Why the government is not really interested in growth

The virtues of economic growth are not limited to economic ones such as declining poverty, rising employment, higher wages, improved tax revenues and so on. There is strong evidence that social virtues — longevity, environmental protection, peace and civility — are linked to prosperity as well. Getting the SA economy growing should be the government’s most important single priority. It is not, for two main reasons.

If we can take successive presidents’ emphatic and hyperbolic employment goals at face value, it is doubtful whether economic growth can be relied on to achieve them, making economic growth itself a less pressing government priority. Having been given the freedom to write SA’s labour laws and regulations, trade unions simply did what was in their interest, giving us two classes of citizen — 36.1-million in relative comfort as against 20.9-million in relative distress. Economic growth is to be avoided, in other words, precisely because it might create employment and, therefore, uncertain conditions for those who are already employed.

However, over the past 25 years SA’s true Gini coefficient — taking taxes, social assistance and government services into account — has declined to a moderate 0.47 where an additional 1% of economic growth is distributed more evenly than it is concentrated.

Source: Financial Digest (financialdigest.net)

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