The
Poor of this World Rich in Faith
During its
last meeting earlier this month, the National Executive
Committee (NEC) of the ANC revisited the issue of the struggle to defeat
poverty and underdevelopment. It recalled the fact that its principal
slogan during the 2004 General Elections was - "A People's Contract to
Create Jobs and Fight Poverty."
At its first meeting after these elections, in May, the ANC NEC had resolved that in addition to what was being done already to create jobs and fight poverty, it was necessary continuously to elaborate and implement the most effective ways to achieve these goals. It agreed that the July meeting would focus on this issue.
Accordingly, the July NEC meeting discussed the topic - "Theories of development and underdevelopment globally, and their implications for our country." This discussion took place to ensure that our concrete interventions to address the issue of poverty and underdevelopment should be evolved within a clear and consistent framework, to avoid ad-hoc, disconnected and possibly contradictory actions.
Naturally, the meeting also considered some specific examples of what was being done in other parts of the world to confront the same challenges with which it was preoccupied. One of these examples was the Regional Policy of the EU. The central feature of this programme is the deliberate transfer of resources by the public sector, through the European Commission, into the relatively poor and underdeveloped regions within the member states of the EU.
This is done within and constitutes a development paradigm that includes six important features. These are:
- the need to transfer resources in the form of grants, from the
richer to the poorer areas that are characterised by high levels of unemployment
and underdevelopment;
- recognition of the reality that, on its own, and even in the developed
world, the market is incapable of totally eradicating poverty and underdevelopment;
- acceptance of the reality that it may be impossible for unaided underdeveloped
regions to create the conditions that would make them attractive to the private
sector as profitable investment areas;
- the requirement to ensure the existence of a strong and growing economy
capable of producing the resources required to address the challenge of
underdevelopment;
- the critical importance of public sector investment in social and economic
infrastructure as well as productive capacity in the underdeveloped areas;
and,
- the central importance of the state as a social agent to effect the
necessary resource transfers, and ensure their productive utilisation
in the underdeveloped regions to uplift them, so that they reach the stage
of development
that will enable them to become part of the economic mainstream, fully
integrated in the rest of the (market) economy.
With regard to these matters, an official document of the EU says:
"Although the European Union is one of the richest parts of the world, there
are striking internal disparities of income and opportunity between its regions.
The entry of 10 new members in May 2004, whose incomes are well below the EU
average, has widened these gaps. (Through 'structural funds'), regional policy
transfers resources from affluent to poorer regions. It is both an instrument
of financial solidarity and a powerful force for economic integration."
Describing the nature of these transfers, the EU says: "Most Structural Fund assistance is granted in the form of non-repayable grants or "direct aid", and to a lesser degree refundable aid, interest-rate subsidies, guarantees, equity participation, and participation in venture capital."
The relevance of EU Regional Policy to our own work to confront the challenge of poverty and underdevelopment in our country is obvious. The ANC NEC is therefore conducting more detailed work to assess the utilisation and management of the Structural Funds and their impact on the EU regions and countries that have benefited from these Funds.
In its assessment of theories of development and underdevelopment, the ANC NEC will also have to look at other experiences. Necessarily, this will include the United States. There are two matters of special interest in this regard.
One of these is that the dominant view is that the US has relied and continues to rely almost exclusively on the market to address its own challenge of poverty and underdevelopment. Americans themselves also advance this view.
The assertion is made that this market model of development, which, according to what we have said above, differs significantly from the EU model, is and has been successful as a mechanism to reduce poverty and underdevelopment on a sustained and sustainable basis.
The second matter of special interest to us is that the US has a large African American population. The US Census Bureau has said that in 2002, the African American population was just over 36 million. By comparison, the black (African, Coloured and Indian) population in our country stands at about 39 million.
Like the majority of our own population, this section of the US population has been subjected to racist oppression, discrimination and exploitation from its arrival in the US as slaves, onwards. Like us, it has also waged a sustained struggle for its emancipation and upliftment. Without losing sight of or minimising the important differences between the black populations of the US and our country, it may also be useful to consider both experiences as reflecting "colonialism of a special type."
We must therefore be interested to understand the extent of the success of the struggle of the African Americans to free themselves from poverty and underdevelopment, in a situation in which, principally, this challenge was and is being addressed through reliance on the market.
In principle this should help to improve our own success in confronting our own challenge of poverty and underdevelopment, given that we are striving to overcome the legacy of "colonialism of a special type".
In 2003, the US Federal Reserve Board (FRB) published a very informative report entitled "A Rolling Tide: Changes in the Distribution of Wealth in the US., 1989-2001." Prepared by an economist, Arthur B. Kennickell, it includes a section headed "The wealth of African Americans".
