Johan Fourie's blog

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On mystical discoveries

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The Trinity College Library Long Room is a must-see.

The Trinity College Library Long Room is a must-see in Dublin. Photo: Johan Fourie.

Our stay in Utrecht is quickly coming to an end. We’ve been here eights months, and it has been a wonderful time to be productive and also, sometimes, less productive. We traveled often, mostly to conferences and seminars, but occasionally just to explore new places. To Spain, France, Germany, Sweden, Belgium and, the past weekend, to Ireland, one of the few places in Europe South Africans can enter without a Schengen visa. We rented a car and stayed in a wonderfully nondescript farm cottage with thick walls, a fireplace and a few dozen cows browsing outside our window.

Rural Ireland is a mystical place, exuding a sense of wonder. North of Dublin is Brú na Bóinne, an ancient neolithic site that was built before Stonehenge or Egypt’s pyramids, around 3000BC. Evidence of long-distance trade suggests a sophisticated society, and entering the sacred tombs – where a beam of light only enters once a year during winter solstice – confirms an advanced knowledge of their environment and complex social rituals. This mystical aura lingers across Ireland, in the evergreen forests and tiny towns and black stone walls that dot the landscape, interspersed with more cows and sheep. We also visited the Cliffs of Moher on the west coast of the island, a breathtaking sight I won’t recommend to anyone with a fear of heights. (At least, the fear of watching others take selfies precariously close to a 120m slippery ridge.) And then it was back to Dublin, for some whiskey and music and, of course, a visit to the world famous Trinity College Library with its splendid Long Room (pictured).

Although our time in Europe is sadly coming to an end, the prospect of returning home – good wine, food and friends (and sun!) – is certainly exciting. But first, I will be taking a technology hiatus in the next month as I travel to northern Spain to hike part of the Camino de Santiago, starting in Oviedo. It will be a physical challenge but certainly also a psychological one: I cannot remember a time when I did not have access to email for more than a few days. Away from the busyness of modern life, perhaps it will be good to rediscover something of that mystical world the ancients inhabited.

 

Written by Johan Fourie

April 22, 2016 at 09:15

Three hundred years of firm myopia

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Three centuries ago, on 24 June 1716, a very important letter arrived from Amsterdam in Cape Town; a letter that, according to John X Merriman two centuries later, would change the future of what would become South Africa. Written by the Board of the Dutch East India Company (the VOC), the letter requested the Council of Policy in Cape Town to reflect on the economic needs of the still small and fragile colonial settlement. In particular, the Board wanted to know whether the Council of Policy would recommend more European immigration to the Cape or whether an increase in slave arrivals would be preferred.

A year later, seven members of the Council responded. Six members recommended that slavery was the better choice. The reason was simple: slaves could supply cheaper labour than European wage labourers. And because all agricultural output had to be sold to the Company stores in Cape Town, cheap labour meant that the Company could pay farmers less for their produce, allowing the Company to make a very decent return when reselling the produce to passing ships.

One member of the Council of Policy, however, disagreed. Dominique Marius Pasques de Chavonnes instead made a case for encouraging European immigrants. Though slavery would be more profitable in the short run, he argued that the settlement of free people would be better for the economy, and thus for the Company, in the long run.  Free men have an incentive to invent while slaves do not, he said, pre-empting what Adam Smith would write in his Wealth of Nations half a century later. And invention is the root of productivity and prosperity.

It’s no surprise that the shareholders in Amsterdam chose the advice of the six men that appealed to their immediate interests. After 1717, European immigration slowed considerably, and slave arrivals from modern-day Malaysia, Indonesia, India, Madagascar and Mozambique increased. The Cape became a slave economy, with high levels of inequality, an inequality that has still not abated. In 1776, Adam Smith would write in his Wealth of Nations that ‘of all the expedients that can well be contrived to stunt the natural growth of a new colony, that of an exclusive company is undoubtedly the most effectual’. DM Pasques de Chavonnes and Adam Smith had recognized the myopia of firms.

Although it has a long history, such short-termism is rising. The trend towards financialisation (higher levels of stock liquidity), diversification and hostile takeovers of the 1980s increased the separation between firm ownership and control. Managers’ incentives to maximise their own utility were no longer aligned with maximising the utility of the firm. To realign these incentives, managers were increasingly compensated with stock options. The result has been a sole focus on higher share prices to the detriment of the long-term sustainability and growth of the firm, for example, by investing less in research and development.

