Mandela in Randfontein, South Africa, November 1993. Photograph: Getty Images
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Mandela's power has come: The ANC's challenges in government

While the ANC has spent years bravely resisting apartheid, it has no experience of government. Sarah Baxter assesses the problems facing Nelson Mandela in power.

“The goal of our struggle is in sight, we are now ending one journey and starting another.”

Nelson Mandela, FNB stadium

For 82 years, the ANC has endured banning orders, expulsions, torture and jailings. It has operated in exile and underground. It has organised passive resistance and waged the armed struggle. It has barely had time to learn the skills of legal opposition, let alone government. But, as the votes are being counted in South Africa, it is preparing for power.

Many South Africans have been talking about their fears for the future. Bombs, destabilisation, economic chaos and violence. No sooner did the threat from Inkatha recede, than the terrorist white right has swung into operation. But none of this can detract from the sheer exuberance felt by South Africans who have been able to vote for the first time. For me, Shadrik Moloi, 45, who is illiterate and scratches a living pointing out parking spaces to motorists, put these pre-election nerves in perspective. He told a newspaper in Johannesburg: “My fear is that I won't know how to make my vote. I think I will not know how to make my cross on the paper.” I hope he succeeded.

For now, the vote is all that matters. There are no more whites—only parliaments; and no more tricameral chambers for Indians and coloureds. Everyone has the vote, including Shadrik Maloi. At the Johannesburg Stock Exchange last week, Mandela promised that the years of mass action were over. “It was the action of a community which had no basic rights in this country and no vote. We have now got the vote.” The long-awaited “day of liberation” has arrived, and the years of government are about to begin.

Mandela has not had to prove that he is a statesman. That much was obvious from the day he left prison. But he has conducted the election campaign faultlessly. Wherever he has spoken, in the remote parts of South Africa as well as its urban ghettoes, he has reached out not only to the rapt audiences before him, but to the wider world beyond. He has not been too dignified to poke fun at his opponents, but he has spoken at all times of the national interest.

Could his biggest fear be his own mortality? He has been oddly emphatic in his last campaign speeches that “as long as I live”, white farmers, business people, the money markets and ethnic minorities have nothing to fear. But he is 75. He has survived the brutality of apartheid and has seen it crumble in his lifetime. That is already a remarkable achievement. In due course, the business of government will pass to a future generation.

It is one of the distortions of apartheid that there is a missing generation of leaders, dating from the 1960s, when the ANC was banned. The leader of the ANC in exile, Oliver Tambo, is dead, and many of Mandela's old comrades are near or past retirement age, although they, too, remain active: Walter Sisulu, Joe Slovo, Joe Modise and Ahmed Kathrada. Recognising people's fears about the succession, Kathrada emphasised at a rally in the Asian township of Lenasia last week that there was a “wealth of leadership” in the ANC. Generations to come would be guided by ANC policy, he said. But party discipline is not what it was during the years of jail and exile. Activists have had different experiences of opposition politics; and none of them (whites excepted) has had the vote, let alone power before.

The two frontrunners for the post of deputy president, Thabo Mbeki and Cyril Ramaphosa (if they are not displaced by Chief Buthelezi in the interests of “national unity”), have very different backgrounds. Mbeki, 51, the party's national chairman, went into exile as a teenager in 1961 and spent years representing the ANC abroad. Ramaphosa, 41, the ANC's general secretary, who formed the National Union of Mineworkers and led it into the Council of South African Trade Unions (Cosatu), belongs to the new generation of ANC leaders, who learned their politics in the 1970s and 1980s as students in the black consciousness movement and as trade unionists and community activists in the United Democratic Front (UDF). There has been a great debate over whose experience has been more valuable: Mbeki, with his knowledge of life abroad and different regimes; and Ramaphosa, with his negotiating skills and practical experience of modern South Africa.

Tokyo Sexwale, 40, who is likely to be regional premier of South Africa's hub, the Pretoria-Witwatersrand-Vereeniging region, straddles the gap between the old and new guard. He was a black consciousness activist who went into exile in 1975, spent time in the Soviet Union and was jailed for 13 years in Robben Island on his return. He was recently voted South Africa's sexiest politician—not just because of his name—and is capable of charming township militants in Soweto and liberal whites in Johannesburg. Although he was compromised by the discovery of men found beaten in the basement of the ANC's regional office, he has managed to avoid the blame settling on him.

Many other up-and-coming leaders, who are destined for high office, are even younger: Trevor Manuel, 37, the ANC's head of economic policy; Jay Moosa, 36, ex-general secretary of the UDF. Between them, they have led strikes, organised mass action, conducted negotiations and have been detained. But, like everyone else in the ANC, they have no experience of office.

