The PBO Director shortlist

The post of Director of the South African Parliamentary Budget Office (PBO) has now been vacant for almost two years after the previous Director resigned under a cloud.[1] That means two Parliaments (the 5th and 6th) have been in violation of their own legislation – the Money Bills Amendment Procedure and Related Matters Act (2009, amended 2018).[2]

I worked for two years at the PBO, leading some of its most important projects at the time, and have written at length in the past about its failures (e.g. on nuclear procurement), its importance, why the filling of the Director position is crucial and my own role in trying to remedy the institutional rot/dysfunction. Some of that accountability work is ongoing.

It took over a year for MPs to agree that the post should be advertised and almost a year has elapsed since then before the shortlisted candidates were finally decided on in a meeting on 4 September 2020. While it is possible that the Covid-19 pandemic delayed the process, it was already glacial prior to that and there was little impediment to finalising the list via a virtual meeting of the kind that eventually took place. The previous meeting of the committee took place in December 2019.

Given the broader political dynamics in the country, it seems likely that the delay has been the result of:

  1. Political lobbying as to who should be deployed to this post (paid at the level of a Director General but with only a small staff complement)
  2. Lack of prioritisation of the issue given widespread institutional challenges across all three arms of state and the relative disregard of the role of legislatures.

As reflected in the minutes of the Parliamentary Monitoring Group, there are 9 candidates on the shortlist. These include: the current chairperson of the Financial and Fiscal Commission (FFC), a former CEO and acting chairperson of the FFC, the current acting deputy director general of the Budget Office in the National Treasury, and all three current deputy directors of the PBO. Originally the committee staff had shortlisted 8 candidates but one further candidate (the Treasury official) was added during the meeting. The minutes of the meeting suggest some inconsistency in the application of the experience requirement, with candidates having 10 – 12 years experience being shortlisted and others with more years not being shortlisted. (This may be because of different notions of what constitutes experience for this purpose but it is not clear).

Candidates will need to go through a clearance process by the State Security Agency at the highest clearance category (‘Top Secret’). The discussion in the committee reflected the lack of knowledge of the PBO’s functioning among both the Parliament officials informing the process and MPs themselves. All parties appeared to be of the view that a PBO Director likely would not need to handle classified information. As the first staff member of the PBO to have received classified information through formal channels on behalf of the Office, I can attest to the fact that this is incorrect. What role the SSA should play in relation to this kind of process is of course another matter, since in principle it presents an opportunity for the Executive to interfere in an undesirable fashion (albeit that seems less likely under the current administration).

In principle, candidates should also meet the requirement of being ‘fit and proper persons’. [Declaration: this requirement followed from an amendment to section 15 of the Act which I proposed as part of a public submission in 2018 and was accepted by MPs]. In practice it is unclear at this point how this requirement will be checked. And whether information from the public will be solicited for this purpose. My view is that it should be: if you have any such information on any of the candidates, I suggest sending it to the secretary of the committee.

The nature of PBOs is such that it should be protected from political influence and partisanship of all kinds, not least in the appointment of its staff. Furthermore, whoever is appointed should be able to put whatever personal and institutional views they may hold, or have held, aside and conduct their analysis and research in a competent, fully public interested, non-ideological and non-partisan way. Unfortunately, this seems highly unlikely in the South African case. Instead, what is likely to happen is that the appointed candidate will be the one who is seen as most amenable to whatever the agenda is of the grouping(s) that holds the greatest sway over the appointment.

 A faction within the governing ANC along with some opposition MPs and civil society organisations will favour a ‘Treasury-aligned candidate’. (Note: this need not necessarily by a candidate from Treasury, though such candidates may well fit the bill). An alternative faction in the ANC along with other opposition MPs and different civil society groupings may favour a more ‘anti-Treasury’ view. There are 4-5 candidates who, in my view, can be reasonably located in one of these two categories. But one should also not rule out the possibility of an opportunist whose objective is really just to secure the post and sells themselves to one or both parties as necessary. As the reader will see, I am not convinced that any candidate is likely to be appointed who is squarely committed to what the role truly requires.

I will refrain from publicly speculating about how I think the process will, or should, play out in terms of the candidate who is ultimately selected. However, in the past I have indicated that given the historical dysfunction of, and misconduct in, the institution an outside candidate is likely to be preferable. And I continue to hold that view. Parliament partially sabotaged any such candidate by allowing staff renewals and appointments under a brief reappointment by the previous Director, thereby leaving any new Director with some staff who may be a liability. However, a suitably motivated and strategic new Director should be able to improve conduct and culture – as well as remove staff who resist that process.