There is now evidence that clearly shows the negative impact of financialisation on innovation. A 2014 paper in the Journal of Finance use exogenous variation in liquidity generated from financial regulation and finds that an increase in liquidity causes a reduction in future innovation. The authors propose two possible reasons: a higher likelihood of hostile takeovers and more institutional investors, like pension funds, who rely on less information and monitoring. The consequences are that short-term boosts in shareholder value come at the expense of the long-term profitability of the firm.

So what can be done to prevent managers from succumbing to these short-term pressures? One solution is to offer managers contractual protection like severance pay agreements. This seems to have a positive impact on innovation; Xia Chen and co-authors of a 2015 paper in The Accounting Review, find that firms with CEO contractual protection are less likely to cut R&D expenditure to avoid earnings decreases. They are also less likely to engage in real earnings management. More detailed analysis reveals that the larger the duration and monetary strength of the agreement, the less likely the CEO is likely to cut R&D expenditure. The effect is also larger for firms in more homogeneous industries, and for firms with higher transient institutional ownership.

Hedge funds and their supporters are eager to point out that not all short-termism is bad and that the evidence on various firm outcomes is mixed. That may be true, but what the recent evidence begins to suggest is that at least one factor that we associate with sustainable firms – innovation – seems to suffer when managers’ priorities shift from the future to the present. Managers that focus too much on short-term gains may, much like the VOC shareholders three-hundred years ago, shift a firm down a path from which it is unlikely to return.

*An edited version of this first appeared in Finweek magazine of 17 March.

The layers of history

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Granada1-2

Helanya and I flew to the south of Spain for a short Easter break last Thursday. We spent a day in Granada, another one in Córdoba and then took the train to Valencia where I’m currently attending the European Social Science History Congress.

Spain is an incredibly diverse country, and the South did not disappoint. Influenced by the conquest and settlement of Islamic Moors between 711 (when the Arab and Berber Moors of North Africa crossed the Strait of Gibraltar and conquered Christian Hispania) and 1492 (when the last Muslim stronghold surrendered), the old cities of Andalusia have a distinct architecture that reminds one of the deep layers of history. This is nowhere more apparent than the Mezquita-Catedral in Córdoba where a cathedral is built inside what was once a Grand Mosque. The incredibly impressive structure has 856 marble and granite columns, some of which date back to a Roman temple which had occupied the site previously. Layer upon layer upon layer.

Granada2-2Another highlight was the Easter festivities. The two nights we spent in Granada were filled with processions through the streets, which attracted what must have been almost the entire city of Granada. It’s difficult to say whether participants were in a reflective or festive mood – perhaps a bit of both – but the streets were still busy well into the early hours of the morning. The processions recreated scenes from the crucifixion of Christ, embedded within Catholic symbolism and, I suspect, many other customs that are unique to Andalusia. The layers of history are not only encapsulated in the built environment of southern Spain, but also in the beliefs, symbols and traditions of its people.

Of course, history never ends. Much as they have done for millennia, people continue to move in and out of Spain (the same year that the last Muslim ruler surrendered in Granada, Columbus ‘discovered’ America). Many North African migrants now cross the Mediterranean in the hope of a better life, while Syrian refugees flee their war-torn country. A visit to the south of Spain is therefore a timely reminder that Europe used to be far more integrated into their southern and eastern neighbours. Córdoba’s extraordinary Mezquita-Catedral was, lest we forget, designed by an 8th-century Syrian architect.

Written by Johan Fourie

March 31, 2016 at 13:43

A small-town story of the resource curse

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Kathu

Boom town: This Google Earth image demonstrates the spectacular town growth over the last decade.

A decade or so ago, Kathu in South Africa’s Northern Cape province was little more than a quaint mining town with a fantastic golf course. Supported almost entirely by the nearby Sishen iron ore mine, no one had expected that the town would change remarkably in the coming decade. But a surge in the global price of steel encouraged Anglo American, the majority owner of Kumba Iron Ore, to expand production, rapidly increasing employment. The town boomed. House prices went through the roof, further strengthened by a lump sum bonus to all employees in 2011. (Not all investments were sensible, though: one story goes that upon receiving the bonus, an employee drove to a neighbouring town to purchase a new luxury car, only to crash it on the way back.) The people of Kathu saw their disposable incomes and living standards increase. Two new malls opened in a town with less than 15000 people.