The ANC, however, has a “plan” for government. It is so proud of its plan, otherwise known as the Reconstruction and Development Programme (RDP), and refers to it so frequently, that when I first arrived in South Africa it sounded disturbingly Stalinist. Hadn't the Soviet Union and Eastern Europe had enough failed “five-year plans”? Mandela has been brandishing the ANC's “plan” as though it were the trump card of the entire elections. “We have a plan Mr de Klerk, where is your plan?” he never stops asking the National Party leader. Far from being a Stalinist document, however, the purpose of the plan is to provide hope and reassurance. To Mandela, it is proof that the ANC is fit to govern. It has a “plan”, if not a record in office. It gives him confidence that the ANC can meet its promises.

The National Party has been busily trying to demolish the RDP, drawing on the tactics of the British Conservative Party. Advised by Mrs Thatcher's PR man, Sir Tim Bell, it has “costed” the programme and concluded that it will lead to higher taxes. But Mandela has gone out of his way to soothe the business community. “The economy of our country must be based on sound market principles,” he assured the Johannesburg Stock Exchange last week. “If you look at our programme, there is not a single sentence about nationalisation. There is not a single sentence that is communist, as our detractors claim.” The all-white traders said he left them feeling “mildly bullish”.

While many elements in the ANC remain militant, there is a key generation of young activists, who were radicalised in the 1970s and 1980s, but would now describe themselves as moderate, who are moving into positions of power and influence behind the scenes. Some will be civil servants and advisers to the new regime, whose task will be to ensure that the transition to a multi-racial society goes smoothly; others have already taken up business and management jobs in the multi-national corporations that used to shut out non-whites. They have now been catapulted into senior positions—the new South Africa will be a young society—but they are also pragmatists. Frank Meintjies, 35, a former journalist on I community newspaper in Natal and ex-information officer for Cosatu, has just been appointed to the eight-member council of the Independent Broadcasting Authority, charged with awarding new franchises for television and radio. “People on the left are talking about more managers,” he says, “and that denotes a key mental shift. We used to talk a lot about leadership, which was a fuzzier term that had more to do with platform oratory.” He is worried, however, that in the student movement, the UDF and other collective organisations in which people like him cut their teeth, “there was never any clarity about power and responsibility. One or two People would emerge as leaders because they were more combative. In the past, it was easy to make excuses for mistakes.”

Yacoub Abba Omar, 33, who joined Umkhonto WeSizwe in the 1980s and spent several years in exile before the ANC was unbanned, is now head of communications for Armscor, the acquisition agency for South Africa's defence forces. “Previously, the head of communications would have concentrated on making sure things did not get in the press and promoting the South African arms industry overseas. It is my job to ensure that the industry works in as transparent a way as possible and that it is accountable to elected and appointed officials.” He says firmly that there is little money to be saved from defence cuts, contrary to the claims of many leading ANC figures. In the short term, spending may even rise, as former ANC and PAC cadres are merged with the existing South African defence forces.

Ismail Momoniat, 36, is a member of the ANC's department of economic planning. He, too, is one of the party's new realists. “The collapse of the Eastern bloc has left a huge vacuum for lots of people, but it has meant there is no debate about whether you have the market system or not. You have to send the right signals to the financial markets.” The ANC, he says, will have little choice but to adopt the National Party's existing budget for the year 1994-95. There will be different spending priorities, but the over-all economic framework will remain the same. “We can't launch into big public investments in year one,” he says. Already, the department of economic planning is keeping a wary eye on the spending commitments made by voluble politicians, just like the Treasury or any western finance ministry.

So “responsible” is the ANC determined to be in office that May Hermanus, 33, a former National Union of Mineworkers official and safety engineer, who was headhunted by Samancor, the South African Manganese Corporation, suspects that large employers will end up closer to the trade unions than the government. “I think the Labour movement is going to hit its head against an ANC government,” she predicts. She regards the moratorium on

Strikes called for by the ANC in the run-up to the elections, when civil servants and hospital workers in the homelands began to take industrial action, as a sign of trouble to come. “I don't think the workers are going to stick it for long.”

Hermanus, who was classified as “coloured” by the apartheid regime, says, “My whole life has changed in the past ten years. I can walk the streets, go into cinemas and restaurants and work for a company like Semancor and feel I have something to offer. It's my country, my place and I have a role to play.” But, she adds, “It's scary. I don't feel powerful. I feel insecure and worried. This is the crunch. After all these years of arguing about things, we're actually going to have to make the changes work.”

Nelson Mandela has shown few signs of pre-election jitters, but he, too, must sometimes feel powerless and small. It was horribly clear as guns rang out around the FNB stadium in Johannesburg that he is respected, but not always obeyed. He was furious, warning that the ANC's security guards would be answerable to him for allowing weapons past the gates, and reminding “criminal elements” in the ANC that gun control was a main plank of party policy. None of the “comrades” will have paid any attention.

But, when, as seems certain, he is inaugurated as President of South Africa on 10 May, he will not be alone. There are many others in the ANC who share his ideals of peaceful and steady transition towards a multi-racial society. According to the constitution, he will have to lead a government of national unity, that includes members of the opposition par-ties, until the next election in five years' time. And, for the first time in his life, he will have the power of the state behind instead of against him. The time has come.

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

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The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt