Train to Jozi

The Passenger Rail Agency of South Africa recently announced the the passenger train between Johannesburg and Cape Town is back in service after many years of unreliable and discontinued operations. When I was an undergraduate at the University of Cape Town I often took this train between semesters. I later published a brief photographic essay reflecting on the experience. Unfortunately the original version with photographs no longer exists (the archived version is here: https://web.archive.org/web/20150922202850/http://www.oxonianreview.org/wp/train-to-jozi/) so I decided to recreate it here.

The Shosholoza Meyl, once known as the Trans-Karoo Express, runs daily between Cape Town and Johannesburg (affectionately known as Jozi). The 26-hour journey begins at the bottom of the city bowl, departing from Platform 1.

Person in a sunbeam on the station platform
© Seán Muller

A pair of feet in black shoes with yellow laces on a yellow-lined station platform
© Seán Muller

Winding out of the station under the characteristic backdrop of Table Mountain to the east, the train meanders through peri-urban industria, graffitied walls, container yards and small factories.

Peri-urban industria: blue warehouses and graffitied walls
© Seán Muller

Exiting the outskirts of the city, it slips into the lush valleys that yield the fruit exports and vineyards for which the Cape is famous. Little children begging by the tracks suggest that the luxuriant scenery does not translate into prosperity for many. As with most of South Africa, the ever-present poverty is only blurred by familiarity.

By late afternoon the train is well into the vast scrublands of the Karoo. It is a meditative landscape; dotted hillocks and straggly sheep interspersed with the occasional farmhouse or windmill-powered dam.

Boy studying barefoot outside a house next to the train tracks
© Seán Muller

It can be too much for some passengers, who incline toward a palliative of alcohol-induced sleep. By late afternoon a blood red aspirin falls through the sky, leaving streaks of colour in its pale blue wake; eventually dissolving into the horizon. The sky bruises dark blue, purple and black, until the train is rushing brazenly into the darkness.

Dawn brings a rattle on the door offering tea in polystyrene cups—steaming hydraulics adding to the slightly magical light—and a gradual drift into the economic heartland of South Africa.

Steam from the hydraulics at dawn
© Seán Muller

In winter temperatures drop below freezing overnight; the days are clear; the veld and air sandpaper dry, bursting into flames with the slightest spark. The train tracks slither below the Nelson Mandela bridge, into the Jozi metro. As a gold mining boom town it was once dotted with mine dumps, but the best vantage points remain the koppies; the largest outcrops of the many granite ridges curling around various parts of the city.

People waiting at a station on the route into the city
© Seán Muller

This is my home.

A view over Johannesburg towards Sandton City
© Seán Muller

And I feel the weight of Ivan Vladislavic’s words: “Are you still with me? In this dog-eared field, collapsing from one attitude to another, dragging your ghosts through the dirty air, your train of cast-off selves, constantly rediscovering yourself at the centre, in the present.”

A view across a koppie with a stone across towards the Jozi CBD
© Seán Muller

[Edited to add some additional photographs that were not published in the original essay]

Geopolitics of the energy transition: Part 1

At present, groups with strong vested interests are encouraging South Africa to make a fast and radical transition without explaining how the costs incurred in doing so will be paid and by whom. Worse, they want the country to do this in a way that would reduce the income it could earn to fund the transition.

One of my current areas of work is the energy transition in South Africa. In 2022 I co-authored two important pieces on this in the online publication New Frame. Unfortunately, New Frame has since shut down and those articles no longer appear in internet searches so I am republishing them here.

Who gets the ‘dirty’ profits while going for ‘clean’?

By: Mike Muller
By: Seán Mfundza Muller

21 Apr 2022

Analysis

In the first of two articles on the energy transition that must happen across the world, it’s clear that coal will be around for years to come. Less clear is who will benefit from it.

Current proposals for an energy transition in South Africa are wholly inadequate. The energy transition is a marathon that will be run for at least three decades and it needs a well-considered strategy to complete successfully.

Countries that try to sprint from the start are likely to fall by the wayside. Yet the popular narrative promoted in South Africa doesn’t move beyond the cheap populism that simply asserts that Eskom and fossil fuel-based energy production are evils that need to be got rid of at the greatest possible speed.

The world must undoubtedly transition to a new energy system, but it will be a hugely complex and costly project. To make a successful transition, each country – and community – will have to address its specific challenges.

For a country as unequal as South Africa, a primary concern will be to ensure a genuinely “just transition”. It should not impose unreasonable burdens on ordinary South Africans, particularly workers and the impoverished, through retrenchments, extra taxes, unreasonable energy price hikes or reduced public services. The transition strategy must consider the implications for public finances, therefore, and it must also consider the implications for national sovereignty and stability.

The current model for transition to green energy is through rapid privatisation. It amounts to a form of self-imposed structural adjustment that threatens to repeat the economic policy mistakes of the 1990s. These collapsed the manufacturing sector of the economy and closed many paths to a more inclusive and prosperous society.

Weaker and more dependent

Meanwhile, the wildly overhyped promised external support for a just transition in South Africa is limited. Close inspection of the “green financing” deal for the country, announced with much fanfare at the COP26 climate change conference held in Scotland in November last year, reveals unfavourable terms and little real financial support.

Populist campaigns that push for the swiftest possible transition to privatised forms of green energy production are likely to contribute to turning an already difficult transition into a brutal one. Instead of ensuring that South Africa can design, fuel and fund its transition primarily from domestic resources, it will become even more dependent on energy imports and conditional external funding.

