Eliminate inequalities in South Africa
JOHNNY MILLER, a photographer, started filming South African cities by drone in 2016. Shots from Cape Town, Durban and Johannesburg show neighboring neighborhoods, but different worlds. On one side of a photograph could be a leafy suburb dotted with azure pools; on the other, a slum with tight barracks.
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Economic research on South African inequalities has produced a less granular picture. Reports from the World Bank and others draw on benchmark measures of income inequality, such as the Gini coefficient, to conclude that South Africa is one of the most unequal countries. in the world. But they often say little about wealth, the role of government policy or, most importantly, what has happened to the black-white divide since the end of apartheid in 1994.
Two recent articles by academics Aroop Chatterjee, Léo Czajka and Amory Gethin fill in some of these gaps. In doing so, they offer perhaps the most detailed picture of the haves and have-nots in South Africa in the democratic age. Research is crucial to understanding the deep discontent felt by many South Africans.
In their latest article, economists combine household surveys, tax data and national accounts to track income from 1993 to 2019. They start by noting that before taxes, the share of income going to the richest 10% increased from 57% to 66%. % —Levels higher than any other comparable country. The average income of the richest 1% increased by 50%, while that of the poorest half fell by more than 30% after inflation. Even after including taxes and transfers, the share of income going to the richest 1% is about the same as it was at the end of apartheid – almost a fifth.
Since 1994, the ruling African National Congress (ANC) increased taxes and introduced social allowances for pensioners and children. It expanded public health care and education, which researchers see as “in-kind” income for beneficiaries. On paper, these transfers more than make up for the loss of pre-tax income of the poorest half of South Africans.
Yet it would be wrong to think that social policies have turned the tide of inequality back. To begin with, the authors note that regressive consumption taxes such as VAT mean the poorest have high effective tax rates. Child support is not enough to buy nutritious food. Unemployment benefits are derisory and unequal; hence the growing campaign of NGOs for a universal basic income allowance. The “income”, as defined by researchers, that the poor receive from public services is not the same as a paycheck. And given the poor quality of schools and hospitals, it is perhaps less appreciated by South Africans than by the authors of the study.
A seemingly positive trend identified by economists is the narrowing of the underlying racial income gap. In the 1990s, whites earned about seven times as much as blacks. At the end of the 2010s, they were making about four times as much.
But this shrinkage is “mainly attributable to the emergence of a new black elite,” the newspaper notes. Once in government, the ANC introduced affirmative action laws, which have helped increase the share of well-paying jobs held by blacks, especially in the public sector, where unions have achieved higher-than-inflation pay increases. Another policy, called “black economic empowerment,” oriented business towards black-owned businesses and enriched a small number of black investors.
Partly because of policies like these, the share of blacks in the top 10% of earners has risen sharply (see Figure 1), although it remains lower than their share in the overall population (81%). . The poorest blacks have been less successful. While the gross income of the richest 10% of black people has tripled, that of the poorest 50% has fallen (see Figure 2). When the researchers looked only at the ratio of white incomes to those of the bottom 90% black incomes, the racial gap had widened slightly since apartheid.
An earlier article by the same authors found similar trends. He noted that the concentration of wealth in South Africa is greater than in any other country for which there are comparable estimates. The 3,500 households that make up the richest 0.01% have more net wealth than the poorest 90% combined. The share of wealth held by the richest 10% is roughly the same as at the end of apartheid; that held by the richest 1% and 0.01% has, where appropriate, increased.
Many of the inequalities of the present stem from the past of white supremacy, when black people were systematically deprived of a good education and prevented from getting rich. Today, whites are on average eight times richer than blacks, an overall gap twice as large as for income. Legacy, notes Mr. Gethin, helps old inequalities continue.
Taken together, the two articles not only underscore the legacy of white domination, but also the ANCfailure to help most black South Africans overcome it. The redistribution and empowerment of elites is not a substitute for growth and jobs. Unemployment, as the work of Murray Leibbrandt of the University of Cape Town has repeatedly found, is at the heart of South Africa’s inequalities. South Africa GDP per person has been declining since 2015, due to corruption and bad policies. In the second quarter of 2021, unemployment hit a record 34.4%.
On November 1, South Africa will hold local elections. For the first time, the ANC may win less than half of the votes in a national competition. If that happens, it will be easy to point out the dysfunction of the party or an increase in opposition participation following the civil unrest in July. Yet deeper forces are at play. Nelson Mandela’s party has pledged “a better life for all.” So far he has offered a much better life for a few. ■
This article appeared in the Middle East and Africa section of the print edition under the headline “Not so black and white”