Editorials 21.8.2017 06:00 am

The problem is still the economy, stupid

Rands. File photo.

Rands. File photo.

As a country, we have never really fully recovered from the world recession that hit in 2008.

For many people, April 27, 1994 was not only the dawn of freedom in this country, but also the start of a bright new future of prosperity.

With the restrictions of apartheid out of the way, a newfound star quality in the rest of the world and with doors being opened to more in the economy, it seemed as though a golden era beckoned.

That dream has turned sour for many in our middle class who, just as they have managed to get on to the playing field of a better life, have seen the goalposts moved. Many feel that, financially, they are not just treading water but are in danger of drowning.

The macroeconomic situation must take a large share of blame for the predicament in which ordinary, working South Africans are finding themselves today.

As a country, we have never really fully recovered from the world recession that hit in 2008. And the collapse of the rand, along with softer commodity prices – which badly affects a mining-driven economy like ours – has made things worse.

Yet, as we report today, an important reason for the state in which the middle class finds itself today is the government. The value of the rand is directly linked to the credibility of our government and that, to be kind, is not high.

Corruption and state capture have siphoned off billions of rands – money which could have and should have been used for development.

This has meant the gradual increase in direct and indirect taxes as the government tries to extract its budget shortfalls from the middle class.

President Jacob Zuma may not particularly care for the middle class – including those he scathingly refers to as “clever blacks” – but the reality is that a country without a strong, healthy and growing middle class is only going to decline.

 

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