Depression & Poverty

Andrew Layman:  PCB CEO

In the recent past we have been reminded more than once of the Great Depression of the early thirties.    In the United States, unemployment rose from 3% towards the end of 1929 to 9% in a year.   The automatic correction anticipated by classical economists did not materialise and by 1933, 25% of the population was unemployed.  In describing this, Bradley Schiller wrote: “People slept in the streets, scavenged for food, and sold apples on Wall Street.   In 1933 President Roosevelt lamented that one-third of the population was ill-clothed, ill-housed, and ill-fed.”   In other countries, similar tales of misery could be recounted.   As in America, this was a catastrophe.  

In South Africa, in June of last year, unemployment stood at 32,5%.    (This is based on the number of people who are available to work, including those who are not active job-seekers.)    The Depression plunged a great many people into poverty.    Is it worse, I wonder, to experience sudden deprivation, or to live with it most of one’s life?   There are several measures of poverty, but one used in South Africa is a monthly income threshold of R283.    The number of South Africans who survive on less represents 22% of the population.    In our own province, where poverty is rifer than in any other, one third of the people are poverty-stricken.   Do we consider this to be a catastrophe?   It is a situation which is significantly worse than that which resulted from the Depression.

I don’t think we do.  I think we have become inured to this state of affairs, as if it is part and parcel of South African life.    It is the subject of many passionate speeches, and there is a good deal of tut-tutting, but it has not assumed the gravity of a national emergency as far as the country’s reaction is concerned.    We have been inclined to associate poverty with the lack of basic service delivery and housing.  Yet, the stronger association, without doubt, is with unemployment.     In March of 2009, just over 13 million of our people received welfare grants, mostly for child support.   Imagine the poverty rate if these grants were not available.    They are surely unsustainable in the longer term.   

I don’t believe that it is melodramatic to claim that we are at war, without even realising it.   We were at war against HIV and AIDS, but this was denied.   Now, we are in danger of being in denial again – as if it is one of those problems that will go away in time, especially if we ignore it.   War requires desperate measures to ensure that the enemy is contained and defeated; and it requires sacrifice, even from those whose lifestyles and good fortune keep them remote from the frontline.     Is there any sign of a war being waged?    Has it become an absolute priority to reduce this awful unemployment rate?    Is there any evidence that other things are being put aside while we address this pre-eminent problem?   

There is also little evidence of a united front.    Companies lay people off when their profitability is threatened.  Sometimes this is justified on the grounds that the company might be forced to close unless it retrenches workers as a means to survival.  This is not true in every case, however.   Government remains distracted by other matters of public and party interest, some of which are of no real interest by comparison with the unemployment crisis.     Unions claim to be the only voice of the poor, but demand a “living wage” some twenty times higher than the poverty threshold.    Rich people get richer and the Gini co-efficient continues to rise in a display of total disrespect for the country’s constitution and its underpinning principles.   

In the meantime, a tide of impatience and rebellion is flowing and soon it will not be held back by promises.   Already there are signs of anger and disillusionment.     It seems to me that there is no consensus, and not a lot more will to find an appropriate solution.    Does anyone know what that might be?    It is elusive, surely, but that must stop the search.  Tinkering here and there will not suffice.   There must be a concerted campaign and this must be based on policies and strategies that are much more substantial and comfort-shattering than the ones on offer at present.              

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