as on the output
side of growth. So what goes into your economy speaks to the intention of
sharing and what comes out of the economy is shared.

The fact of the matter is that you have got to create an entrepreneurial
orientation on the input side of growth. People who have the drive to
participate must have the knowledge to be entrepreneurs. But in South Africa
they also have to have the attitude to be entrepreneurs. And in South Africa
this is particularly difficult. The question that we ask ourselves is: If we've
got this fund and that small business fund and that red door and this
assistance and this bank thing and that bank thing, why aren't we getting it
right? Because it may appear on the face of it that we have the resources to
give people the knowledge to be entrepreneurs and maybe even the kick start to
be entrepreneurs, but why aren't we doing it?

Because fundamentally you cannot have been told for 300 years of colonialism
and then apartheid that you are no good, that you are second class, that we are
not investing in you, that you are only good to be carriers of wood and drawers
of water and so on. And then suddenly 10 years after democracy, confident
blacks step forward and want to take their places in the boardrooms and want to
take the economy by storm and so forth, because the greatest crime of apartheid
was to rob us of our self-confidence. And you can see this every day: a
matriculant who is white and has grown up with a lot of things comes to an
interview with so much more confidence that you are tempted to employ them
without even any further processes, while a black person with a degree comes in
and struggles with his or her own sense of being, with their self-esteem.

They give you the right answers, but in ways that don't inspire confidence.
So that is the deficit. That is part of the inputs of a shared growth model.
The skills, how do you transform the schools to give those kind of skills, when
they did not even have the teachers to teach maths and science. You can have
the intention to teach maths and science, but not every school has more than
one teacher who is trusted by the learners to teach you maths and science
correctly. And if that is a prerequisite for the confidence to participate in
the economy as engineers, for example, then if a school doesn't have a decent
maths and science teacher, you are not going to build the shared growth inputs
and that is where we fall short. There is the aspect of material support; there
is question of the access to assistance on the input side of growth that we've
got to get right.

And then on the output side of growth, you've also got to make sure that
what comes out of the economy is also shared. For example, the basic way of
sharing is that the state is able to put in place services, so that the first
way in which people experience the sharing of this economy is that they know
that they have got a tap from which clean water will come, they have got a
flush toilet, and that they have got electricity, and that they can switch on
the lights and so on.

The second thing is that human settlements and transport systems must make
people feel that they are not thrown out to the outskirts of the city and
physically excluded as well. Because that is what is happening in South Africa,
the Khayalitshas, the Mitchell's Plains and so on are all on the outskirts of
the city. There is the physical exclusion that goes with the economic exclusion
and the social exclusion. And, so human settlements and services must become an
absolute first base of the sharing of that economy. Then there has to be the
sharing of the wealth of the economy as well as the ownership of the economy.
Many people look at black economic empowerment (BEE) as a dangerous thing, as
an aberration, as an artificial addition to the economy, but the fact of the
matter is that unless you are also going to deliberately include undoing what
was a deliberate exclusion you are not going to be able to get shared growth
going. And then you also have to make sure that the most basic way in which
this inclusion in the economy and sharing of the economy occurs is through
employment.

However, the context that South Africa finds itself in is that, just as we
made the transition from apartheid to freedom, including the freedom to
participate in the economy, the world made a transition from labour-intensive
to technology-intensive methods of production. So now suddenly we have millions
of young people who only have their muscles to offer, because the schools
taught them nothing about the skills and the brain power to operate a global
economy. They thought that they would enter the new South Africa, putting their
muscles on the line on farms, in mines and all of these kinds of things,
suddenly we've got to give them the bad news that you no longer need to use
this, and you've got to use that. But nothing in their lifetime has trained
them to use their heads, to use their skills, to rely on maths, and so the
exclusion is also one that takes place at the level of employment.

And so, in the transitional phase we must get all of those things right,
through expanded public works programmes and giving people exposure to this
economy, even for short periods, just so that they know what it requires. We
need to get the learnerships going and to try and fast-track post facto the
skills deficit that we are faced with. You�ve got to build enough of a safety
net, but not too much of a safety net, because too much of the safety net will
mean that no one will go for the upgrading of skills, no one will go for
participation in expanded public works programme opportunities, etc.

So what I have done today is try to problematise this notion of shared
growth, to tell you that we think we know where we want to go to. But there are
two factors that inhibit us from perfecting or even implementing in practice
all of these good ideas that we have. The one factor is that we are
inextricably locked into a global economy that determines things for us. That
even where we can participate as in the clothing and textile industry, we are
not able to get it onto the markets because China is able to do so a lot more
cheaply. In fact, China is able to do this so well that they are even wiping
out the domestic market for our clothing industry. So what do you do with 60
000 clothing workers still left in our economy, with their families, who face a
wipe out if we don't do something drastic.

So you are operating in a hostile global environment you've got to transform
your economy. And the other thing is that we are not doing this like other
countries which are responding to China/India and to protectionist policies
that are in place in Europe. We are not doing this on an equal basis; we are
doing it from a deficit that we've got to get right. And that is the challenge
that we face. So shared growth remains an ideal, something that we work towards
everyday. We get elements of it right every day. We learn by trial and error.
We are able to basically survive and get things going, and we�ve got enough of
a safety net to tell the most vulnerable that we can tide them over the most
difficult times until we get it right.

But the fact of the matter is that partnerships are needed, at civil society
level, such as between EFSA and Tutzing at a sub-national level, such as
between the Western Cape and Bavaria at national levels between South Africa
and Germany at continental level such as the European Union (EU) and the
African Union (AU). Those all become critical integrated elements of getting
the notion of shared growth right.

The difficulty is that you've got to get it right, at all levels,
simultaneously. That I think is the elusive nature of shared growth. But I
think that there is no other show in town except shared growth. You must avoid
the sirens who call only for a narrow growth, just like you must avoid the
sirens, however much you may love them, who call only for distribution. Because
both those sirens take you down difficult paths: the one like Argentina, the
other one like Zimbabwe. And those of us who stand in the middle of those
extremes need to strengthen our backs. And those who don't want this
dysfunctional society must make sure that at the multinational level, at the
international level, they invest in shared growth and try to make it work.

Thank you very, very much.

Issued by: Office of the Premier, Western Cape Provincial Government
17 February 2007