South Africa, you’re at a crossroad. You have numerous valuable assets, but your politics are rendering you increasingly irrelevant in a global economy that is fast changing and has no time to wait for any country to sort itself out.

In a report entitled Mind the Gap, Oxfam points out how distributional conflict lies at the centre of the inequality challenge in South Africa. In other words, the proportion of income going to the top and bottom 10% earners in your economy between 1995 and 2010, indicates that the largest income gains in post democratic South Africa have accrued to income earners in the highest group.

Your economic inequality is the highest in comparison to other emerging middle-income economies such as India and Indonesia. And your youth unemployment could easily become tomorrow’s catastrophe. In addition, a defining feature of your structure, income inequality continues to be along racial lines.

This, and the unravelling of the ANC which, from either an internal politics or as the ruling party perspective, threatens the basis of your economic recovery and future progress. The reasons are manifolds, but here’s one. The decisions made at successive NECs do not seem likely to start addressing the structural defects of the ANC.

Nowhere is that clearer than in its failure to enforce internal mechanisms needed to contain individuals such as Andile Lungisa and Bathabile Dlamini. The social grants fiasco is but one example of a party that’s not interested in working on economic recovery that will lead to a better future.

How long can this state of affairs – in which South Africa’s political elite not only ignore the reality of a country afflicted and impaired by its triple challenges, but also discount economic risk – be sustained?

Much is at stake; hence I’m suggesting Why Nations Fail as a required reading for our politicians, but not just them – business leaders too. It is co-authored by economist Daron Acemoglu (MIT) and political scientist James A. Robinson (Havard). In it they discuss how a country doesn’t have a chance of solving its economic problems if it can’t sort out its political problems first. I learnt a lot from both the authors and I still find parts of their story interesting and persuasive. The book argues that any hope of modern societal prosperity must be built on political foundation. A government that develops inclusive political and economic institutions is more likely to flourish.

Stripped of its complicated details, the essence of the book is that political structure will always exert influence on the economic development versus the other way around because of the underlying social and political issues. In short, the politics of a nation affects how it will fare economically.

Admittedly, I considered (more than once) whether it was the relevant example to use for this article. I was quickly reassured by the self-serving nature and narrow interest of the South African political class. It constantly escapes their attention that until they (collectively) determine a way of overcoming the political antics and posturing, their actions will affect the economy. In turn, this will continue to inflict impoverishment upon the vast majority of the population.

We face a historic responsibility: we need to modernise the South African economy, and introduce in the next coming years a decade’s worth of reforms to generate fast economic growth that will be more inclusive, create more jobs and shrink public deficits.

It is a fact that the country’s economic inequality will further undermine inclusive democracy and deepen social unrest. Lest we forget, there’s an ancient economic principle that the country’s ruling elite, business leaders and rich must remember: When a nation has wealth concentrated in the hands of the few, it creates an imbalance in the economy. The few who are wealthy will not be able to spend enough money fast and wide enough to keep the multiplier effect going. Since poor people have limited money and are unable to spend, economic growth will be stunted. As a developing nation, South Africa needs its poor to be lifted above the poverty line to generate spending.

The lesson of history, I remind you, is that bread riots broke out in ancient Rome from the same economic conditions South Africa is facing today.

Sadly, but increasingly inevitable, given what we see unfold before us; the country’s politics will fail this nation.

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