This will reduce its ability to negotiate trade and finance deals, including for renewable energy investments, further undermining its economic sovereignty. It will weaken public finances and reduce the resources needed to address poverty and inequality in a sustainable way. And history shows that weakened sovereignty on these fronts can weaken political sovereignty as well.

While many domestic commentators like to frame South Africa as some kind of energy pariah, this does not hold up against a global perspective. Globally, South Africa is being outplayed by more powerful nations who seek to maximise their returns from their hydrocarbon resources while they still can.

Take Australia. Back in 1981, its national intelligence agency, the Office of National Assessments, warned then-prime minister Malcolm Fraser that by the middle of the 21st century, CO₂ emissions would cause climatic change that “would require major economic and social adjustments”.

The primary concern for Australia was not climate change. It was rather the “potentially adverse implication … for the security of Australia’s export markets for coal”. The country’s response was simple and is now a matter of public record. It ramped up coal production to maximise its carbon income before the fateful day arrived. It also encouraged the exploitation of its offshore gas fields. So today Australia is not only the world’s largest coal exporter, but also the largest exporter of liquefied natural gas (LNG) – although in total gas exports (LNG and pipeline) it is only fifth in the world.

Making hay while sun still shines

Other rich countries are following similar strategies to Australia’s. Canada has a relatively low-carbon domestic electricity system, thanks to extensive hydropower and nuclear generating capacity. But despite local opposition, Canada continues to exploit its huge reserves of dramatically dirty “tar sands” despite the extreme environmental and social damage. The aim is to produce oil for export, maximising its hydrocarbon income while it still can.

Canada’s big neighbour, the United States, is even more aggressive. In the 1970s, the US produced much of its electricity from local coal. For transport fuels, however, it depended on oil imports from cheap but politically unstable, or destabilised, Middle East countries.

Like Canada, the US has huge, potentially valuable reserves of gas and oil in shale rocks that are difficult to tap. Fracking technologies, developed with support from the government, have solved the technical problems and transformed the country’s energy sector. Expanded gas supplies are replacing coal for electricity generation, enabling a significant reduction in CO₂ emissions. This has turned the US into a net exporter, with both the Trump and Biden administrations aggressively promoting LNG exports.

As energy prices fluctuate dramatically worldwide, providing transitional solutions – dirty old coal – remains a highly profitable business. AGL Energy, which is responsible for 8% of Australia’s CO₂ emissions, rejected a bid from US private equity company Brookfield saying it was well below fair value. AGL Energy intends to continue using coal until 2045, which will help it to build a renewables business.

In South Africa, the future value of a few decades of coal-fired business was demonstrated when Anglo American sold its local coal business to Thungela Resources, a black economic empowerment company, in June last year. Thungela’s share price has since gone up over 600%, with most of that rise happening even before the Ukraine crisis.

The importance of local mining production for public finances was demonstrated by the tax windfall from higher commodity prices that helped to relieve the post-Covid fiscal shock, just as it boosted public finances before the global financial crisis of 2007.

Worsening inequity

So whether one likes it or not, profits will continue to be made from fossil fuels during the energy transition. The question now is who will capture those profits and for whose benefit will they be used? A just transition would see the transitional profits go to the more impoverished countries that bear the heaviest burdens. That’s not currently happening and, if anything, the present trajectory suggests the inequity will worsen.

As Mia Mottley, prime minister of Barbados, put it earlier in March, developing countries need “a way to finance our route to net zero”. And if the wealthy nations that “caused the problems” would not provide funding, these countries would need to find other ways to generate revenue, such as exporting fossil fuels. “There has to be equity,” she told a Financial Times climate conference.

Historically, wealthy countries have been reluctant to really pay their share. In 2007, the then Ecuadorian president Rafael Correa proposed that wealthy countries pay Ecuador not to drill for oil in an Amazon rainforest reserve. In other words, he wanted them to compensate Ecuadoreans for the national revenue they would lose by keeping oil in the ground. Of the $3.6 billion proposed, only $13 million was forthcoming and the oil drilling in the Amazon went ahead.

The question that motivated Correa was simple: why should poor countries sacrifice much-needed revenues from exploiting natural resources when rich countries that can better afford this sacrifice are often not doing so? This same question can be applied in South Africa and beyond to other Southern African Development Community countries that have strong incentives to “monetise” their hydrocarbon reserves to help fund the building of their domestic power systems and economies.

The stated aim of virtually all campaigns in South Africa at present is to achieve a “just transition”. But analysis of South Africa’s options, supported by evidence from the rest of the world, suggests that their effect is more likely to impose an unnecessarily brutal transition on the majority of South Africans and a loss of energy and political sovereignty.

Séan Muller does not receive any funding, or have any other conflicts of interest, related to the subject of this article.

Mike Muller’s pension is invested in, among others, renewable and conventional energy and construction companies.

This article was first published by New Frame.

Comments on South Africa’s medium-term budget policy statement (and related matters)

Front-page of the Medium-Term Budget Policy Statement

The Medium-Term Budget Policy Statement was tabled on the 1st of November alongside the documents for the ‘adjusted Budget’. Here is my first op-ed on those proposals. I will post the videos from media interviews and oral submissions to Parliament separately.

South Africa’s medium-term budget reflects difficult and contested decisions

Seán Mfundza Muller, University of Johannesburg

The medium-term budget policy statement presented by South Africa’s finance minister, Enoch Godongwana, to parliament on 1 November 2023 is intended to provide a preview of government’s public finance plans over the next three years. It does not actually commit government to anything, either in law or in practice. Nevertheless, it is a crucial document because it presents what the National Treasury intends to be the broad, financial foundation for the functioning of national, provincial and local governments in the near future.