The PBO is an institution with great potential to serve the public good. One can only hope that the current Parliament makes an appointment that puts it back on the right path, rather than consigning it to further stagnation and membership of a list of institutions with highly paid staff that do little for the public good. It is welcome that much/all of the process will be in the public domain. But as we saw with the appointment of the current Public Protector, transparency of that sort does not mean substantive transparency or guarantee a good outcome.

Note: I did not apply for the position in question and have no material or other interest in the outcome except to the extent that I am invested in the public interest role the PBO is supposed to play.

[1] This article incorrectly says one year.

[2] For those who don’t know: most legislation is introduced by the Executive and then approved by Parliament, but in special cases Parliament may draft legislation itself – most notably in relation to the conduct of its own affairs. The Money Bills Act is one of the few such pieces of legislation.

A letter rejected by the South African Medical Journal

Throughout South Africa’s Covid-19 pandemic response, I have been raising concerns about the basis for the government’s decisions – starting with an op-ed when the lockdown was announced. It has been particularly concerning how uncritical academics and journalists were at the outset. I am still in the process of writing a number of academic pieces on this, but unfortunately these will only come out later in this year or next year. One effort I made in the interim was to write a cautionary letter to the South African Medical Journal, which has been responsible for publishing some concerning editorials that contribute to the problematic stance of the South African academy. Today I received notification that my correspondence was rejected as “The editors have determined that this submission is not appropriate for this journal and will not be considered for publication.” Given that the pieces criticised were journal editorials, this is perhaps not very surprising. Decide for yourself.

Unmitigated praise of government’s Covid-19 response is premature and inconsistent with available evidence

A recent editorial[1] expresses concern with statements by the Minister and Department of Health[2,3] and Medical Research Council (MRC)[4] in response to remarks attributed to Dr Glenda Gray[5,6] relating to the government’s approach to lockdown regulations and public health consequences of the lockdown. I concur with the authors on the primacy of Constitutional principles of free speech and academic freedom for members of the Ministerial Advisory Committee (MAC) on Covid-19, and the institutional independence of the MRC (which has now found no transgression[7]). However, premature, unsubstantiated statements about government’s response to Covid-19 contribute to an environment of uncritical praise that preceded, and arguably contributed to, the controversy in question.
The theoretically optimal policy response to Covid-19 remains unknown under the usual standards of academic and scientific justification, given extensive uncertainty about characteristics of the virus itself along with the dynamics of contagion, morbidity and mortality in different populations and contexts. Furthermore, thorough assessment of the efficacy and optimality of government responses can only be made on evidence that will become available after the pandemic is over. Only preliminary assessments are possible at present and cannot be exempt from basic standards of justification and evidence. The authors’ statements[1], as with others elsewhere[8], do not meet such standards and thereby undermine impartial, evidence-based criticism. For example:

Notwithstanding the concerns raised above, the Minister of Health’s management of the country’s COVID-19 pandemic, to date, is laudable

And:

SA’s response to COVID-19 has been swift and science based, and merits praise

The apparent premise, that “other governments around the world have not grounded their response to the pandemic in science and evidence”[1], is too low a bar. The British government, for example, has rightly been criticised not for failing to use science and evidence, but for doing so selectively and secretively[9]. Yet the authors fail to critically examine the composition and conduct of the MAC, asking only for “involvement of experts from academia outside of the biomedical sciences, and statutory bodies”[1].
There is evidence that contradicts this stance. As noted by others[10], and reflected in international open Covid-19 databases[11], South Africa has not been forthcoming in publishing detailed data on testing, screening, contact tracing and patient characteristics – despite international calls for transparency[9,12]. Even more concerning, while the original lockdown decision was premised on modelling[13], only limited details of the strategy and basis were provided much later[14] while current projections and model details have only recently been made public[15].

Good intent along with science- and evidence-based decision-making are not sufficient to ensure the best policy decisions are taken. Transparency in evidence, modelling, decision-making, use of expertise and balancing of societal priorities is paramount. The South African government has performed badly on some of these dimensions. Rhetoric of “unity and solidarity” in that context potentially undermines the role of dissent, rather than deference, in contributing to the public good. Unsubstantiated and premature praise may contribute to a sub-optimal response to the pandemic.

