Prof Carlos Lopes’s address at the annual CASAC Kader Asmal Lecture
News11 October 2022
THE IMPERATIVE OF DEFENDING PUBLIC GOODS
A constant African battle
Ladies and gentlemen,
It is with great pleasure that I participate in this ceremony in memory of Kader Asmal. His struggle, his example in life and above all his ideals are always a source of inspiration. Asmal was stamped in South Africa as a fighter for justice and the rights of the most vulnerable and oppressed. Both in his period of exile and after his return to the country in 1980, his trajectory was always marked by an obstinacy of principles, ethics of behaviour and gracious treatment. For some of the areas in which he worked, such as the issue of water, forests, or education, he always defended the principles of human rights and the promotion of equality.
It is worth noting his intimacy with Ireland. In the island he had great academic and political recognition, which explains why his name is still celebrated there today. I applaud that a scholarship program has been created in his name.
The topic that I am going to present today is fully inscribed in Kader Asmal's concerns. The fortification of public goods was a hallmark of his life. Whether through the participation in the construction and protection of the South African Constitution, or through his work as a politician.
There is a lot of talk these days about state capture. It is about the appropriation of public goods in an organized and systematic way. This question is not the result of any South African exceptionalism. Across the continent we have manifestations of rent-seeking behaviour that have deeper explanations.
Africa lives in a colonial trap in which the structure of economies is geared towards the use and expropriation of raw materials. What nature generously offered us has been used to extract or exploit for the benefit of others.
Six decades after the great independence movement, we continue to export essentially non-value-added commodities. This means that the structural model of economies continues to be based on extraction. It is as if the typical economists' interpretation of the theory of comparative advantages had stopped in time.
Many European countries developed their initial trade based on the advantages of their natural resources. As an example, the first great wealth of the Americas was the production of sugar and the extraction of gold. The famous sea route to the India, discovered around the Cape by the Portuguese, was intended to boost the trade in spices. But these countries or regions have not been locked into these comparative advantages throughout history. Yet Africa, seems to have stayed in that corner.
This colonial trap explains why 80% of African exports are still commodities. Only a structural transformation of the economies will make it possible to get out of this alley and provide a modernization that will have to be focused on industrialization. Industrialization will add value to commodities, including those that will be strategic for the future of humanity, from green hydrogen, to cobalt, graphite, platinum, rare earths and so on. Fortunately, a significant part of these essential resources for the economy of the future is in Africa. It is Africa that possesses also 60% of arable land in reserve or the greatest fishery wealth on the planet. But that doesn't mean we can avoid another wave of dependency, brought on by that persistent and stubborn misinterpretation of the theory of comparative advantages. A static rather than dynamic interpretation of the theory.
But what does this have to do with the safeguarding of public goods?
In Africa we are faced with two types of behaviour on the part of the elites. Those who want the kind of transformation I described earlier; and those who live on income from exports and other easy ways of acquiring resources and income. The former deserves our salute. The others are rent seekers. They are a serious problem because they imagine the State as a space for appropriation and not as an instrument of governance. Thus, they confuse the public sphere and the private sphere and live happily in the mixture of these two fields of societal constructs.
Let's see how to equate this challenge.
Based on the theories of Paul A. Samuelson (1954), two main categories of goods can be distinguished: private goods and public goods. This classification depends on two main characteristics.
Firstly, the possible rivalry of goods, that is, whether consumption of the good reduces another person's ability to consume the same good; and secondly, its excludability, that is, the ability of the owner of the good to prevent the use of the good by another person. In other words, a good that is both rival and excludable is, by nature, a private good.
On the other hand, a good that is non-rival, meaning that one person's consumption does not diminish another person's ability to consume it, is non-excludable, that is, the owner cannot easily prevent others from using the good. This will then be a public good. The public effects of a good can be local, national, regional, global, or intergenerational.
For example, if I have a cell phone, I can limit its use to my person and exclude others. I can, but that doesn't mean necessarily I do. But because I can, it is by nature a private good because it is characterized as rival (since others can have a cell too) and excluding. However, the cell phone does not work without the regulation of magnetic waves. The ability to organize the use of magnetic waves is a public attribution of the State, or at the global level, of a public multilateral body, the International Telecommunication Union. This right, so to speak, should not be appropriated by anyone on a proven basis, because it is in the public interest and should not be exclusive or limited. It is a common public good.
Translated to a local or national reality, we can say that, in general, the main task of governance is to take care of public goods and regulate the spheres of action of private interests. It is done through laws, regulations, norms, and systems, which define the limits of each sphere.
A society is all the more sophisticated when it is able to separate the areas covered by public and private goods. Concomitantly, a society is more chaotic and disorganized the greater the space of confluence and overlap, without order, of these two spheres, public and private.
Typically, in Africa those who promote rent-seeking, induced by the type of commerce and economic structure that I have denounced, live from the advantages of a framework that underestimates this division of waters between public and private goods. Rather, they consider public goods in terms of various private interests. It can be for the benefit of individuals, a class, an interest group, an organization or even a party apparatus.
The legitimation of the private use of the public good is done in a political way. Several explanations can serve as a pretext to justify certain political behaviour in this matter. Including behaviours that seem surprising: such as, for example, appropriating public goods for their own benefit, arguing that it is to fight corruption of the enemies or to fight against the seizure of state assets by the privilege.
Does it seem paradoxical? But politics is full of paradoxes, where you say one thing and do another.
The informality of the African economy largely explains why it is possible to use subterfuges and explanations that are completely out of the nexus, provided that, through populist interpretations, they are accepted by large swaths of the population.