Another report on the social condition of African Americans was published in 2004, under the title "The State of the Dream 2004: Enduring Disparities in Black and White". Its authors are Dedrick Muhammad, Attieno Davis, Meizhu Lui and Betsy Leondar-Wright, who belong to a US non-governmental organisation, "United for a Fair Economy" (UFE).
The overall conclusion from these studies is contained in an article "Slavery and the Roots of the Wealth Gap", written by Meizhu Lui and Professor Rose Brewer in 2002, based on figures then available. They said:
"The descendents of slaves continue to find their ability to jump on board the asset-building train impaired. Fault lines laid long ago forged a vast and enduring wealth gap between white Americans and African-Americans. In 1998, the median net worth of white households was $81,700, while the median net worth of African-American households was just $10,000. The homeownership rate among white families is 74 percent, while for African-American families it is just 48 percent nationally, and much lower in some local areas."
The FRB report says that for the period 1989 to 2001, "mean wealth of white non-Hispanics ranged between about 5 and 6 times the mean wealth of African Americans."
It also says: "Over all the years of data analysed here, African American families were far more likely to have wealth of $1,000 or less than were white non-Hispanic families, but the difference narrowed.At the other end of the distribution, a far larger fraction of white non-Hispanic families had wealth of at least $500,000 than was the case for African American families across the period."
The FRB report concludes: "The median wealth of African Americans in 1989 was only about 5 percent of that for white non-Hispanic families, and by 2001, the fraction had risen about 16 percent. Differences are most striking at the two ends of the distribution of wealth. A higher fraction of African American families have net worth less than zero and a much higher fraction have wealth between zero and $1,000.
"At the top end of the distribution, the differences are reversed with a much larger fraction of white non-Hispanics having wealth of $250,000 or more."
The figures in the FRB report show that in 2001, 41.7 percent of African Americans had net worth up to $10,000, compared to 16.4 percent for white non-Hispanics. At the other end of the wealth scale, 6.8 percent of the African Americans had net worth of $100,000 and above, while 54.9 percent of white non-Hispanics were in this higher wealth range.
These disparities in wealth and standards of living also show up in the unemployment figures. The UFE says that in 2003, unemployment among the African Americans stood at 10.8 percent, more than double the white non-Hispanic figure of 5.2 percent.
Given the reported high black unemployment figures in our country, these figures should not ring any particular alarm bells among us. However, we should take into account the way the unemployment figures are calculated in the US.
The US Department of Labour says, "Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work."
However, in a 2004 article Dedrick Muhammad reported that, "The New York Times recently reported on a study that found that just 51.8% of Black men in New York City between the ages of 16-64 held jobs, while 75.7% of white men were employed."
The US Bureau of Labour Statistics put out these figures, reflecting employment-to-population ratios in New York City. Unlike the official measure of unemployment we have cited above, they include discouraged workers and others excluded from the official definition of unemployment.
Contrary to the 10.8 percent national unemployment rate for African Americans, and 5.2. percent for white non-Hispanics, both based on the official definition, they reflect the high and disturbing figures of 49.2% and 24.3% unemployment among African Americans and white non-Hispanics respectively.
As we would expect, the racial disparities indicated by the information above also show up in the social statistics. In this regard, the UFE report says, inter alia:
"In 2001, the Black infant mortality rate was 14.0 deaths per 1,000 births - 146% higher than the white infant mortality rate of 5.7 deaths per 1,000 live births.
"By 2000, Blacks' life expectancy was 93% of that of whites, 71.7 years compared with 77.4 years.
"From 1974 to 2001, the percentage of Black men who had ever been in a state or federal prison rose from 8.7% to 16.6%. The percentage of white men who had been in prison grew from 1.4% to 2.6%.African Americans are about six times as likely as whites to have been imprisoned at some point in their lives. This gap between Black and white men is growing." Since this Letter is discussing the issue of closing the gap between the developed and the underdeveloped, we should consider some of the stark realities presented in the UFE report, which says, among other things:
"For every dollar of white per capita income, African Americans had 55 cents in 1968 - and only 57 cents in 2001. At this pace, it would take Blacks 581 years to get the remaining 43 cents.
"In 2001, the typical Black household had a net worth of just $19,000 (including home equity), compared with $121,000 for whites. Blacks had 16% of the median wealth of whites, up from 5% in 1989. At this rate it will take until 2099 to reach parity in median wealth.
"The Black poverty rate was three times greater than the white poverty rate in 2002. At the slow rate that the Black-white poverty gap has been narrowing since 1968, it would take 150 years, until 2152, to close.