This year’s statement is particularly important for two reasons. The first is that South Africa’s fiscal situation is arguably at its worst in the post-apartheid era. The second is that any decisions taken, especially about the 2024/25 fiscal year, could affect how South Africans view the current government when voting in next year’s elections.

The crucial background to this year’s statement is that South Africa’s national debt levels relative to the size of the economy have increased substantially since 2008. The statement emphasises that the increase was approximately 47 percentage points from 2008. The three main reasons are the global financial crisis that started in 2007, continued slow economic growth partly as a result of state capture and power outages, and the COVID-19 pandemic.

Additional reasons include lower tax collection, other major expenditure increases such as the “free higher education” policy announced unexpectedly at the end of 2017, and large transfers to the state-owned power utility Eskom in response to its worsening financial position.

As things stand, national debt is expected to reach almost 75% of GDP by next year. Before the COVID-19 pandemic such levels would have been considered unsustainable by many economists and international financial institutions. The sustainability of national debt – how much a country can borrow without leading to a crisis later – drives a lot of thinking about country’s public finances.

But it’s not a science. What was almost unthinkable about debt levels before the COVID-19 pandemic has now become almost normal. Many countries have experienced large increases in their overall debt levels and the resultant debt service costs.

Some so-called radical economists claim that there are few limits on government expenditure. But this is, unfortunately, a luxury that may only be true for much wealthier countries with greater economic and political power – like the US.

On the other side of the spectrum, recent scaremongering statements that the country could “run out of cash” are absurd and misleading.

The question for South Africa is what to do about high and growing levels of debt. A sustainable debt path isn’t just about reducing debt to a particular level. The process of how it’s done is also crucial. Cutting spending in a way that creates social harm and reduces economic growth is self-defeating. Raising taxes too much can also be counter-productive. But letting debt rise indefinitely will mean borrowing costs become impossible to meet without dramatic spending or taxation measures.

The result inevitably involves difficult trade-offs. But because these are contested, within government and by different interest groups, the consequences and details are often concealed or given a misleading spin.

The devil in the detail

A few examples from this year’s statement illustrate this – and the divisions within government itself.

The first is the issue of government spending on salaries.

In the past the National Treasury and some economists have sought to suggest that this kind of spending is inherently “unproductive”. In reality, even from a narrow economic perspective, that is incorrect. Such spending funds the work of teachers who are responsible for educating future generations, nurses whose job includes keeping people in the labour market healthy and alive, and police officers whose presence should contribute to keeping crime in check.

For many years there has been an arm-wrestling match between the treasury and other parts of government responsible for determining public sector wage agreements. The way this has been “resolved” is by the treasury budgeting for the wage increases it believes are appropriate, the other parts of government agreeing to higher wage agreements, and the treasury then forcing departments to cut the total number of employees in order to keep total wage costs down.

Although the treasury accompanies its stance by promising that “essential” or “labour intensive” departments and sectors will be protected, it has never provided any detailed information to actually show that is happening. The consequence is a form of “austerity by stealth” in relation to staff available to provide public services.

The much better solution would have been for a social compact on wage increases and public sector employment. That would require compromise from the treasury but also public sector trade unions. Unable to reach that kind of mature solution, the arm-wrestling continues every year with the general public being the losers.

This year the treasury budgeted for an increase of less than 2% but the actual outcome was 7.5%. Some of this will be covered by funds taken from other important expenditure items, while the rest will come from cutting public sector posts.

A seemingly positive development is that the statement now makes provision for a continuation of the Social Relief of Distress Grant that was introduced during COVID-19. This is one of the only sources of support to millions of South Africans who are unable to find employment.

The 2023 budget made no provision for the continuation of the grant: the treasury planned to end it in March 2024, immediately before the 2024 elections. Earlier this year I argued to Parliament that such a decision would be inequitable and could also unduly influence electoral outcomes.

While it seems sense has prevailed with treasury now planning more than R50 billion ($2.65bn) for such spending over the next two years, it remains to be seen what is proposed in the 2024 budget.

Another example relates to crucial public employment programmes. In a recent speech the president cited his Presidential Employment Initiative as a major success – although without providing any detailed evidence. The treasury proposes to extend this to 2024/25, which seems like a good thing. But it plans to do so by cannibalising funds for other public employment schemes like the Expanded Public Works Programme and Community Works Programme: arguably a case of “robbing Peter to pay Paul”. And it seems intent on continuing the costly and ineffective Employment Tax Incentive.

Lastly, there is the thorny issue of taxes. The major cause of an increase in national debt levels this year is a shortfall in taxation revenue of almost R60 billion ($3.2bn). Only if you read the detail in the medium term budget statement does it turn out that a large part of this is due to private sector investment in decentralised renewable energy generation capacity. This isn’t fully explained, but is likely to be due to value added tax refunds linked to tax incentives introduced in the 2023 budget. In other words: it is the result of a policy proposed by the treasury itself.

Watch this space

While the minister and the treasury have provided an indication of current thinking, the crucial details and commitments of government’s fiscal plans will only be clear when the budget itself is tabled next year. And those will only be cemented when approved by Parliament.

Some political parties have suggested that the 2024 election may be the most important one since 1994: the same is arguably true of the 2024 budget.