1. Singh JA. Freedom of speech and public interest, not allegiance, should underpin science advisement to government. S Afr Med J. 2020 May 26;
2. Mkhize Z. Health Minister’s statement on Prof Glenda Gray’s public attack of government based on inaccurate information [Internet]. National Department of Health; [accessed 26 May 2020]. Available from: http://www.health.gov.za/index.php/2014-03-17-09-48-36/2014-03-17-09-49-50?download=4247:statement-by-minister-mkhize-prof-glenda-gray-public-attack-of-government-20-may-2020
3. Human L, Geffen N. Health department boss calls for investigation into Glenda Gray. GroundUp [Internet]. 22 May 2020 [accessed 26 May 2020]; Available from: https://www.groundup.org.za/article/health-department-boss-calls-investigation-glenda-gray/
4. Herman P. SAMRC board apologises for Prof Gray’s comments, bars staff from speaking to media. News24 [Internet]. 25 May 2020; Available from: https://www.news24.com/SouthAfrica/News/breaking-samrc-board-apologises-for-glenda-grays-comments-bars-staff-from-speaking-to-media-20200525
5. Karrim A, Evans S. Unscientific and nonsensical: Top scientist slams government’s lockdown strategy. News24 [Internet]. 16 May 2020 [accessed 16 May 2020]; Available from: https://www.news24.com/SouthAfrica/News/unscientific-and-nonsensical-top-scientific-adviser-slams-governments-lockdown-strategy-20200516
6. Karrim A. I didn’t criticise the lockdown, but the regulations ‒ Prof Glenda Gray after Mkhize slams criticism. News24. 21 May 2020
7. SAMRC. Media statement from the SAMRC Board [Internet]. 26 May 2020 [accessed 26 May 2020]. Available from: https://www.samrc.ac.za/media-release/media-statement-samrc-board
8. Academy of Science of South Africa (ASSAf). Public Statement on COVID-19. 18 May 2020.
9. Alwan NA, Bhopal R, Burgess RA, Colburn T, Cuevas LE, Smith GD, et al. Evidence informing the UK’s COVID-19 public health response must be transparent. Lancet. 2020 Mar;395(10229):1036–7.
10. Marivate V, Combrink HM. Use of Available Data To Inform The COVID-19 Outbreak in South Africa: A Case Study. Data Science Journal. 6 May 2020; 19(1):19.
11. Xu B, Kraemer MUG, Xu B, Gutierrez B, Mekaru S, Sewalk K, et al. Open access epidemiological data from the COVID-19 outbreak. The Lancet Infectious Diseases. 2020; 20(5):534.
12. Barton CM, Alberti M, Ames D, Atkinson J-A, Bales J, Burke E, et al. Call for transparency of COVID-19 models. Sills J, editor. Science. 2020; 368(6490):482.2-483.
13. Republic of South Africa. President Cyril Ramaphosa: Escalation of measures to combat Coronavirus COVID-19 pandemic [Internet]. 23 March 2020 [accessed 25 May 2020]. Available from: https://www.gov.za/speeches/president-cyril-ramaphosa-escalation-measures-combat-coronavirus-covid-19-pandemic-23-mar
14. Abdool Karim SS. SA’s Covid-19 epidemic: Trends & Next steps. Presentation for the Minister of Health; 13 April 2020. [accessed 16 May 2020].
15. Silal S, Pulliam J, Meyer-Rath G, Nichols B, Jamieson L, Moultrie H. Estimating cases for COVID-19 in South Africa Update: 19 May 2020. South African COVID-19 Modelling Consortium; 19 May 2020.

Economic justice will not be televised

(Riffing on Gil Scott-Heron: https://www.youtube.com/watch?v=qGaoXAwl9kw)

Economic justice
Will not be televised
It will not be delivered
Like a fast food dinner
By white men
Using black economists
To front for them.

Economic justice
Will not be televised
It will not be delivered
By VAT zero-ratings
That benefit the rich
More than the poor.

Economic justice
Will not be televised
It will not be delivered
Like fast food transported by exploited workers
By commissioned research
Elevating the status of a few white men
Using black economists
To front for them.

Economic justice
Will not be televised
It will not be brought to you
Like a hot take
By the tentacles of institutes
Wrapped around civil society initiatives
To promote themselves.

Economic justice
Will not be televised
It will not be delivered
Cold
Like emailed interventions
To protect sexual harassers.