"While white homeownership has jumped from 65% to 75% of families since 1970, Black homeownership has only risen from 42% to 48%. At this rate, it would take 1,664 years to close the homeownership gap - about 55 generations."
All this points to the inescapable conclusion that on its own, the market is incapable of solving the problem of African American underdevelopment. Or, as Lui and Brewer put it:
"The descendents of slaves continue to find their ability to jump on board the asset-building train impaired. Fault lines laid long ago forged a vast and enduring wealth gap between white Americans and African-Americans."
In 2001, the EU issued a report on the impact of its Regional Policy. Among other things it said:
"Over the ten years since the reform of the Structural Funds, significant progress has been made in terms of convergence and cohesion in the Union. The disparities.have narrowed over time. In the three least prosperous Member States (Greece, Spain and Portugal), average income per head has risen from 68% of the EU average in 1988 to 79% in 1999, a reduction of a third in the initial gap.
"The finance made available through the Funds almost doubled between 1989 and 1999, rising from 0.27% of EU GDP to 0.46%. The transfers were most pronounced in the cohesion countries, the main beneficiaries, equivalent to over 10 years, to 1.5% of GDP in Spain, 3.3% in Portugal and 3.5% in Greece. In Greece and Portugal, Community transfers represent over 10% of investment.
"Between 1988 and 1998, the difference in income per head between Objective 1 (underdeveloped) regions and the EU average narrowed by one-sixth, GDP per head in PPS in the former increasing from 63% of the average to 70%. Within this general trend, a number of regions, in particular those in Ireland, the new German Länder and Lisbon, have performed better than the average. "Over the period 1989 to 1999, structural intervention had a significant effect in Greece and Portugal, GDP at the end of the period being an estimated 9.9% higher in the former and 8.5% higher in the latter as result of intervention. The effect was less in Ireland (3.7%) and Spain (3.1%), the Structural and Cohesion Funds forming a smaller proportion of GDP there. This significant contribution to growth was accompanied by more limited effects on the level of unemployment especially in Ireland and Spain.
"Transport infrastructure has expanded significantly, investment co-financed by the Structural and Cohesion Funds achieving time savings of, for example, 20% in Spain, through an improvement in the motorway network, and 70% in Portugal in the case of rail freight.
"Around a sixth of firms located in Objective 1 regions were recipients of support to SMEs, creating over 300,000 new jobs. In the case of Objective 3, the rate of placement of people who had followed a training programme varied between 25% and 50% according to the country and the groups targeted."
All this indicates significant progress in the struggle to defeat poverty and underdevelopment within the EU, which would not have been achieved if the EU member states had relied solely on the market to meet this challenge.
The EU report also made the important observations that "The Structural and Cohesion Funds do not only stimulate demand by increasing income in the regions assisted. By supporting investment in infrastructure and human capital, they also increase their competitiveness and productivity and so help to expand income over the long-term. Structural intervention, therefore, tackles the root causes of regional imbalance and is aimed at strengthening the factors which provide the basis for sustained growth."
In other words, these Structural and Cohesion Funds help to build the underdeveloped regions towards the level where they can be integrated into the mainstream economy, with the poor being given the possibility and ability "to jump on board the asset-building train."
However the EU recognised the reality that despite the enormous resources dedicated to this objective, it will take a considerable period of time to close the gap between the developed and the underdeveloped - though it projects a dramatically shorter time span than the periods predicted by the UFE with regard to the United States. It said:
"In sum, the evidence demonstrates that considerable progress has been achieved in the present EU15 in reducing income gaps between regions, though on past trends it is likely to take another generation before regional disparities are eliminated. Enlargement (to EU25) widens the disparities markedly. Given existing levels of income per head in the candidate countries, convergence between regions in the enlarged Union would take at least two generations if it occurred at the same pace."
As in the previous elections, during the 2004 elections the poor of our country voted for the ANC in their millions. They did so because, virtually as a matter of faith, they are confident that our movement will continue to do everything possible to extricate them from a soul-destroying condition of poverty and underdevelopment.
The discussion initiated by the July ANC NEC on theories of development and underdevelopment is therefore not an academic exercise. It is an inherent part of what we have to do to honour our commitment to the people.
It is a necessary part of our effort to address a matter of life and death for the millions of our people, about whom we can say that fault lines laid long ago forged a vast and enduring wealth gap between white South Africans and black South Africans.
The General Epistle of James in the Bible contains the verse: "Hearken, my beloved brethren, Hath not God chosen the poor of this world rich in faith, and heirs of the kingdom which he hath promised to them that love him?"
Our mandate relates to the earthly kingdom and demands that, as James said, we should not be satisfied with our performance "if a brother or sister be naked, and destitute of daily food."
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