Seán Mfundza Muller, Senior Research Fellow, Johannesburg Institute for Advanced Study, University of Johannesburg

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The problem with IEJ

Since early 2018, I have expressed – mostly privately and sometimes publicly – criticisms of and reservations about the newly established Institute for Economic Justice (IEJ). Some people appear to be under the impression, so they’ve told me, that this is ‘personal’. Not at all; no more than it would be ‘personal’ if I was critical of Person W because as a bystander I saw them pickpocket Person B. But these and other reactions/narratives indicate that I should clearly state what I believe the problem with IEJ is; that is the purpose of this piece. The purpose is not to persuade anyone either way but simply to put across my experiences and reasons for my position. If I get around to it, I may say more at a later date about what I think the IEJ reveals about parts of South African ‘left-wing’ civil society more broadly.

Background: the problematic dominance of conservative economic analysis

In the last couple of decades, the South African economic analysis and policy space has largely been dominated by conservatives, who have consequently also gotten away with low quality analysis and dubious policy proposals. Much of this has happened under the banner of shallow rhetoric and tired tropes. Many individuals (including myself) and some organisations, with varying political views, have criticised examples of this bad conservative analysis year in and year out. But it has persisted and for whatever reasons, institutions that ought to have provided credible, consistent alternative analysis and commentary of better quality have failed to do so, or failed to gain traction. The result being a tedious succession of exchanges between arrogantly mediocre conservative economists, strongly aided and abetted by the business and mainstream press, and loud but equally empty rhetoric from left-wing organisations such as trade unions and political parties. Key public institutions like the National Treasury and Reserve Bank have developed post-apartheid institutional cultures most closely aligned to the conservative end of the spectrum. Resulting in a neat conflation of conservativeness with credible economic policy by these institutions and most of the media – who at best do not know enough to judge either way, and at worst suffer from the arrogant conservatism of the poorly trained and poorly informed.

For these and other reasons, there has been a long-standing need for some kind(s) of counterweight to this problematic culture that enables what are arguably sub-optimal economic, and other, policies. What has been evident to me at least since my undergraduate studies in economics in the early 2000s is that a shift requires left-wing analysis and research that can match, or exceed, the quantitative sophistication of the analyses produced by SARB, Treasury and their stablemates in academia. For that reason, in the past I encouraged a number of my left-wing students and ‘activists’ I came across not to turn their backs on quantitative methods; if they had the intention of further study in economics, I recommended getting some substantive training in these methods – whatever those methods’ actual usefulness for answering economic questions.

An introduction to the IEJ

With this background, it should not be surprising that when I was told about the idea of a research institute aimed at providing relatively sophisticated research and analysis in support of left-wing/progressive agendas, I welcomed it. That was the case when, by a chance meeting via a mutual acquaintance, I spent a few hours (in 2017 as I recall) with one of the initiators of the Institute for Economic Justice (IEJ). And in that discussion, I was forthcoming in sharing a number of ideas I’d had over the years for a range of specific initiatives required. In doing so, I made – with hindsight – a number of mistakes:

I assumed that the initiative, and its initiators, had a certain respect for the intellectual separation between academic work/research and advocacy
I assumed that the initiators recognised the importance of what’s often referred to as ‘positionality’ – in general and especially in an area which ultimately concerns policymaking in the interests of the majority of South Africans who are black and women
I assumed that the white male initiators were doing this as a part-time or extramural activity, that a much broader, demographically representative group would be involved, and that the initiators would not be the final directors of the organisation
And finally, I assumed that the institution would play a supporting role to actual civil society organisations that could lay some credible claim to representing at least a subset of black South Africans who would speak for themselves.

These assumptions were based on my own views about how it might be appropriate to work in this kind of area, but it was naïve at best to assume these views were shared. Such assumptions partly followed from a deliberate decision to give the founders the benefit of the doubt, despite some reservations about their respective familial and professional associations with men in civil society who had been involved in some arguably rather revealing scandals. It seemed unfair to damn the IEJ founders by association…and perhaps that remains true even if it turns out, after the fact, that it would have been the right decision.

Existing civil society spaces

I continued with this approach of giving the founders of IEJ the benefit of the doubt as they began to involve themselves in long-standing civil society spaces I was working in – most particularly, the public finance space. The main such space had evolved in name, participation and structure, but in recent times was largely the initiative of a number of (mostly black) women who had been working in related spaces (public finance and civil society) for some time. It is now called the Budget Justice Coalition. There were very clear statements about what the purpose of the space was and how it operated:

The purpose was to build capacity amongst CSOs on public finance oversight and thereby also develop the basis for collaborations to lobby and influence policymakers
Conduct needed to be respectful, non-hierarchical and democratic, aware of positionality and ultimately in line with the purpose of the spaces created.

You can find a full statement of these principles at the bottom of this webpage: https://budgetjusticesa.org/about/.

These fundamental principles aligned nicely with my own view of an appropriate role for myself in these spaces: sharing the academic and policy expertise I had (from my training, government experience and recent work at the Parliamentary Budget Office) to the extent that it was useful for the people and organisations involved. I had/have clear views on many public finance issues in terms of what I think is likely to be in the interest of South Africans at large, but it was absolutely clear to me that these should not be imposed on these spaces, nor should I seek greater influence or authority for my views from getting endorsements.

Indeed, there were a number of occasions where I had to state explicitly that it would not be appropriate for me to take leadership positions in advocacy, nor would it be appropriate to have my individual submissions (e.g. to Parliament) endorsed by CSOs – as much as I welcomed the implicit support the desire to do so implied. I should perhaps have paid more attention to the fact that this was more often interpreted as rebuffing attempts for collaboration, than it was seen as being in keeping with the principles stated above.