In South Africa, the level of institutional organization is high. Asset coding is among the most advanced in the world. Part of the explanation has to do with the country's high rates of industrialization and a very service-dependent economy. The industrialization of South Africa is the highest on the continent. Industrialization requires a normalization of exchanges and a formalization of behaviour. Also in the service sector, South Africa has one of the most sophisticated financial regulations in the world.
Although there is a lot of informality in the country, it is associated with the vulnerable sections of the population. That part of the population that was excluded from the most modern economy for a long time. This population has not yet been completely absorbed by the so-called formal and modern economy. This explains why for this population the civic space (interpreted as the space of State attributions) is still strange, even sometimes unreachable. It is a space associated with those who had or still have access to it naturally. For others, the refuge where they feel a sense of belonging is the primordial space, the one where they feel good and accepted, the space of affection and its culture. This duality so well explained by Nigerian political scientist Peter Ekeh serves for elites to legitimize the appropriation of public goods. Such behaviour is presented and perceived as an appropriation of a distant and unattainable world, the world of the State, the civic space, where the excluded feel foreign.
This interpretation explains a lot. It brings South Africa closer to the rest of the continent in terms of behaviour. It lessens the weight of any exceptionalism that could arise from the fact that the country is more modern in its laws, codes, and economic transaction systems. The public sphere in South Africa, like any other African country, is exposed to attacks that can be legitimized by this logic. And these attacks on public space may even be supported by the most disadvantaged. The richest, by nature more integrated in modernity and traditional beneficiaries of the public sphere, are able to relate to the civic space without difficulties or complexes. They fight for the preservation of public goods because they have always benefited from them and do not realize that many times the others do not feel they benefit.
As with most private goods, most public goods are made up of various building blocks that need to be assembled to obtain the desired end result.
The private good is the fruit of appropriation. This appropriation can be the result of work and ingenuity that allowed the accumulation or inheritance of a capital that precedes or is inherited by the individual or organization. It is clear that this is a construction that can have several blocks and stretch over time. It needs care and treatment to avoid wear or erosion of value.
The preservation of public goods equally needs maintenance and care so that it can generate the expected benefits. In the absence of such care, even in a society or country with a good capital for the management of public goods, an accelerated decay can occur in a short space of time. A city can become a degraded area if there is no maintenance. Likewise, an individual home will be devalued if it is not cared for.
To preserve goods, public or private, it is necessary to have means.
African countries generally have a fiscal policy marked by major weaknesses. Taxes are a kind of thermometer of the welfare of the social contract between citizens and the State. It is taxes that allow the country to have the means to manage and maintain public goods, from schools, hospitals to roads, meteorology, or fire services, etc.
First, let's look at what happens with tax collection.
If few taxes are paid in relation to the volume of economic transactions in a country, something is wrong. Fiscal pressure corresponds to the volume of taxes collected in relation to a country's GDP. The average worldwide tax pressure is 35%. In Nigeria, the continent's largest economy, this pressure is 7%. In Africa the average is 16%. In South Africa it is 26%.
What does it mean?
It means that in a country like Nigeria there is a huge volume of economic transactions that are not taxed. South Africa is doing much better in terms of tax collection than the rest of Africa, but below what could be expected. The lower the collection, the more there may eventually be signs of corruption or exemption policies benefiting some economic agents.
Sometimes people think that in Africa a lower percentage of taxes is collected because the countries are poor. Taxes are not generated by those who do not carry out economic activity. Even though the poor may be taxed through the consumption of VAT-classified products. The problem is rather the exemptions given by the state and the corruption by the powerful.
In the case of South Africa between 2007 and 2019, the state accounts went from a surplus of R9.5 billion to a deficit in 2019 of R246 billion, which means a significant loss of annual revenue over time. This deterioration in fiscal capacity has several explanations. It is important to note that with the increase in population and unemployment, the impact of these numbers on the preservation of public goods is gigantic.
Second, we must be concerned with the use of taxes. If they are not used for the common benefit, there are imbalances that, in turn, can generate legitimacy crises. The state can be challenged for not being transparent or judicious in its use of public money. In Africa this is very common and explains the systemic problems in maintaining even state’s existing capacity. Here in South Africa the vivid illustration of this that everyone talks about is loadshedding.
In addition to the fiscal issue, rent-seeking behaviour tends to despise the maintenance of the constituted heritage and rather invade this public space for private benefit. The report by the Judge Zondo’s Commission on State Capture demonstrates how this behaviour can be harmful to the economy as a whole, instilling deep distrust in public institutions.
These weaknesses also extend to the way politics is done in Africa. Public goods are often used for political activity. It is another track for a private capture that weakens the State's ability to preserve the commonwealth.
Psychological and behavioural factors receive the most frequent mention in the social science literature as contributors to the under provision of public goods. The most frequent impediment assumed is the free ride by individual actors in the presence of public goods.
So far, however, evidence has shown that harmful and selfish behaviour does not occur as commonly as analysts assumed. Many individual actors, whether organizations, entities such as the State, companies, civil society, human groups or individuals, act more as a result of induced motivations, or perhaps even out of pure altruism. Often hesitation to cooperate for the common public good arises from aversion to change or uncertainty stemming from lack of information or even the inability to fully understand complex events.
At an age of information overload, the necessary filtering that was previously based on precepts of collective interests’ defence, is lacking. We could even say – using a soundbite - that “less is better”. It no longer makes sense to limit access to information, despite its intimidating fortitude. It is unfortunate, that much of what one receives is rubbish. But that is the reality we have.
Deep down, the safeguarding of public interest has to move beyond the legal and juridical arguments. Common public goods have to become the subject of continuous political debate, as Kader Asmal would surely have proposed.
I thank you.
Professor Carlos Lopes, October 8th, Double Tree Hilton, Woodstock, Cape Town