[They’re not completely sure… in the end… But I think Africa gives us much of the answer. Jan]

Dear Client
Herewith is an extract from an email received by us from BOE Private Clients. The article is so relevant that we have taken the liberty of forwarding it to you.

Integrating the Two Worlds

One can live in SA and one can both perceive and experience two different worlds.

On the one hand there are the continuous, daily reports on crime. It seems to be getting worse and more vicious: reports of farmers being tortured; grannies being murdered by (ostensibly) their loved ones; and police officers murdered in cold blood. Crime is the big gorilla. To put the murder rate in perspective, about 50 South Africans are murdered per day “ more or less the same number of people are dying per day in the current Lebanon and Palestine conflict! And it cuts across all communities: whites form 1 in 10 of the population, but 1 in 33 of murder victims. If you are young, Black and male your chances of being murdered are the highest.

Add to that regular reports of this public office and that public service not performing; reports of private sector companies ripping clients and/or investors off; or reports of those who buy their way out of a traffic ticket through corruption. There are the fundamental problems with health. As the man who lovingly tends our garden mused: “Eish, so many people are dying.” One can add education where the promise of opportunity is denied by lack of quality.

From these one can only conclude, “things are going to pot”. Call it the “decline and decay” reality.

On the other hand, one can delight in the solid growth of the economy; more jobs being created and rising living standards for more South Africans than ever before. By the end of this year per capita incomes will be back at the all time high levels of 1981. We are recovering from 25 years of lost growth. Coupled with redistribution

these higher incomes bring social services and poverty relief to more people than ever before. Viewed through this prism, one can only conclude that SA is making progress. Call it the “steady progress” reality.
Which reality is stronger?

So which SA is the dominant one? The “decline and decay” reality or the “steady progress reality”? Which of the two realities are more likely to shape our future?

Part of the challenge in making a judgement, is that we see and hear more about the one reality than the other. The “decline and decay” reality is infinitely more visible and audible than the “steady progress” reality. There are simply more media reports about crime than about rising incomes; many more reports about high unemployment than about the two million and more jobs created the last decade. There are now 12 million people working, up from 9,5 million in 1995. Where have you read that? The “steady progress” reality is simply being drowned out by the more voluble “decline and decay” reality.

But is it just media noise, or is “steady progress” indeed being killed off by “decline and decay”? Which one is stronger and which one will dominate? To answer that we must look at the basic drivers of each scenario.

Decline and Decay

The main driver here is crime and the perception that progress is not being made in turning it around. Victim Surveys indicate that most South Africans feel more insecure and vulnerable now than 5 years ago. The reality might be different. Over the last few years various sources of stats (by far not just official statistics) indicate that crime has been inching down. Of course, that is entirely academic if your loved ones are a victim of crime. Then the incidence is sky high. We must wait and see whether the recent spate of very high profile crime incidents, have reversed this decline. In the mean time it is perceptions that count, the perceptions are that crime is increasing and that helps to drive “Decline and Decay”.

Why is crime such a problem? It seems to me we simply do not know. Poverty? Most poor people do not commit crime and in fact help the police to fight it; and some

car hijackers are reported to look very rich indeed. Unemployment? Some employed people with good jobs turn out to be the “insiders” who help with crime heists. How many homes are burgles with the help (coerced or other wise) of domestic servants? Social capital, (as in values, cohesion and a sense of reciprocity) is one of those insufficiently explored areas that may explain at least the more gross aspects of crime. The recent cabinet decision to commission an investigation into why SA crime is so violent may help us to find some answers. Our frustration at not understanding crime feeds the perceptions, which feed “Decline and Decay”.
Linked to crime are the experiences and perceptions about service delivery. The local government that does not work, the passport office that does not issue IDs, the police officer who cannot take a statement, the accused who walk free from court because basic work has not been done. Essentially it is about effective institutions and institution building. The perceptions and experiences of many that our institutions are not working also help to drive “Decline and Decay”.

Steady Progress

Economic take-off and the steady improvement of many institutions are driving this scenario. This used to be a 1% economy, it is now decidedly a 4% economy. Economists who 19 months ago argued that we cannot grow quicker than 3% now all forecast 4% growth!! The result is that more and more resources become available to be used elsewhere.

Some of those resources are used to increase public sector investment. That has grown from 4% of GDP in 1994 to 7% this year. The average for Latin America (the peer group in which SA comfortably belongs) is 2% of GDP. More investment means more growth and jobs; it means a virtuous cycle, which will make “Steady Progress” sustainable.

More resources also means a social welfare network to combat poverty. SA now probably has the biggest welfare state outside Western Europe. One can argue about the negative side effects of social allowances (like teenage pregnancies), but there is no question that it has helped to roll poverty back. Prof Servaas van der Berg™s research indicate quite clearly that about 3 million South Africans have been lifted out

of poverty since 2000 “ largely because of social grants. The number of South Africans living in poverty has declined from 57% in 1970 to 47% in 2000 to 41% now. If that is not “Steady Progress”, what is?

By the way, this week I listened to one of the few crime researchers/experts in SA “ Anthony Altbeker “ discussing crime trends. He mused that the introduction of social allowances might have contributed to the decline in violent crime seen the last 2 to 3 years. That is his opinion, but it makes one think “ might be linked to that little understood concept of social capital.

Probably the strongest driver of “Steady progress” is rising productivity. It all started in 1995. During the two decades before 1995 productivity improved by less than 0,5% a year; it is now running at over 3,5% p.a. SA has now completed its eleventh year of high productivity increases. As long as productivity increases, sustainable wealth is created, irrespective of crime levels or aids.

So which of these two, “Decline and Decay” or “Steady Progress” will win? Whose drivers are stronger?

Yours sincerely,

Source: www.nolands.co.za