Economic justice
Will not be televised
It will not be brought to you
By men
Defending sex ‘not consensual’.

Economic justice
Will not be televised
It will not be delivered
By the festivities
Of ideological cliques
Shouting about reform.

Economic justice
Will not be televised.

Commentary on VAT zero-rating

Since early 2017 I have been engaging with, and advising, some South African civil society organisations on public finance matters. While I naturally have my own views about many issues, the purpose of this engagement is really to help individuals in these organisations understand the issues well enough to make up their own minds. (Some other economists have the more specific agenda of influencing civil society organisations to support their – the economists’ – positions; an approach which I think is evidently dubious).

One important issue that arose with the tabling of the 2018 Budget was the increase in value-added tax (VAT) by one percentage point to 15%. My view on this matter was that there were major procedural and legal problems with how the increase has been brought into effect and that the National Treasury could have done more to protect poor South Africans from the incidence of new revenue measures. The position of civil society has subsequently honed in on the prospect of expanding VAT zero-rating and increasing various forms of social expenditure.

Some of the demands relating to social expenditure that I have seen seem loosely related to the actual VAT incidence claimed by Treasury, but that is a separate issue. More specifically, I recently argued -in an op-ed in Daily Maverick – that zero-rating itself could be of limited value or even counterproductive. A version of that piece with hyperlinks is provided below for anyone interested in reading some of the background references.

Unfortunately, it appears that no-one currently has the appetite to challenge/query the constitutionality of the VAT Act.

Continue reading “Commentary on VAT zero-rating”

(unrequited) SARS data request

Earlier this year I wrote about undercollection by the South African Revenue Service (SARS) and the controversy over SARS refunds. This was also discussed during the presentation to Parliament mentioned here. The issue has been bubbling-along for some time – as indicated by this report from SAICA.

The information in the public domain, whether from SARS tax statistics, the SAICA report, or replies to Parliamentary questions, is only suggestive and inadequate for a thorough assessment of whether these concerns have substance or not.

As a result, I decided to follow-up with SARS and request information at the minimum level of detail I believe is required to enable this kind of analysis. I emailed Mr Randall Carolissen – Group Executive, Revenue Analysis, Planning and Reporting and, incidentally, also the Chair of Council at the University of the Witwatersrand – with the request on the 3rd of April. (See the proposed data table here: SARS_statistics_request_table).

Having received no reply, I followed-up on the 22nd of May. To date I have still received no reply. The information requested is at a sufficient level of aggregation that I can’t see any legitimate reason for not making it available. And one might have expected that SARS would be keen for independent researchers to verify their assertions that there has been nothing untoward taking place with refunds.

Recent commentary and analysis: nuclear, Eskom and Molefe

I’ve recently provided commentary and analysis on the somewhat related issues of Brian Molefe’s reappointment as CEO of (South Africa’s national power utility) Eskom, as well as the case against procurement of nuclear energy. An argument that has emerged from Molefe’s backers is that he ‘turned-around’ Eskom during his tenure, while allegations against him remain unproven. Leaving aside the latter claim, in a recent op-ed I argue the credit given to Molefe for the end of load shedding and improvements in certain financial ratios is misplaced. A number of analysts had noted the role of falling demand in ending load shedding, but less attention has been given to the scale and significance of the financial support Eskom received from national government in 2015.

While my preference is to focus on the public finance and public economics dimensions, in the current context one cannot ignore political economy issues. I note here that Molefe’s reappointment is not just concerning for given his alleged improprieties, but more so because of what it implies about the failure of a much wider range of accountability mechanisms that should be keeping dysfunction at Eskom in check.

The failure of those mechanisms has been linked to various vested interests and the push to procure a fleet of nuclear power stations. I’ve previously written on why the current case for nuclear procurement is weak, as are previous, vague claims from Eskom that it can finance the project itself. So I was glad to be invited to debate some of these issues at the recent Nuclear Power Africa stream at Africa Utility Week. (Unfortunately, at the last minute Molefe and Minister Lynne Brown cancelled their scheduled attendance at the conference). As far as I could tell, I was the only panel member who argued that the case for nuclear was weak; given that I was also one of the few who did not have a direct vested interest in nuclear procurement proceeding, this is perhaps not surprising. The range of vested interests – some explicit, others concealed – keeps growing, and that presents its own challenges.

