Having taken a huge interest in International comparative economics, I could not help myself in attempting to write an account of how South Africa may seem to be following a similar economic tragedy that Greece followed in the aftermath of the 2008 Global financial crisis. What makes South Africa’s economic failures even more of a “bitter pill to swallow”, in this case a Matrix type Red Pill, is the fact that South Africa has generally been far more blessed than Greece in terms of the resources at its disposal.
South Africa has for years been a prominent and robust services economy, while also enjoying the benefits of natural resource abundance, manufacturing potential and a modern Constitution safeguarding private property rights and Free enterprise. South Africa’s highly favorable climate has always been ideal for unlocking agricultural potential, and it is also another unequivocal advantage which a region like Greece has been known to lack. In 2020, however, the South African economy paints a completely different picture of the resource rich economy it had been during the Golden years of 2003 – 2007, during former President, Thabo Mbeki’s tenure.
If there ever was a classic example of economic under performance, it would be South Africa. It is almost baffling to have to face the fact that the country is nowhere near its fullest potential, and it is no surprise that inequality, poor governance, corruption across all sectors, as well as a patently unequal distribution, as far as widespread development is concerned.
The main focus of this article, however is not necessarily political or adversarial, but rather analytical and comparative. My objective in this perfunctory piece of writing is to merely draw very real and startling parallels between Greece and South Africa, by highlighting the features of economic disintegration, which they both share in common. The moral of the story has more to do with the dangers of “complacency”, and less to do with the individual and isolated shortcomings of poor governance, maladministration and corruption.
Complacency is very detrimental, more so to nations that happen to be blessed with many initial economic advantages which would otherwise be a head start to any country looking to accelerate towards the status of a high-income, highly developed and minimally indebted nation. The similarities between Greece and South Africa seem arbitrary at first, but would inevitably make far more sense to those with an appreciation of the 2008 crisis, as well as the economic trajectories of those countries who were able to recover versus those countries who continued on a downward spiral after 2009 onward.
South Africa, much like Greece was an economically vibrant place, during the decade prior to 2008, despite their fundamental discrepancies of their economies, however mention must be made that both nations have enjoyed the status of being a robust services economy, which is usually an indicator of a nation on its way to being a highly developed and industrialized country. What South Africa now has in common with the post-2008 Greece can be summed up as blind optimism, complacency as well as an inherently definitive trend towards living beyond living one’s means.
Economics, as classically understood, is built on the premise that resources ought to be allocated as efficiently and as prudently as possible, since resources are finite. Greece’s wholesale reliance on its position as number one, in terms of the size of its merchant marine fleet is very suggestible of complacency and shortsightedness, further compounded by its advantageous status of being part of the Euro zone. This complacency was certainly a recipe for disaster, coupled by the absence of a willingness to diversify its economy and International trade, by focusing on inward manufacturing and industrialization.
The Greek tragedy seems to be a lot less tragic than South Africa’s in 2020 in that they had the political will and urgency to avoid a looming sovereign debt crisis, through the introduction of very strict austerity measures, as well as a $182 Billion stimulus package from the Euro zone coffers, and the IMF to tend to the economic woes of the 10 million or so inhabitants of the Greek nation. South Africa, much like Greece ought to have been a position post the 2008 financial meltdown whereby its leaders would ardently learn from the examples of not only Greece, but of the likes of Zimbabwe, its neighbor to the north, Venezuela as well as Brazil.
This was not to be, as the administration of former President, Jacob Zuma seemed to have compounded South Africa’s inherent fiscal indebtedness, deficits, inflated property and food prices,with creating an even more “consumption driven” economy, plagued by Corruption, maladministration and a bloated civil service to cater towards the ANC’s patronage machine. All the factors mentioned I have mentioned here seemed to have all converged on each other, all in a short space of time, and essentially led South Africa down the road of economic disaster for the majority of its 3rd world citizens.
The complacency of Government in failing to safeguard its counter-cyclical fiscal policies after the Golden years, coupled with a nation wide cultural tendency of live beyond one’s means has all led us to the point we find ourselves in in 2020. The Covid-19 global outbreak and lock-down measures have endowed ordinary South African’s with serendipity, as it has helped tremendously in exposing the catastrophic fiscal decisions executed as well as those omitted by the Political elite. The South African Greek tragedy is fundamentally a story of a great social and economic experiment gone bad.
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