Trends and trade-offs

The preliminary results of the South African Census 2011 was released today by Statistics South Africa. There are few surprises: in nearly every respect, the average South African is better off today than they were ten years ago; in other words, Sir, there are more reasons to smile than cry. But, as everywhere, the average hides large disparities in incomes: the most tweeted statistic today (and certainly the most commented on popular news sites) was that the average white household earns more than six times than the average black household (R365k vs R60k) per annum. While still enormous, the good news is that the gap is closing: whites earned 8.6 times more in 2001. In fact, white South Africans’ incomes increased the slowest of all four population groups. So, while the rich grew richer, the poor grew richer faster.

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Smile, the beloved country

South Africa is the feature of this week’s edition of The Economist. The magazine paints a pessimistic picture of South Africa’s future, summarised by the cover caption of “South Africa’s sad decline”. Its lead article makes two points: that the country’s bad economic performance is mostly but not entirely the result of the African National Congress, the party that has ruled South Africa since its first democratic elections in 1994; and that the only way to solve the current crisis is to make political competition a reality. This is not wrong, but it is quite weak and simplistic, especially coming from The Economist (as Ferial Haffajee, editor of South Africa’s City Press, agrees). South Africa’s future depends on much more than simply political competition, and its recent past is also more complex than the linear decline The Economist insinuates.

Thabo Mbeki’s reign was not all bad. Between 1999 and 2008 (his two terms), the South African economy grew at an average of 4.2% per annum. According to most development economists and across several poverty indicators, the high growth caused South African poverty to decline significantly in this period: the World Bank estimates that this was from a poverty headcount ratio of 38% in 2000 to 23% in 2006, although this may be too optimistic. See Yu (2010) for a more detailed analysis. We tend to forget that many of the problems we encountered over the last five years – electricity cuts, infrastructure failures, yes, even service delivery backlogs in cities – are partly the results of faster than expected economic growth.

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