And then it all came tumbling down. A few weeks ago, Anglo announced that, based on weak prospects in China and the low price of steel, it will cut around 4000 jobs at the Sishen mine. House prices are falling and those new developments that rose like mushrooms are going unsold. Stores are likely to close their doors soon, cutting more jobs. The future for the former quaint mining town looks bleak.

Kathu is a microcosm of the problem with development based on natural resources. Oxford University economist Anthony Venables investigates this conundrum in the most recent edition of the Journal of Economic Perspectives, asking ‘Using Natural Resources for Development: Why Has It Proven So Difficult?’. Venables explains that the successful use of natural resources requires multiple stages. First the deposits have to be discovered and extracted. Then the revenues need to be divided between the government, investors and other claimants (like the local community). What is important is how these revenues are split between the different claimants, and what it is used for. Finally, the indirect, negative effects to the rest of the economy must be allayed.

Dividing what can often be large gains can be difficult. Discovery and extraction licenses are typically awarded to encourage the most efficient mining companies to operate, but can result in corrupt practices. To avoid this, auctions provide one mechanism to ensure the government maximise revenue. Auctions do not work everywhere, though: in Botswana, the government instead negotiated with the dominant De Beers to ensure a larger share of the gains from diamonds.

Once gains have been divided, deciding how to spend it can be even more difficult. Often, Venables argues, there is pressure to spend on current expenditure instead of investing in infrastructure, for example. These pressures are magnified by patronage politics, which favours spending on groups or individuals allied to the government. The worst a government can do is to use the revenues to increase its chances of staying in power, for example, by hiring supporters as public sector employees.

But even if revenues are divided fairly and invested effectively, resource exports can cause what is known as ‘Dutch disease’: an appreciation of the exchange rate that hurts other exports. (The term ‘Dutch disease’ was coined after the 1959 discovery of gas fields in the Netherlands hurt the Dutch manufacturing industry.) A country that only exports one resource can become dependent on a single but volatile source of income, which can destabilise the economy during bad times. Just ask Angolans or Nigerians. Or the mayor of Kathu.

The future for natural resources dependent economies will not get better soon. Resource prices, notably oil, are unlikely to rise rapidly in the face of continued weak demand combined with the growing popularity of alternative energy sources, from fracking to renewables. That means that resource-rich countries, like many African countries including South Africa, will have to come to terms with the negative shocks on its public finances and balance of payments. The silver lining is that this may stimulate economic activity in other, more sustainable sectors of an economy. But even then, political pressure to protect the status quo may cause additional pain.

Perhaps Kathu will revive the golf course to its former glory, attracting tourists who want to enjoy affordable Kalahari hospitality, and allow the town to develop at a more sustainable rate. But not before many of its inhabitants have suffered the consequences of the natural resource curse.

*This article first appeared in Finweek magazine of 3 March.

Written by Johan Fourie

March 21, 2016 at 09:08

How to decolonise an Economics curriculum

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Mario4

The economics curriculum at South African universities is in crisis, claims Ihsaan Bassier, an honours student at UCT. He writes that UCT’s curriculum is ‘largely abstracted from South Africa’s economic crisis and reinforces an anti-poor understanding of policies’. He explains:

Economics is presented as an amoral subject, only examining mechanistic questions and optimising efficiency. If it is amoral, why is so little attention given to heterodox thought? Capitalism arbitrarily privileges those with money over others in the most violent form possible, through a system of class protection, marginalisation of the poor and gross injustice. Rather than being amoral, undergraduate economics in fact promotes a horrible moral: that “rationality” is defined as profit-maximisation and that the point of departure is our violent system. Students are trained to be apologists for capitalism and alternatives are marginalised.

It is both bad economics and anti-poor for students to be bombarded with arguments that government intervention and minimum wages are “bad”. Social benefits are blamed for unemployment, as if it is preferable to allow people to starve; regulation is demonised, as if unfettered business would solve South Africa’s economic problems. Some attention is eventually given to market failure, but only as a token.

