[DEBATE] : (Fwd) Spin for Treasury/Harvard

[Patrick Bond]

(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?)


The Times

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 
action.

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 
in budgeting.

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 
system.

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 
adopted differently.

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 
administration.

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 
fourth poll.