[DEBATE] : (Fwd) Spin for Treasury/Harvard
pbond at mail.ngo.za
Tue May 13 06:58:11 BST 2008
(Here's some clever spin doctoring, apparently in order to keep
potential looming macroeconomic populism in check and the JFK School
studies - done in October 2006 but somehow ripe for release late last
week! - in the same loop as the politics. "Left leaning" to describe
studies that recommend a dual labour market is a bit odd, as I also
found when I met some JFK School folk in Cambridge a couple of weeks
ago. But I guess that's a fair description compared to Raenette... who a
few months ago confided to me that she quit her job as DA MP because the
neolibs had crowded out the libs. By the way, a moratorium on "the
outsourcing of public-sector utilities" is probably not serious, given
how fast Erwin intends bringing private electricity producers on-line,
and how many municipal services are going to private suppliers. It's a
telling reflection of the 'new' ANC's proclivity to talk-left and
sell-right. Devan, are you paying attention?)
Manuel revs up for Gear shift
Raenette Taljaard: Another Take Published:May 13, 2008
SHREWD: Finance Minister Trevor Manuel Picture: SYDNEY SESHIBEDI
Manuel has campaigned for parliament to have a greater budgeting role
Coherent proposals will help craft a governing agenda
Alliance Summit debated recommendations challenging new leadership to
resist ‘economic evangelism’
Finance Minister Trevor Manuel has done it again — leading at a time
when leadership appears to be in disarray on many fronts . A few weeks
after the release of the annual report on AsgiSA’s progress, he has
surprised us all with a new card trick.
The painstaking work of the panel of Harvard economists — which had been
reviewing and making recommendations about South Africa’s growth path
and post-Gear economic progress — has been released. This was done on
the eve of the May 9-11 Alliance Summit of the new leadership forces in
the ANC, Cosatu and the SACP.
The move placed the national Treasury back where it belongs
post-Polokwane — front and centre of policy dialogue over economic
policy, challenging the entire country to think long and hard about the
choices that confront us regarding our collective future.
At the same time the summit has confirmed the strong influence of the
Left over economic policy thinking at this juncture in party structures.
Various proposals have been adopted for further discussion and policy
These include decisions taken at the weekend looking at inflation
targeting again, to allow parliament to amend money bills, to remove VAT
on a wide range of basic foods, and to have a moratorium on
privatisation and the outsourcing of public-sector utilities.
With the exception of the moratorium, the other three areas of summit
decisions have all carried Manuel’s stamp of approval for a long time
and he has actively campaigned for parliament to exercise a greater role
This is therefore a tactically shrewd and strategically important time
to have released the recommendations because they clearly challenge the
new leadership cadre, and society at large, to resist what the
Treasury’s director- general, Lesetja Kganyago, so aptly calls “economic
evangelism” and to debate a new chapter in our country’s economy policy
using empirical facts.
Already a raft of Left-leaning economic policy positions have been
agreed to by the Alliance Summit and a prospect of a large-scale
economic policy conference must be countenanced where the Harvard
panel’s recommendations and new Alliance decisions can be debated.
Among the panel’s key recommendations are proposals to improve labour
market flexibility; provide a wage subsidy to younger workers; increase
competition in key industries; fight cartels and market concentration
that hamper competitiveness; improve the capacity of the civil service ;
craft and implement an effective industrial policy; streamline BEE and
ensure a strategy that retains skills and encourages skilled immigration.
Other key recommendations include running a budget surplus; maximising
revenue windfalls from commodity booms and channelling these revenue
funds; aligning fiscal and monetary policy more closely; implementing
inflation-targeting more flexibly; and that the Reserve Bank be willing
to intervene in the currency market to keep the rand competitive.
Perhaps the most interesting arena of agreement — albeit from very
different vantage points and underpinning assumptions — is the fact that
the Harvard panel’s recommendations and the Alliance Summit’s decisions
have chosen to focus on inflation-targeting and a possible review of the
This has been given additional volubility by a recent article by former
World Bank economist Joseph Stiglitz that has raised questions about the
desirability of such a framework in developing countries. There can be
little doubt, however, that Reserve Bank Governor Tito Mboweni will be
watching this discourse very closely and that he will play an active
part in it to ensure that the Bank’s constitutional mandate remains
unaffected by the detailed changes.
While much of the panel’s recommendations may have been touched on in
previous policy discourses, having a coherent set of proposals to debate
at this crucial juncture will assist in crafting a future governing agenda.
At his first press conference after being elected leader of the ANC,
Jacob Zuma stated that it was not as much the nature of economic policy
that was being contested, but the lack of consultation in the way it was
crafted and its adoption with a “non-negotiable” stamp that was at
issue. He said any new policy trajectory would need to be debated and
While this may not have satisfied all alliance agendas, it was an
important statement of openness to policy discourse.
The release of the panel’s recommendations creates such a space and yet
does much more than crack open a door for discussion. It creates a sound
empirical platform on which the government’s economic policies have been
evaluated, thereby providing an indispensable planning tool for any new
It highlights key areas for reform that have the status of political
holy cows in our body politic and therefore crystallises and elevates
them in an inevitable period of electoral contestation prior to our
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