Why do we not learn more seriously about other systems and behaviours, about technical aspects of socialism and redistribution, about power, about how racism interacts with capitalism, the pervasiveness of rent and out-of-equilibrium dynamics, or an endless number of alternatives that my education has not exposed me to?

UCT’s curriculum is quite similar to that of Stellenbosch, where I teach. So let me respond to these rather big accusations, and then make a suggestion.

Capitalism arbitrarily privileges those with money over others in the most violent form possible. Economics equips students with a set of tools that allow them to explain the world around them. One of those tools is statistical analysis, which means we can test a hypothesis – like the above statement – with evidence from the real world. And unfortunately for Ihsaan, the real world evidence is pretty clear on this one: capitalism, a system based on the principle of individual rights, has created remarkable economic freedom for humanity over the last three centuries. Consider this: the real income of the median person in the world doubled in the period between 2003 and 2013, a period that included a financial crisis. In 1981 more than half the people in the world lived in absolute poverty. Today, it is less than 20%. It is simply wrong to declare, without proof, that capitalism arbitrarily privileges those with money. Millions of Indians, and Chinese and, yes, Africans too, have higher living standards than their parents did, and that is highly correlated with more market activity, not less. (In fact, privileging arbitrarily is exactly what communism does, by removing people’s individual freedoms and choices. Just ask the Latvians or any other Eastern Europeans who suffered its consequences.)

Global poverty the last two hundred years

Global poverty the last two hundred years

That is not to say that everything about capitalism is great. Capitalism is not one thing – it morphs into different forms depending on the political and social context. Capitalism in America is certainly more unfettered than capitalism in, say, France. And there is certainly space for more debate about the type of capitalism we need in South Africa.

But those debates need to be based on sound theories and falsifiable evidence. Economic policy arguments – Is a higher minimum wage better for the poorest? Do social benefits lead to unemployment? Does regulation impede growth? – are all empirical questions, one that economists’ statistical toolkits can answer. Yes, we have theories about how the world works, but as Dani Rodrik explains in his excellent new book, Economics Rules, there is not one single (better) theory, but a menu of theories that economists can use to understand their world. Think of a theory (or a model) as a map. There is no single map that explains everything. Sometimes you need a world map just to look at countries. Sometimes you need a street map to take you to your destination. Other times you need a map of the soil quality if you want to sow for the coming season. Economists’ models are the same. We use different models in different contexts, and what makes a really good economist is picking the right model for the right question.

EconomicsRulesHere, Ihsaan’s critique is valid. In first and second year, the emphasis is too much on a single theory (or model) of the world, the standard, neoclassical theory. There are good reasons for this, of course: it is mathematically tractable and provides a solid base for understanding basic human interaction. And that is exactly why it is a good platform for understanding why it does not work in every setting: the assumptions are strong but they are also explicit. Relax some of those assumptions, and the results change. This is exactly how we come to improve our understanding of the world. (In my class, I discuss these assumptions in the South African context and ask the students whether they may or may not hold. That is, I’ve found, how students actually gain a better understanding of the complexities of the problems we have in South Africa, and an appreciation for the tools of economics, of modeling and statistical testing, to solve them.) But a more explicit treatment of the menu of theories economists have at their disposal is necessary.

Ihsaan offers three solutions to solve the curriculum conundrum: 1) admit that we are in a crisis, 2) allocate time to a topic in proportion to its importance in our context, 3) include topics such as poverty, unemployment and inequality from the first year. He fears that too many students leave Economics after only one or two years, without understanding the nuances of the models.

What undergraduate Economics begins to do is equip students with the analytical tools to investigate the important topics of our era. Students need the basic skills of mathematical and statistical analyses to be able to empirically test the questions we are all concerned about. To make it more practical: Debating poverty in South Africa is very difficult if your opponent has no idea how to calculate a ‘poverty line’ or ‘median income’. Or the impact of a higher interest rate with someone who has no idea what the monetary transmission mechanism is. Or the impact of an increase in VAT with someone who has never heard about tax incidence. That is why we need those first three years.