Anyway, it was in this space that it became evident how inaccurate, and far too generous, my assumptions about the IEJ founders were.

Revealing true colours

At the beginning of 2018, which seems something of an age ago now, a number of CSOs involved in the initiative mentioned above organised pre-Budget workshops to prepare representatives of various left-wing CSOs for analysis of the forthcoming national Budget. I was involved in the organising, partly based on prior participation in such efforts and partly through a new, formalised project funded by the EU to improve CSO engagement with legislatures. IEJ were the newest on the scene but it made obvious sense (including to me) to have them involved in some way.

It is worth noting, though, that as I remember it their participation was proposed by an individual at another CSO – let’s call him ‘John’. Neither at that time, nor later, did John indicate that he had any personal relationship with the founders of IEJ.

Let me fast forward here to save some time. Overall the workshops went well, but afterwards I was sufficiently bothered about something I had seen that I sent a message to the IEJ co-founder I’d originally spoken to, confronting him about his conduct, that of his co-founder and John. Specifically, prior to a consultative session in which the group was intending to make decisions about the way forward, this individual surreptitiously called his co-founder and John outside to have a strategic discussion – unaware that I had noticed them doing this. (Bear in mind the background to this CSO group above and the fact that these three were all white men). On returning to the session, they began to raise points from the floor.

The principle for making contributions in that concluding session was that only one representative from each organisation could speak for a fixed period of time. The first dishonesty was that the two IEJ co-founders insisted on being allowed to speak separately on the grounds that IEJ, supposedly, was not up and running (contradicting statements made elsewhere).

The second, was that – with the benefit of what I had seen – all three made contributions that pushed in one particular direction but while giving the impression that they were independent. That direction, I suddenly realised, resonated closely with what one of these IEJ co-founders had told me individually: their first priority was to elevate IEJ’s profile in order to secure its status and more donor funding. After the workshops a similar dynamic emerged in email exchanges. The IEJ had no interest in the slow, painstaking process of putting together a group submission and instead went ahead and drafted its own (which really meant one person’s document) which it then put to the group. And John was the first to enthusiastically endorse the IEJ submission and role. These were additional dishonesties, because the IEJ representatives said nothing about the desire to use this pre-existing initiative and substantive public interest issues to raise their profile, and John neglected to mention – as I later discovered – that he was the best friend of the person whose organisation and submission he kept endorsing.

Given the heavy workloads and limited time of the organisers, the prospect of someone taking responsibility for the submission was gladly accepted with an apparently naïve good faith. (I cannot be too harsh here because after all I was also guilty of giving the relevant individuals the benefit of the doubt at the outset). So it was that one, not especially well-qualified or experienced individual in the public finance-legislature space, made himself the figurehead for left-wing civil society opposition to the government’s proposed VAT increase in 2018. Not only did he draft the submission with little input, but also presented it to Parliament on behalf of these CSOs – clearly with no qualms about his own positionality despite ‘wearing multiple hats’ (as he acknowledged in the relevant presentation to Parliament) and being a white man from a privileged background who had no legitimate claim to represent any South African besides himself.

Because of my original lengthy conversation with him about the IEJ and what I had seen, I decided – as mentioned already – to confront him privately rather than publicly after the workshops. He all but admitted the self-interested agenda I put to him, but aggressively denied that issues of positionality in this carefully created space should impede him and the ambitions of his two collaborators. The conduct I observed violated many principles of the space in which these individuals were operating. Among those one can find on the BJC site are those requiring that participants “are open and honest with each other”, “are characterised by integrity”, “are committed to emulating equality and inclusion in our processes”, “have humility”, “respect the multiplicity of organisational approaches to achieving social change”, and so on.

There are two other instances of problematic conduct by the IEJ founders that I have heard about from others. One concerned using contacts in civil society to pre-emptively attempt to discredit individuals making allegations of sexual harassment. Another concerned rude and abrasive behaviour in a civil society workshop to the point that the professional facilitator complained about the conduct. Reportedly, the culpable individuals were taken to task by their peers on both. Yet that appears to have done little to materially affect their power or status in the organisation or the organisation’s credibility. It is unclear whether the Board was ever informed about such matters.

Avoiding IEJ and initiatives it controls or has significant weight in

Having confirmed my own suspicions by engaging directly with one of the individuals concerned, I have since sought to avoid any interaction with IEJ, initiatives it controls or initiatives where it has any significant weight. Sadly, that means I had to largely sever any involvement with the Budget Justice Coalition. There is an obvious irony in this, but personally the only consequence of no longer being involved is: less work on public interest issues and more time for my career-enhancing academic work.

I summarised my stance as follows when I was approached more than 12 months later (in early 2019) to be involved in one aspect of the Rethinking Economics for Africa (REFA) initiative:

I am not really comfortable with IEJ as an organisation. I know there are good people internally and on the board, but in my view (and that of others) it replicates a problematic CSO model in South Africa that should be left in the past. Some categories of problems were exposed with the Equal Education saga last year. Given this, while I think initiatives like IEJ and REFA are needed in SA, I do not want to be involved with IEJ as it is currently led.

I should add that I also don’t really think it’s appropriate for REFA to be controlled by one institution, not least a problematic one. There is also the matter of how the REFA festival was handled last year, with the effect that a very clear message was sent (in my view) by the way involvement appeared to be determined – reflecting the interests, cliques, positioning and prejudices of the organisers; not primarily expertise on the supposed issues at hand.

