Why low rate of growth could be good

Delegates to the Fifth Unisa Postgraduate Summer School, hosted by the College of Graduate Studies and held at the Unisa Science Campus

It is dangerous to expect any economy to grow forever and South Africa’s current low rate of growth could be an opportunity—not a setback—for the country and its people.

“Our model of economic growth is stupid. It markets consumption as the only way to measure growth—but it doesn’t talk about the quality of consumption. High growth and high consumption are exploiting people and polluting the planet,” said Professor Lorenzo Fioramonti of the University of Pretoria, the opening speaker at the Fifth Unisa Postgraduate Summer School, hosted by the College of Graduate Studies and held at the Science Campus in Florida from 6 to 10 November 2017.

Fioramonti shattered many of the myths about conventional economic models and opened delegates’ eyes to the possibilities of what he called the “wellbeing economy”.

Selling our gold and our organs

Using a graphic example of why the world’s current economic model is stupid, he said: “If I were to sell my organs, I could make money and buy a Maserati. But it would come at a cost—the cost of something that would never come back.

“South Africa has done the same with our natural resources. We have run out of gold—sold our organs—and we have given the money to someone else,” he said, referring to foreign corporations that have benefited from South Africa’s mineral wealth.

Fioramonti then asked the audience what place in the world they thought was the most polluted. “No, it’s not China,” he said in response to an audience member’s suggestion. “Up to two million people die every year from air pollution in China, and who pays? The taxpayer, not the companies that created the pollution. But no, it’s not China.”

The most polluted country is also not India, he said. “India pays USD8 billion a year to fix its pollution—and the companies that created it are not asked to pay for it—but not, it’s not India.”

Rather, the most polluted place in the world is South Africa’s very own Emalahleni (previously known as Witbank) because of its high concentration of coalmines and contaminated air.

“Growing our economy has done this,” said Fioramonti, adding that the drive for economic growth was also destroying other natural resources. “Our soil quality is going down so quickly…The Economic Freedom Fighters (EFF) want to give the land back but it is no longer the land that was taken away. That productivity has been lost through erosion and commercial agriculture.”

False sense of security

He also asked the audience what business sector in South Africa was producing the most jobs, and received various suggestions, including mining, retail, and agriculture.

“No, not agriculture,” Fioramonti said, commenting that “30% of food produced goes to waste right away”. It was also not mining. “It used to be. Mining destroyed our land and exploited thousands of people. Apartheid had high levels of growth and polluted our water. Mining and commercial agriculture have been the biggest polluters of water.”

The sector producing the most jobs was also not retail. “We have a very concentrated, centralised retail market,” he said, adding that the result was profits for a few people.

“Security is driving the economy. Private security is the leading business sector in South Africa, and the rise of private security is not a good sign. The underlying condition of a good economy is trust, and it is out of mistrust that a business sector is thriving.”

Fioramonti noted that pollution itself is big business.

Profiting from pollution

“Pollution leads to consumption,” he said, pointing to the many industries that have grown up around bad consumption and pollution since the 1970s, including bottled water, air conditioning, vehicles, oil, and healthcare focusing on stress-related sicknesses.

“In an economy where all you are is a consumer, a target for consumption, is it surprising that our communities and families are being broken?”

Moving on to the wellbeing economy, Fioramonti said this is an economy where the focus is on improving the quality of life, not on increasing consumption.

An example of a country with a wellbeing economy is Costa Rica, where economic growth is low but life expectancy and literacy are extremely high—the highest in the Americas. “In 1948, Costa Rica abolished the army; they don’t spend their money on guns.”

“A truly sharing economy is what we need,” Fioramonti said, adding that the economy should be integrated into nature and society. “Companies that damage the environment are not going to be seen as successful.”

The upshot of all is that is that South Africans, instead of bemoaning the slow pace of economic growth, should see this an opportunity. “Imagine if we had a shared economy, a more just and caring economy. The fact that economic growth in South Africa is disappearing is an opportunity to think out of the box.”

By Clairwyn van der Merwe

Source UNISA