And yes, many students leave after only two years. True, they will have a limited understanding of Economics. But no one expects me to be a psychologist with just Psychology 1, or fluent in French with just French 2. This is why we need to encourage more students to enroll for Economics graduate degrees, and why we need to expose them to more analytical tools, not fewer. We cannot afford to have a society where economic policy is not informed by sound economic analysis undertaken by well-trained, analytical economists. Undergraduate Economics – with the emphasis on rigorous analytical training in microeconomics and macro-economics – needs to stay. This not only gives a solid toolkit for those who want just the ‘essence’ of Economics, but it also allows students to continue with graduate Economics, not only in South Africa but elsewhere. And as I’ve said before, to get into US universities requires a lot of analytical skills.

But I also understand the need for more context, for thinking and discussing the very real material problems that South Africans face. So, I have another solution for Ihsaan, one that betrays my biases: We can look to the past to help us understand today’s problems, and we can look to what the brightest minds have thought about solving these complex problems. In short, we can do more to encourage Economic History and the History of Economic Thought as analytical tools of their own to make sense of today’s development problems.

Ihsaan is fortunate: UCT does have a good undergraduate economic history programme, and a wonderful third-year class in the History of Economic Thought. Global and African economic history provides us with an understanding of the historical roots of poverty, inequality and unemployment; the past does not only explain the present, as one colleague notes, but it is analogous to the present. The History of Economic Thought is concerned with philosophers’ (or theorists’) ideas about solving the economic problem, including philosophers that were very much in favour of socialism. If the neoclassical model is a country-map, the History of Economic Thought is a map of the world, showing how neoclassical thinking evolved and why it became the dominant model.

At Stellenbosch, we have created an entire course in the second year to investigate past and contemporary economic development. One semester of Economics 281 starts with the Neolithic Revolution (circa 8000 BCE) and ends with the Economics of Apartheid. The other semester considers all kinds of current development policies, with a specific focus on South Africa. I see Economics 281 as complementary to the standard Economics courses. You cannot have the one without the other.

You do not decolonise a curriculum by removing content. If you do that, you deny students the opportunity to participate in global debates and the global job market. You decolonise by adding more context and diversity. We advance science by standing on the shoulders of giants. Decolonisation done right can add more shoulders to stand on.

 

Will robots cause massive unemployment?

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robots

At least a quarter of all South African men and women of working age that are willing and able to work are unable to find a job. Unemployment is the scourge of our times, depriving households from incomes that will allow them to buy the goods and services that will, by increasing their consumption of nutritious food, sending their kids to good schools, giving them access to health services, ensuring safe and secure homes for their families, and providing ample opportunities for leisure activities, improve their living standards. The psychological scars of joblessness can be severe and persistent too. Few would deny that, in an ideal world, all citizens who are able and willing to work can find a job and provide for their families.

And yet, there are deepening concerns that technological progress is stealthily eradicating the need for human labour. With the emergence of artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing in everyday applications, a very real social problem seems to be on the horizon: Will the firm of the future have any need for human workers? And given the poor quality of skills in South Africa due to Bantu Education and the failure of the post-apartheid government to improve the performance of black schools, is it not plausible to expect that South Africa’s unemployment rate will soon rise to 50%?

South Africa is not alone in confronting this immense societal challenge. The economic consequences of the Rise of the Robots – also known as the Fourth Industrial Revolution – were the main topic of discussion at the World Economic Forum at Davos in January, with great fanfare but little content. A far better analysis, instead, is provided by MIT economist David Autor in a paper published in the December issue of the Journal of Economic Perspectives. In ‘Why Are There Still So Many Jobs?’, Autor asks why automation has not wiped out most jobs over the last few decades, as it was predicted to in the 1960s.

The simple answer is that automation both substitutes and complements human labour. Yes, automation (machines, robots, algorithms) replaces labour. Walk into any car manufacturer and the dearth of technicians and labourers – especially compared to 50 years ago – are striking. But automation also complements labour, increasing productivity and earnings, which augments the demand for labour.

Think about bank ATMs. A new study by Boston University professor James Bessen shows that ATMs quadrupled in the US from 100 000 to 400 000 between 1995 and 2010. One might assume that the spread of ATMs replaced the need for bank tellers, but as Bessen shows, bank teller employment actually rose from 500 000 to 550 000. Why is this? ATMs reduced the cost of operating a bank branch (by substituting what more expensive bank tellers do). Because of this cost reduction, however, banks opened many more branches across the US, and could thus employ more bank tellers (although fewer tellers per branch). And because ATMs could now do the menial task of cash-dispensing, bank tellers were freed up to offer other types of ‘relationship banking’ services, introducing clients to new banking services like credit cards, loans and investment products.