This is the one-page summary I used for my presentation:

Nuclear_AUW2017_SMM(There’s some fun to be had adding more arrows, linking the various issues).

What was clear from the sessions across the day is that, as captured by one report, after a number of setbacks the various nuclear interests (politicians, bureaucrats, academics, utilities and consultants) are ‘regrouping’. The dominant tenor of the talks was that ‘we need to get the broader public to understand why nuclear is good for them’, and that critics – whether energy experts or economists – are simply misguided.

Suffice to say that while the various arguments for immediate nuclear procurement continue to shift and evolve, having listened carefully to them my own view is that they remain unconvincing. I’ll summarise some of the more important areas of contention in my next post, along with some interesting new arguments and why they are flawed.

Statement regarding the Parliamentary Budget Office and recent CCMA award

The Parliamentary Budget Office (PBO) was established to provide Parliament with independent technical advice to support it in exercising oversight of public finances. The importance of this role should be evident given the recent Cabinet reshuffle and ratings agency downgrades, which have raised concerns about public debt, public service pension funds, a prospective nuclear deal and the finances of state-owned enterprises amongst others. These are all matters about which a functioning PBO would be expected to provide credible insight and guidance to Parliamentarians.

There are, however, serious concerns regarding the functioning of the Office. These relate to the content and objectivity of its advice. This became apparent to me shortly after I joined the PBO in 2014. The resulting dynamics in the office led me to resign in 2016, and were also the basis for an unfair labour practice complaint brought against the PBO at the CCMA.

On the 26th of April 2017 the CCMA issued the commissioner’s award, which did not find in my favour on the narrow labour issues raised. While I am disappointed with this outcome, it is important to place the case in the broader context of the need for a competent, functional and credible PBO that is beyond reproach. In this regard, the Commissioner held that – as I had testified – the Director of the PBO had indeed offered to provide me with the interview questions for the position, I had declined the offer, and he had lied about this in his testimony (i.e. under oath). This example was only one of a number of issues raised in the process, but on its own raises very serious questions about the functioning and management of the office.

The Act governing the PBO is expected to be reviewed and amended later this year. In that process, the end goal must remain paramount: to build an independent, technically and ethically credible institution that the public and Members of Parliament can rely on for non-partisan analysis of public finance issues that is conducted without fear or favour.

Internationally, similar institutions are expected to maintain the highest standards of objectivity and political neutrality; standards that the South African PBO has failed to demonstrate. Perhaps the most famous international example is the Canadian PBO, which in 2011 produced a costing for parliamentarians of the government’s fighter jet procurement plan that was significantly higher than the estimates the government had published. The Office was attacked by the Prime Minister at the time, but supported by society at large and subsequently vindicated: government eventually acknowledged that the costs were higher than originally stated and the procurement remains on hold. The Canadian example is in marked contrast to the South African PBO’s analysis of the desirability and feasibility of the proposed nuclear energy procurement. The PBO’s report failed to cost the project, or assess its implications for public finances. In a more recent example from Kenya, the country’s PBO raised concerns about omission of a large increase in debt repayments from budget documents.

Since some of the issues raised at the CCMA go to the heart of these expectations, and it is my view that the basis for its finding is deeply and materially flawed, I am considering taking the award on review to the Labour Court. This is an expensive option – the estimated cost is R500,000 or more, and is prohibitive for an individual. However, the basis on which staff are appointed to, and promoted in, PBOs is one of the most critical factors in their success. Combined with the importance of the PBO and the upcoming amendment of its governing legislation, public interest organisations may find this case to be an appropriate mechanism through which to contribute to the establishment of the kind of PBO the country deserves.

Some thoughts on the Finance Minister’s adviser and his critics

The debate around the new Finance Minister Malusi Gigaba’s new adviser, Chris Malikane, has gone beyond the deeply flawed proposals he has made, to claims about his academic credentials and integrity. I want to agree that the proposals are flawed, but that some of the attacks on Malikane are as well. Furthermore, they draw attention to some serious issues in South African academic economics that require mature discussion.