While I appreciate that none of the issues I raise (past or present) may be within your control, they are important. To put it bluntly: I can’t involve myself even with ostensibly worthwhile initiatives and good people if I know that ultimately the final strings can still be pulled by people who I believe to be problematic. If/when the top leadership of the IEJ changes, feel free to get in touch again.

REFA, as part of the broader Rethinking Economics movement, is also a great idea in principle. But the fact that it is ultimately controlled by the same people controlling IEJ is deeply problematic.

Recent developments and (non-)prospects for change

As far as I can see, the founders of the IEJ have continued in precisely the vein they started in: pathological self-promotion that seeks to take over other initiatives and control people who’ve been involved in such work for longer periods, under the justification of promoting ‘economic justice’. And one must give them credit: they have been very successful. Helped to no small degree, like similar predecessors in South African civil society, by the power that accrues in resource-starved spaces from donor money. Unlike in the United States where one might need to pretend to be a black woman in order to profit from work supposedly of benefit to marginalised communities, in South African left-wing civil society it turns out that it’s entirely possible for a few, not especially accomplished or insightful, white men to make a comfortable living and dramatically increase their professional profiles by anointing themselves representatives of the pursuit of economic justice for black South Africans. And then receive significant donor funds, along with endorsements from supposedly credible individuals and organisations, for this act of non-benevolence.

In the last year or so there appears to have been a slight shift in strategy by IEJ, with the problematic individuals reducing their self-promotion a little and putting others in public fora. I suspect this is in response to awareness of the above concerns from a number of individuals. They nevertheless appear to retain final control of all aspects, directly or indirectly, of IEJ. And REFA is correspondingly still controlled by these individuals. For myself, I have no interest in any association with people of this kind or those who endorse them.

An obvious source for change ought to be the IEJ board, the members of which purportedly subscribe to progressive notions of leadership elsewhere. To my knowledge, however, the board was created by the founders rather than the founders being appointed by the board. Furthermore, some board members have long-standing reciprocal/mutually beneficial relationships with the founders and therefore do not have an interest in appointing individuals to manage the organisation who would be more consistent with the principles they espouse.

More broadly, there are certain power-brokers in civil society who have for a long time participated in such dynamics themselves and work hard to use their roles – including in the media – to secure the legitimacy of such individuals. Ironically, the author of the article linked to calls for ‘economic democracy’ but fails to mention that the initiatives he endorses are led by unelected white men; what kind of economic democracy is that, one might ask? Furthermore, though he bemoans alleged dismissive treatment of those he endorses by the business press this is largely false: whereas the media almost entirely ignored the black women-led initiative that preceded the IEJ by many years, within the 18months of IEJ’s launch, one of its co-founders was widely personally profiled in the business press, invited to participate in policy discussions led by conservative organisations, and both co-founders were widely cited and invited to speak as authorities on left-wing positions on economic matters. In an astounding case, one columnist and former editor of Business Day represented a document by one of the IEJ co-founders as representing the views of left-wing civil society as a whole. (I might note that the document contained a few glaring technical errors: confirming that the author’s status cannot be justified even putting positionality issues aside). The claim thus holds little water. Indeed, if one looks at the evidence it is hard to separate these individuals’ self-interest from their purported activism…

As I have alluded to above, it seems this kind of conduct – hypocritical as it is – has become normalised in left-wing South African civil society. Almost thirty years into the country’s democracy, the position of those who have endorsed IEJ is implicitly that black South Africans need to be led to economic justice by white men substituting an actual mandate with merely their unapologetic self-promotion. This is grossly hypocritical. I do not hold the view that white people – men or otherwise – should not have any involvement in these discussions. Evidently not, since I remain actively engaged with these areas myself. But I really cannot see any defensible basis for white people of any background leading these initiatives and even less so when on multiple occasions they have violated basic principles of conduct on which such activity is supposedly premised. And I have little tolerance for those who endorse or enable this and yet still want to shout about representation or demographic injustice issues in other parts of society.

Update (22 March 2021):
#1 Since the original post was written, the IEJ has changed its Board (or at least changed the details of Board members provided on the website) – only 2 members of the original board seem to remain but despite that the issue of beneficially reciprocal relations does too. How Board members are appointed, and by whom, remains unclear. One of the co-directors is now referred to as a ‘senior policy specialist’ – leaving it unclear who the other ‘co-director’ now is.
#2 I notice that the IEJ website claims that “The IEJ was launched…in September 2018”. It is easy to find public information indicating that the IEJ was operating long before that, as per my remarks in the post. For example, see these minutes from a presentation to Parliament in February 2018: https://pmg.org.za/committee-meeting/25892/

Why is Parliament violating PAIA?

In May 2018 the Parliament administration solicited bids for a forensic investigation into accusations of misconduct at the Parliamentary Budget Office. The forensic investigation commenced in June 2018 and was completed by the end of July (within the very limited time-frame given by Parliament). The Director of the Parliamentary Budget Office, Mohammed Jahed, resigned shortly thereafter accompanied by strenuous denials that the resignation related to the investigation into misconduct.

After some less formal requests for the report, in March 2019 I initiated an application under the Promotion of Access to Information Act. The Parliament administration first sought to extend the time period for reply and then stopped providing substantive replies – meaning it is now in violation of the PAIA Act. In my most recent letter to the Acting Secretary of Parliament (who is officially the Information Officer for Parliament) I lay out the details of the preceding correspondence and the legal implications.