The effect of automation on employment thus depends on whether workers’ tasks are substituted or complemented by automation, whether there are enough workers in the economy to respond to the greater demand for the complementary tasks, and what those new workers prefer to do with their incomes. Let’s use another example: Farmers are increasingly using GPS navigation equipment to automate harvesting, substituting the need to employ (experienced) tractor drivers. Can these tractor drivers adjust their skills to complement the new automation? Probably not, which means that their jobs as tractor drivers will be replaced by technicians able to install and run GPS navigation software. If there are fewer such technicians available (which there are), it is likely that their wages will be higher than what the experienced tractor drivers earned. But these technicians will in all likelihood also spend their incomes on products and services different from the tractor drivers, benefiting industries unrelated to the GPS automation (like restaurants and golf clubs) and hurting others (the local spaza shop).

The latter is often an overlooked point. Many fear that automation will replace unskilled labour for highly skilled jobs. This is indeed true in the first stage of the story: the tractor drivers losing their jobs to GPS technicians. But the higher farm productivity pushes both the incomes of the farmer and the technicians to higher levels, allowing them to spend in the rest of the economy – and often on services where automation has less of an effect. Such services often employ unskilled labour intensively, like restaurant waiters or greenskeepers. Automation could thus have a net positive impact on unskilled labour.

Robotic Steel WorkersEmpirical evidence seems to support this hypothesis. Autor reports that automation in the US and Europe seems to have had a positive impact on high-paying and low-paying jobs. But, surprisingly, it is the middle-paying occupations – like office clerks, building trade workers, machine operators – that have lost out. He calls this phenomenon the polarisation of employment.

I find it unlikely that automation will result in significantly higher unemployment in South Africa. Automation will result in higher levels of productivity, increasing the incomes for those with the skills to complement the rise of the robots. Their higher incomes will likely be spent on services where unskilled labour is intensively used. Expect the demand for occupations as disparate as cleaners, security guards, health-workers and hairdressers to increase – those jobs where automation can is complementary to human labour.

Because of the large supply of unskilled labour in South Africa though, such greater demand will reduce unemployment but is unlikely to affect wages. Unless we can open our borders to skilled migrants, inequality between the incomes of the top with its small pool of skilled workers and the large pool of employed but low-wage earners will thus increase further.

Those currently employed in back-office jobs where creativity and human interaction is not required should be warned: the robots and algorithms are coming for your job. My advice: Find a way to build or programme the robots, or analyse the data they generate. Or choose a service industry where automation will complement those very human tasks of creativity, imagination and human interaction.

*A shortened version of this first appeared in Finweek of 18 February.

Can South Africa’s empirically-minded public intellectuals please stand up?

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BigBangTheory

Much has been said about South Africa’s economic situation in recent months. Even more has been written about the underlying ills that explain everything from protests at universities to the persistent poverty in the former homelands. This piece by Raymond Suttner, a principled intellectual who paid a heavy price – seven years in jail – for his political activities during apartheid, perhaps best exemplifies the tomes of op-ed pieces trying to make sense of the situation.

And then Dan de Kadt*, an MIT student in Political Science, wrote the following on Facebook in response to the Suttner piece:

In my opinion this is the type of article we need fewer of in South Africa. Not because Raymond Suttner is fundamentally “wrong”, but because this article is a platitudinous summary of what we already know. And somehow it even gets the summary wrong, by being deeply non-empirical.

1) Pretty much everyone who is not a racist bigot (e.g. all those white folks posting on “White Genocide” groups or commenting on News24) knows that South Africa is still living through the legacies of Apartheid – political, sociological, economic, geographic, etc. The structural challenges facing people in South Africa clearly cut along race lines, and the consequences of that are deeply troubling. Egregious inequality, limited inter-generational mobility, social violence, state violence, etc, all following racial lines. It is anecdotally obvious, and empirically obvious too, if you bother to look at actual data.

But understand that the racist bigots aren’t going to change their opinions because of the nth article stating these facts, no matter how well written or persuasive it is. Trying to convince Apartheid dinosaurs is a fruitless (and actually unnecessary) enterprise.