Most of the 8-page ‘manifesto’ published, and extensively publicised in various articles and interviews by Malikane, is not worthy of serious analysis. (Although one effort to take it seriously, by Charles Simkins, is worth reading – as is the more acerbic piece by Richard Poplak). It is primarily a political document and contains no substantive content relating to economic policy and public finance. There’s a crude Marxist analysis of class, and a shopping list of things that should be nationalised and services that should be provided. The only interesting assertion is that the working class should throw their weight behind those black South Africans who have become an elite through corrupt government tenders, rather than through credit-based black empowerment schemes. Like the other assertions, no serious justification is provided. But it certainly explains why Malikane’s radicalism has found favour with Gigaba, whose predecessor appeared to be successfully blocking a range of efforts at tender-related corruption by individuals associated either with the President or the Gupta family. The thinking from Gigaba – a man better known by some for tabloid stories, tailored suits, expensive ties and appearances on Top Billing – may have been that Malikane would provide some solidity to the fig leaf of ‘radical economic transformation’, while Malikane – who has otherwise been quietly exerting influence in left-wing, or trade union movements for some time – clearly thought that his revolutionary moment had arrived.

Some have attempted to defend Malikane on the basis of his academic credentials – to the point of also insisting that his evidently wrong-headed proposals (such as ‘expropriating banks’) cannot be criticised except through detailed academic analysis. At which point it is useful to invoke a phrase attributed to the Italian computer programmer Alberto Brandolini: “The amount of energy needed to refute bullshit is an order of magnitude bigger than to produce it”. Just because the minister’s adviser has published some academic papers on other subjects does not mean we must presume that his manifesto carries additional weight. Indeed, the primary disappointment for many who had  reasonably high opinion of Malikane up to this point is quite how threadbare his analysis and proposals are.

Where things are getting messy, however, is in attacks on Malikane’s academic credentials. These in fact open-up a big can of worms regarding the state of South African academic economics. (One reason I have been delayed in writing a comment on the Malikane’s saga is that I had been drafting a conference paper on what ‘decolonisation of the curriculum’ might mean for South African economics).

Understanding Peer Review in Economics

It turns out that the issue of decolonising economics is closely related to some of the misguided aspects of attacks on Malikane. The first, by Stuart Theobald, starts off well enough by noting that Malikane’s published, peer-reviewed work either has relatively little relation to his recent arguments or even – in some cases – seems to contradict those arguments. This is a particularly useful point to make for those who, naively, argue that Malikane’s arguments must be substantive because he has published some academic papers. Where Theobald strays into dangerous territory is in his inferences about Malikane’s integrity and assertions about the wonders of academic peer review.

Theobald’s characterisation of peer review in economics makes me suspect that he has never published anything in the discipline. Very few academics I have come across or read, including Nobel prize winners, have such a rosy view of the peer review process; in practice it is far from the notional ideal of a meritocratic system in which originality and quality are what determine publication. And any problems – of cronyism, bias toward researchers in certain institutions, ideological influences and so forth – are amplified if the basic thrust of your work is critical of, or very different to, the dominant narrative. It does not surprise me that Theobald, given his demographic, views on economic policy and his area of work (banking and finance), might not be able to appreciate this.

Which brings us to the issue of whether Malikane is dishonest for publishing work with conclusions he does not agree with. My short answer: no. It might be inadvisable, and it is something I personally try to avoid doing (at some cost), but the system is structured in such a way that it can self-sabotaging to only publish what you believe rather than what you can do. (Some have suggested that there should be betting markets in which economists show their confidence in their empirical claims by putting money on it). Either you will publish in journals not recognised by your peers, or your career will stall at a junior level – and the associated administration and teaching burdens limiting the very time you need for that ‘against the current’ research that is so good it breaks into the mainstream. When co-authors are involved this is even more difficult. These challenges are essentially what Malikane is gesturing at when he says, quoted by Theobald:

Don’t confuse my academic writing and what I believe to be true…you know the business of publishing is so ideologically poisoned that what is published is not necessarily scientific…we sometimes write in order to simply play in the publishing game…not necessarily because we think what we publish is correct…there is heavy ideological repression in academia…

Theobald paints this as sinister and possibly an “act of intellectual dishonesty”. He softens that with a few acknowledgements that Malikane is basically right, but then returns to a naive notion of academic publishing.

Finally, Theobald makes the important point that we should not try and judge Malikane the person but rather “whether he has good evidence and reasoning for his claims”. Unfortunately, he then goes completely off the rails by saying that: “until [Malikane] publishes them in a way that involves assessment by his peers, we must assume he does not”. Which peers? In what journal? I doubt Malikane would have trouble publishing in the Review of African Political Economy, but would Theobald accept that as adequate? (Leaving aside that he is not an academic economist, so it’s not clear what basis he would use).