The big question is: why is Parliament so desperate to hide the report it commissioned?

A note on the philosophy literature on external validity

Later this month (August 2019) I’ll be presenting a paper at the 14th conference of the International Network for Economic Method (INEM). The paper is titled, “From ‘data mining’ to ‘machine learning’: the role of randomised trials and the credibility revolution”. An apparent puzzle is that there’s a session on external validity – which was the subject of my economics PhD, a working paper and short publication – in which I’m not presenting. Surely if I am going to be presenting at conferences on the method or philosophy of economics I should be presenting my work on external validity? The short answer is: I already did in 2012. But I think the longer explanation is also worth giving.

First, the paper I will be presenting at INEM (and ENPOSS) builds explicitly on work I’ve done on external validity (henceforth ‘EV’).

Second, and more importantly, my contribution to the philosophy literature on EV was not just presented at the Evidence and Causality in the Sciences (ECitS) 2012 conference but subsequently finalised as a paper in 2012, revised in 2013. Unfortunately that paper was not published at the time, for reasons that were at best flimsy. Preoccupied with finishing my economics PhD and changing jobs, I delayed resubmitting the manuscript. When I returned to academia in 2016 I discovered that a paper on the subject had been published in Philosophy of Science. More surprising was that, apart from some differences in verbiage and references, the core arguments of the paper seem to be the same as about 30-40% of my own paper but with no reference to that or my work in economics. Then, earlier this year, another paper appeared in the Journal of Economic Methodology. The core arguments of this paper, too, are very similar to the other 30-40% of my paper (dealing with issues like causal process tracing and related matters). In the second instance, my economics work is cited by misunderstood or misrepresented: suggesting that my views are different to the author’s when in fact, as is clear from the 2012/13 paper, they are almost entirely the same.

Needless to say, this creates a rather awkward situation. Not least because I believe, for reasons I will not ventilate in detail at this point, that it is implausible that the two authors were unaware of, or uninfluenced by, my 2012/13 work. But it is now simply impossible to publish my own work, despite clearly having a claim to intellectual priority. These concerns have been taken-up in the relevant fora, but the wheels turn slowly. And it will be informative to test the extent to which academic philosophy is committed to principles of intellectual priority. In the interim it makes for an ‘interesting’ context for intellectual engagement…

Public finance oversight in Gauteng after the elections

Section 120(3) of the Constitution requires provinces to pass a law that guides how they deal with public finance proposals (spending, taxes, etc) from provincial governments. Until 2019 no province had done this. In April of this year, the Gauteng Provincial Legislature (GPL) passed such a law – the Gauteng Money Bills Amendment Procedure and Related Matters Act.

Having such a law is important, but unfortunately the GPL put together a Bill riddled with problems and errors which it then proceeded to rush through in a month without any serious consultation. Some of the problems with the Bill and the process are summarised in this article: https://www.businesslive.co.za/bd/opinion/2019-03-25-gauteng-legislatures-draft-money-bills-act-is-riddled-with-flaws/

A more detailed analysis of the strengths and weaknesses of the Bill is provided by the submission I made to the GPL, at very short notice, in March:
Gauteng Money Bills submission to GPL

With the recent provincial election results suggesting a very narrow numerical majority for the ANC, the problems with the GPL Act may have a profoundly disruptive effect on public finance oversight and decisions in Gauteng. That is concerning, not least for a province that is estimated to be responsible for about 35% of the country’s economic activity and 25% of the country’s population.

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.

The NDP: some thoughts from 2013

Now that Cyril Ramaphosa is president of the ANC and the country, it seems likely that the government will do more than pay lip-service to the National Development Plan finalised in 2012 but barely implemented in any substantive way by subsequent Zuma-led governments. However, the NDP is far from a perfect document, as I pointed out in comments I made in a piece published in 2013 – most of which remain as pertinent now as they did then. These comments cover the public service and education chapters of the NDP. Later this year I will write something about South African economic policy in general, which will address the (somewhat problematic) NDP chapter on that topic.

Moralising hullaballoo around circulation of The President’s Keepers is misplaced

There was an outcry on South African social media on Saturday the 4^th of November, when a PDF version of investigative journalist Jacques Pauw’s book The President’s Keepers began being circulated online and via the WhatsApp messaging service. A number of prominent media, academic and other South African personalities took to social media to criticise the sharing of this file as ‘theft’, ‘stealing’, ‘immoral’ and ‘pirating’. At best, none of those assertions reflect the nuanced complexities around copyright and the public good. At worst, they merely illustrate misinformed armchair moralising.

There appear to be three different, but often overlapping, premises for these arguments. First, that copyright infringement is illegal. Second, that circulating the book as an electronic file will reduce sales and harm profits for the author and publisher. Finally, that there is something inherently morally wrong in circulating a book in a way that allows people who haven’t paid to read it. I want to argue that only the first argument may be correct and that, even then, it doesn’t follow that it is immoral to distribute the book this way.

Illegality

Whether distributing a PDF version of a book you have purchased or received, without any expectation of private gain, is illegal is a question for copyright experts. The illegality could arise in relation to the converting of the original ebook into an electronic form that could be distributed, and the actual distribution itself. To my knowledge, no-one has been attempting to profit from distributing the PDF file and that has legal as well as moral significance.

