Fall Semester 2012 - Week 1: Making Sense of Post-apartheid Economics

Post by: James Repp

Eight days in South Africa and hardly one day in Namibia are not enough to gain a full understanding of my new living situation, but it has provided a valuable, if only limited, window into a new cultural experience. Getting used to the winter (read: cold) weather was one thing, but trying to understand a whole new political, economic, and social atmosphere has proven to be a much greater challenge. 

Ever since landing, I’ve been confronted with the economic reality of two countries coping with the lasting effects of an apartheid regime. During our second day in Johannesburg, we had the pleasure of speaking with Dr. Dale McKinley, a political activist and economist, who brought us up to date on the darker side of South Africa’s economic situation. According to McKinley, when the apartheid regime decided to give up power, they struck a deal with Mandela and the African National Congress (ANC), the majority political party that grew out of the liberation struggle. That deal promised to allow South Africa to become the democratic entity that it is today while keeping the economic structure of the regime intact. 

As McKinley said, there has been a huge accumulation of wealth in this country, mostly by the white community, many of whom are invested in the immense mineral resources the country has to offer. With so much money at stake, those in power weren’t about to relinquish their economic advantage because of a popular outcry against a brutal and unjust regime. As has happened throughout history, the regime fell, but those in power didn’t go anywhere, and they kept the country in an apartheid economy, despite the ANC rising to power.

I have seen this reflected in the structure of the cities that we have visited: Johannesburg, Pretoria, and even Windhoek continue to have the ‘rich, white’ north and the ‘poor, black’ south. Having only visited Soweto and Kliptown when I heard McKinley speaking, I found myself shocked when he told us that there had been “a huge accumulation of wealth.” Having just explored the tin shacks, pirated electric lines, and overall poverty of Kliptown, it was hard to believe that there were mansions only a few miles away. 

Not only are the communities still very racially split, but the opportunity to work one’s way out of poverty is not exactly abundant. Poor education and a disenfranchised lower class have resulted in a sustained unofficial unemployment rate of over 40% for the last twenty years. That is worse than the highest unemployment rate during the United States Great Depression. Some poorer neighborhoods that we explored had unemployment rates of up to 90%, reflected by the sheer number of young men lining the streets appearing to be doing virtually nothing. When dealing with the South African economy, one should understand that it has virtually remained in a great depression for over two decades, with no end in sight.

Dr. McKinley emphasized that there is no “silver bullet” to fix South Africa’s economy. The only way to reverse the negative effects of an apartheid system is to invest in the lowest classes. There is no such thing as ‘trickle down’ economics here (or in my opinion, anywhere). McKinley believes that the government has to close the expanding economic inequality by fighting against further privatization and providing short-term jobs to relieve those at the bottom. 

When meeting with representatives of the ANC, the majority party, I asked them what they thought about McKinley’s ideas. They acknowledged that their party needed to more vigorously enforce drastic changes in the South African economy. “Just don’t ask me what it is that we should be doing,” he said. In my opinion, that’s exactly the question we need to be asking.

References:

Dale McKinley lecture to CGE students at St. Peter’s Place, August 14th, 2012.
Thami Hcokwane, ANC party member speaking to CGE students on August 16th, 2012.