Regardless, as an academic economist who has also worked in the public sector, I would never accept a policy claim just because someone had managed to publish a paper on it; the idea that successful peer review in economics shows that a claim is ’right’ is completely misguided, and any economist who advised a minister on that basis should also be fired.

There Are Many Flavours of ‘Bogus Economist’

This usefully brings us to the even more problematic contribution by Co-Pierre Georg. Let me start by saying that I was interested, albeit surprised to see – in Georg’s somewhat crudely-stated concern about ‘white male patriarchs’ – channelling critiques I myself have made in the past of untransformed gerontocracies and academics behaving like rent seekers. I have, also, for some time been politely raising concerns with various role players about such dynamics at an organisation where Georg has been an associate for some time; I hope Georg is as vocal on such matters of principle within his institutions, and even when it is personally inconvenient.

The basic assertion of Georg’s article is that people should not trust ‘bogus economists’. Hard to disagree with, but the devil is in the detail. In my draft conference paper on decolonisation, I made some similar critiques of the quality of the local academic economics to those discussed by Georg. Beyond that, though, we are again in swampy terrain. Georg’s assertion basically translates as: ‘people should not trust economists I think are bogus, which obviously doesn’t include me, my co-authors, patrons, friends, etc’. It’s not a new trick, including for fake radicals in economics. In a recent comment an otherwise respected senior scholar in macroeconomics (Paul Romer) published a rather disgraceful attack on various other economists for what he calls ‘mathiness’. Among these was one of the most famous female economists of the 20th century, Joan Robinson, who by virtue of her gender, left-wing views, and being dead, was perhaps an obvious target for Romer. Critiques of excessive or inappropriate use of mathematics in economics are as old as the modern version of the discipline itself. But a close reading of Romer’s critique reveals a petty, self-serving definition of the crime: when economists he doesn’t like use mathematics they are guilty of mathiness, whereas when economists he does like (obviously including himself) use mathematics then it’s done properly. Georg’s argument boils down to a similarly crude skeleton. (Romer, incidentally, was then appointed chief economist at the World Bank – illustrating how dysfunctional economics can be in other places).

Furthermore, Georg peddles a version of how economics can inform policy that is popular with certain types of academic economists, but bears little relation to reality. In this model, people who can write the most complex mathematical equations, estimate the most complex econometric models and get published in high-ranked journals are best-positioned to advise on policy. This might be funny if it were not so misguided and, in its own way, dangerous. There are some individuals who have managed to make the transition from producing cutting-edge academic work (by mainstream standards) to giving good policy advice, but it is the exception rather than the norm. The last thing a finance minister needs is some social incompetent who thinks he can figure-out a policy solution by writing down an equation, running a model or looking for a ‘peer-reviewed solution’. If you need an academic perspective, your adviser talks to a deputy director general who gets someone in the research cluster to do it, or outsources it to an academic like Georg.

Yet Georg goes even further, offering to define for us what a ‘proper academic’ is. But the best he can do in this regard, like Theobald, is to refer to ‘peer review’. I have already made clear that this is a naïve, and in Georg’s case arguably self-serving, use of the notion of peer review. One can tell that Georg, like Theobald, is not exactly familiar with the challenges of swimming against the current. Or, in fact, advising on broad economic policy in the complex South African terrain.

A Necessary Debate

 In some ways, the great tragedy of the Malikane saga is that, in principle, he should have been in a position to be a very good adviser – albeit one with strong left-wing views. While the likes of Theobald and Georg might be good advisors at lower levels of the hierarchy on specific issues relating to banking and finance, Malikane’s broad credentials should have made him a better choice for a general adviser to a minister. Given that, fortunately, it looks like his manifesto will have no impact whatsoever – with various politicians suddenly realising that talking-up radical economic transformation is a bad idea if it means emptying the fiscus you had planned on appropriating – the most harm done is to Malikane himself. But he has also damaged the possibility of more open discussions about economic and fiscal policy, which means that in fact those who should be most angry with him are economists (including myself) who believe such a conversation is sorely needed.

The bigger picture that Theobald and Georg’s misplaced attacks draw attention to is the state of South African academic economics. Some time ago as a student I witnessed the destructive consequences of the failure by some, otherwise very respectable, academics to reconcile tensions within the local discipline. The result, I think, has been for many to bury their heads in the sand and hope for the best. Or, less innocently, to set-up fiefdoms in which they can propagate their own views and agendas without the inconvenience of differing views.