Even if such distribution is illegal under copyright law, that does not make it inherently immoral: laws inform moral reasoning, are also informed by it, but need not coincide with it. Pauw’s book provides a great example. It is clear that someone would probably have had to break a law in order to give Pauw some of the information he uses, but from a moral standpoint that can be justified by an appeal to the broader public interest. If, for example, the president was letting cigarette distributors make cabinet appointments in return for cash – arguably a treasonous offence – then breaking tax or intelligence laws to reveal this is surely the morally right thing to do. (As a result, in some instances such actions are protected by other laws, in the form of whistleblowing legislation).

A more complex perspective from economics

The more interesting issues relate to the overall impact on the public good of distributing the electronic version of the book. The moralising critiques expressed above appear to be entirely unaware of a large literature, in economics and other disciplines, on the ‘social welfare’ effects of copyright, and copyright infringement.

In economics the fundamental starting point of the literature is that constraints on the distribution of knowledge and information – defined to include everything from the computer code for spreadsheet software to fiction novels – are bad. The reason is simple: in the modern world it is almost costless to reproduce and transmit information, so if that information yields meaningful benefit to a significant number of people then it is socially inefficient for them not to be able to access it. The critical counterweight to this, is that in order to encourage people and institutions to produce such information they need to be able to collect a reasonable return: if people know that information is freely distributed after it has been produced, the producers may realise they will not get a reasonable return and therefore not produce it in the first place.

In recent times, a third dimension has been added to the literature: the role of behavioural and institutional norms. Specifically, the second dimension above is based on a narrow notion of market interaction in which people only pay for something if they are forced to. But it is well-established across a variety of disciplines that human beings often behave in other ways, reciprocating when they don’t have to. The implications of this for markets can be seen from the rise in online organisations, such as Wikipedia, that create and distribute information freely on the basis of a model under which people voluntarily contribute.

Different groups with different consequences

It should be fairly obvious in applying these three perspectives to the case of Pauw’s book, that simplistic moralising is misplaced. If we want to think through the issue systematically, it is useful to distinguish four groups:

People who already have bought the book
People who were going to buy the book (i.e. they want to and can afford to) but have not yet done so
People who would like to read the book but cannot afford to read it
People who were not going to read the book, whether or not they could afford it.

Initially we can ignore the fourth group: receiving the file makes no difference to them.

One of the strange things about modern publishing is that having the (more expensive) hard copy of a book often doesn’t entitle you to a searchable electronic version. So some people in the first group might benefit if they would later use an electronic version as well, and it would be hard to argue that this is morally or legally illegitimate.

The main interest, however, is in groups two and three: in a basic economic model, the ‘net effect on social welfare’ of distributing the file will depend on the relative numbers of people in these groups, as well as the behaviour of those in group two on receiving the PDF. The well-being of those in group three increases because they can now read the book, whereas cost had prevented them from doing so. What happens to the well-being of those in group two depends on their behaviour, but it certainly will not decrease. The future profits of the publishers and author, on the other hand, depend only on the number of people in group 2 and their behaviour.

As regards group three, it is useful to be reminded of the role that Jacques Pauw is playing. He is an investigative journalist who has a long track record of reporting matters in the public interest. The people who gave him the information used in his book almost certainly did so to bring it to the attention of the South African public, not to make the author or his publishers rich. In other words, the standard concern in the economics literature applies: we want the producers of knowledge to earn a fair due, but we also want the broader social good to be well-served. Given the nature of Pauw’s book, it is not a stretch to argue that it should be disseminated as widely as possible – those who cannot afford the book, the vast majority of South Africans, should not be excluded from reading it.

My own view is that the vast majority of people who were going to buy the book anyway (group two) are unlikely to change their minds just because they received the PDF. One reason is that many people, such as myself, still prefer to read hard copy versions. Another is the principle of reciprocity I noted above: assuming people won’t pay simply because they do not need to ignores vast literatures in psychology, experimental economics and real-world institutions that survive and thrive on the opposite assumption. Furthermore, the hype associated with the distribution of the file could even cause people in group four (who weren’t going to buy the book) to now either read it or buy it.

Some concluding thoughts

In conclusion, let me make a few final points.

First, since we don’t know how different people will react to receiving the ‘pirated’ version of the book, we simply cannot say whether it will increase or decrease sales and profits for the author and publisher. It seems at least as likely that they will increase as decrease, given the arguments I have made above.

Second, given the threats from both the South African Revenue Services and the State Security Agency, it seems reasonable to infer that the PDF file was circulated primarily in anticipation of a possible withdrawal of the book. A second motive may have been to get as many people reading it as possible, because of the serious implications its revelations have for our democracy. In that context, it is hard to understand assertions about ‘theft’.

Third, it is ironic that moralisers implicitly reject the possibility that people might buy the book anyway, out of a spirit of reciprocity, while appealing to recipients to delete the file and buy the book. Essentially, they are presuming, in rather patronising fashion, that only their moral incantations will get people to behave in this way.

Finally, it is important to remember the role that investigative journalists play as conduits of information in the public interest. It is perverse to argue that the first priority in this kind of case is profit when what makes it worthy of such strident commentary is precisely its relevant to matters of national interest.

Fortunately, the author of the book seems to have a more nuanced appreciation of these issues than those ostensibly defending his interest.

There will surely be more such incidents and hopefully we will be able to have a more informed, and less moralising, public exchanges in future.

Declaration: I received two, unsolicited copies of the PDF file containing the book. I didn’t distribute these further, but have filed a copy away: either in the event that I cannot get a hard copy version, or so that once I have done so I can easily search the electronic copy for reference purposes.