SADC Correspondent | Oct 30, 2018 | 0
If there were statistics, Africa fails the GINI test
A review by a respected economist, of another economist’s book on inequality, brought this issue to the fore in the past few weeks.
The book is the controversial work of Thomas Piketty, called Capital in the Twenty First Century and the reviewer is celebrated academic, Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University in the United States.
Piketty argues that inequality is at its zenith, while Professor Rogoff offers counterpoints to dispute the validity of the former’s universal claims. Piketty’s studies focus on in-country income disparities while Rogoff considers global conditions, which ultimately leads to an entirely different take on the problem of inequality.
But it is not my intention to draw out the academic debate, rather I want to list a few point I deem relevant for the inequality debate in Africa.
The first is that the inequality debate in Africa always carry either a racist or colonial undertone. Africans know that this bias carry little weight in the rest of the world, but because it is so easy to sell to an ignorant electorate, it gets perpetuated by one wave of politicians after another. If one takes Namibia for instance, the debate has always insinuated whites are by nature of their race exposed to a more privileged income and lifestyle. This, it is argued, is the outcome of historical processes and affirmative policies must be drafted, implemented and enforced to assure the reversal.
But empirical observation shows that the emerging black middle class is much bigger and far richer than the advantaged group of whites. This implies that income disparities between the poor majority and black business leaders and politicians, are just as elevated as between the poor majority and whites, although there are thousands of poor whites. It is only because the colour makes it so obvious and visible that it remains convenient to hammer on race-based income inequality.
If there were any reliable statistics available for, say Angola, or the DRC, I am convinced from what I encounter daily in my work, that the income disparities will be ten times bigger than in Namibia. Only, in all the African countries where the rich are über-rich, they also happen to be black, so the world does not pay attention. Neither do the politicians. In the hands of the unscrupulous, the income disparity debate becomes a dangerous tool. Africa’s history is saturated with events to underpin my observation.
But there are many more facets to inequality than visible at the (convenient) surface. In a TV interview on one of the SABC channels this week, two union leaders defended the exorbitant demands of the platinum industry’s labour force. How can one man earn R50 million in a year while the company turns down a demand for a salary of R14,000, they asked.
This is a very powerful argument and one has to be realistic that it reverberates loudly at grassroots level. Indeed, how is that tenable?
Another event which helped me formulate my ideas about inequality was vividly demonstrated by a visit to Walvis Bay last year of the yacht of one of the original Microsoft investors. This boat with its entire crew belongs to one single man who has many other comparable investments and assets. How can one defend such riches from an ethical point of view.
But there is one crucial point that is usually overlooked in any inequality debate. The owner of that yacht, and the owners of the platinum mine, employ hundreds of thousands of people, and were it not for their enterprise, all these people would not have had a job and an income.
Certainly, that is a blatant over-simplification of the dynamics of the difference between rich and poor, but I believe it states the base case. Yes, there are people who are obscenely rich and yes, there are millions of people who are destitutely poor, but this is where Professor Rogoff hits the nail on the head. You can not try and revert to an outdated, outmoded communist sentiment on wealth because some individuals have amassed vast riches under the capitalist system. If one looks at the bigger picture of development, many millions more have been lifted out of poverty by capitalist enterprise than by cronyism, or by despots with Swiss bank accounts, or by criminals who steal the state’s assets.
Bring me the statistics on inequality in the rest of Africa, and I am sure one will immediately see where prosperity is winking, independent enterprise is running in the background.