To be fair to economists, similar behaviour happens in a range of other South African academic disciplines. However, besides the fact that this is an unhealthy state of affairs, legitimate calls for transformation and decolonisation (appropriately defined) will only ratchet-up these tensions and it would be best to address them openly and as maturely as we can. The position I have come to is in some ways rather obvious: we need to raise standards, but we also need a wide diversity of views and therefore should be pluralist in our approach to defining who is a competent economist (academic or otherwise). In that context, we would be advised to avoid doing things like accusing a fellow academic of not being a ‘proper economist’ or being ‘intellectually dishonest’, when they have a PhD from a very reputable North American institution, some competent publications, and extensive engagement and knowledge of South African civil society. When the institutional winds change, you may find that the knives are in your own back. These are surely not the kind of dynamics we want to encourage.

Reshuffles, downgrades and South Africa’s public finance drama

The last week has been tumultuous for many South Africans, not least if you are an economist concerned with public finances and the associated political economy dynamics. I had predicted that the President would make another attempt at a finance ministry-targeted reshuffle some time from the end of March onwards. The basis for that prediction was the timing of Parliament’s recess period, as I discuss in greater detail in this article.

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Zapiro: “Shift happens”

The new Minister has been brought in on the back of the President’s (empty) rhetoric about ‘radical economic transformation’ to benefit the majority of poor, black South Africans, but he is known more for his snappy dressing than radicalism; if the FT is correct about his favoured brand, then two of his many ties would equate to the proposed new monthly minimum wage. The combination of supposedly radical rhetoric with personal profligacy is on its own questionable, but there are many more reasons to be concerned.

It was therefore not a great surprise to many analysts when S&P downgraded South Africa’s foreign currency sovereign debt rating to sub-investment grade (‘junk’). After the downgrade by S&P, which I had also expected having paid close attention to presentations at their one-day conference in Johannesburg only a couple of weeks earlier, I provided some commentary with an emphasis on the reasons for the downgrade and possible economics and public finance implications. One of these interviews, with Ayabonga Cawe at PowerFM, is available here. In the first interview I did, on KayaFM, I made a deliberate point of stating that we should not allow anyone to mystify the obvious: that Gordhan has been removed for similar reasons to Nene, implying ‘capture of the state’ (as per the Public Protector’s report). In that context, the new finance minister simply lacks credibility and any statements made about continuity and protecting the fiscus will likely be taken with a pinch of salt.

With the inconvenient oversight of Minister Gordhan removed, the South African Revenue Services announced its final revenue collection figures for 2016/17 in a chummy press conference with the new Minister. This attempted to paint a R30bn revenue undercollection (relative to the revenue forecast in the 2016 Budget) as a success, because it exceeded the 2017 Budget forecast (i.e. the one revised down by R30bn) by R0.0003bn… Unfortunately, many journalists reporting on that event were taken in by the claims of success. I had already dealt with much of this in an article in the Finance Mail. In fact, given concerns about SARS delaying refunds to inflate collection figures, and given inadequate data submitted to Parliament, I have submitted a formal request for more detailed data to SARS and hope to follow-up on that in due course.

Needless to say, the capture of the Finance Ministry makes Parliament’s oversight role even more critical. But as I have argued in some detail (here and here), and ventilated in my CCMA case, the Parliamentary Budget Office is neither equipped, nor inclined, to provide the robust analytical support expected of it under the Money Bills Act (2009). I will have more to say about this in due course.

After the decision by S&P, Fitch has now also downgraded South Africa’s foreign and local currency sovereign debt rating: setting the stage for more dramatic consequences if another agency also downgrades local currency debt to ‘junk’.

These are dangerous times for the South African fiscus, economy and society at large.

Presentation to Parliament’s finance committees

I am now affiliated to the new Public and Environmental Economics Research Centre (PEERC) at the University of Johannesburg, within which I intend to continue putting my public finance and public economics knowledge to good use.

As already noted, I recently published an article on the legislative process that guides the adoption of Budget proposals by Parliament.

And this week, along with my colleague Jugal Mahabir (who has experience at National Treasury and the Financial and Fiscal Commission), we made a short presentation to the finance committees on the fiscal framework and revenue proposals.

The time available (4-5 days between the tabling of the Budget and the submission of public comment) limits the depth and sophistication of the analysis, but with greater preparation this is something I hope to improve on at each successive iteration.