2) While the above claims are undeniable, they are also stylized – they are generalizations and simplifications. As Suttner points out, a lot of progress has been made since 1994. But then he turns around and says things like “Black people’s life opportunities are little different from that of their parents.” On average, that’s simply false for any reasonable definition of “little different”. And it’s obviously false if you just look at the (slow, but real) emergence of the black middle class, a group that tends to be young and upwardly mobile. There’s ample census and labour force data that backs this up – for black South Africans there is better inter-generational mobility now than before, and income and wealth are slowly (far too slowly) being redistributed to the emerging urban black middle class.

The same is true of many many things in post-1994 South Africa. Electricity, water, sewerage, refuse collection access? Virtually non-existent for black South Africans in 1994, much more existent now. If you actually bother to look for it, we have the data needed to examine where the country is failing and where it is not, where Apartheid persists, and where it does not. That is what we need from our public intellectuals, rather than endless repetitive platitudes about how “things are essentially the same”.

3) The failure to recognize this subtler empirical reality means that Suttner fails to capture emergent intra-race class cleavages. There are indeed many young black South Africans whose opportunities/lives are as limited/horrifying as their parents’ were. But these are, for the most part, not students at universities (certainly not UCT). They are, for the most part, not the people participating in RMF or FMF. They are the children of some 17 million exclusively black (read almost half) South Africans who are still forced to live in, essentially, Apartheid-era Bantustans, the only parts of the country where service provision is systematically worse now than it was in 1996. They are the children who eagerly went to school in grade 1 only to find their teacher absent 3/5 days a week. They are that young man on the trash heap while Gareth and Dali walk by laughing. An entirely contrary reading of the RMF/FMF movement is that it is an expression of the emergent black middle class, and its ignoring of (not to say dislike of, or indifference to) the plight of those who remain “below” them. Free university? For whom, the 5%?

4) What this country needs is intellectuals who write articles that explain how to FIX the legacies we’ve inherited. Suttner gives us a brief paragraph about how “we could have done better” on NSFAS because “other places have”. Like where!? Tell us!? That’s valuable f*cking information! Problems in the education system limit black South Africans prospects? No sh*t! Now, please tell us how you think we should fix it, or at least start a debate about how to fix it, preferably one based on actual evidence.

There are so many brilliant minds in this country, and so many brilliant ideas worldwide about how to address the kinds of problems we face. Our problems are not unique. But all we deserve, it seems, is yet another article from a celebrated public intellectual telling us what’s wrong (and with little empirical evidence to back it up, to boot).

Diagnosing the ills of South Africa in broad strokes is, to be honest, extremely straightforward. Apartheid makes it so. What we need are bright minds and public intellectuals leading empirically grounded debates about policy and about how to fix the problems we (smart/not-bigoted people) know exist.

Yes, yes, and yes! First, this is why South Africa’s best and brightest students should study fields (and equip themselves with tools) that will allow them to address these serious questions. Second, we need to expect more of our public intellectuals. A research paper or policy document or even an op-ed cannot simply be a few bundled ideas and theories without empirical proof. Third, there is way too much emphasis in South Africa on who says something, rather than what is being said. Science should be anonymous. Regardless of the nationality, gender or religion of the scientists, if results are falsifiable and repeatable, then they are all that matters. This is not entirely the case in the social sciences, because the real world is not a laboratory. But empirically-grounded research where social scientists analyse large data sets of household earnings, voter behaviour or race relations, for example, depend less on who is doing the research and more on what is being done. To use one example: we don’t care about the nationality, gender or religious orientation of the researcher who showed that less than 9% of South Africans use state-sponsored public transport (trains and buses) to get to work. Instead, we care about what this finding tells us about the inefficient transport system in South Africa, and the policies that could best fix it. I accept that not all research is quantitative, and that not everything can be reflected in numbers. (I’m an economic historian; sometimes numbers just don’t exist.) But what we should be cautious of is opinion (i.e. arguments not grounded in empirics). The ease of publication these days means that opinion often gets more attention than it deserves.

Dan’s last sentence is therefore indeed very important, so let me repeat it: What we need are bright minds and public intellectuals leading empirically grounded debates about policy and about how to fix the problems we know exist.

Can South Africa’s empirically-minded public intellectuals please stand up?

*I asked Dan’s permission to quote him. I tried to cut, but it was all just very good, and very valid. Thanks Dan.

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