STUART THEOBALD: Can we quit the grand visions and fix the problems?

Posted in: Economics, i-Blog, Politics on February 8, 2021


This column was first published in Business Day.

The government is increasingly giving up on solving problems that might be hard, but that it can be held accountable for, and turning instead to promising, grand new institutions.

Some of the work of philosopher Karl Popper shows why this is bad for accountability and ultimately for our country.

He argued that we should fix our pain points through a patient process of studying each problem, figuring out the most likely fix, implementing it, then monitoring to assess the change. In this way, over time, we incrementally improve our societies and gradually eliminate misery. Popper strongly opposed grand new policies or sweeping revolutions. These, he thought, lacked evidence for their efficacy and opened ways for politicians to serve their own interests instead of the public’s.

The state should deal with problems it can identify — the queues at social grant collection points, the high accident rate in households that use paraffin lamps, the lack of access to water and sanitation in informal communities. By focusing on these specifics the citizens can hold the state responsible for making a difference — we can see when they have been solved and when not. (This is one reason the Open Society Foundation, which is heavily influenced by Popper’s ideas, works on promoting a free media so the public can get the information needed to assess their leaders’ progress.)

This incremental approach, Popper believed, is far preferable and leads to better societies than politicians who promise revolutions, with a nirvana on the other side. Individual citizens, Popper believed, should be free to maximise their own benefit, but politicians should be focused on evidence-based solutions for actual instances of misery.

I’ve increasingly been seeing a behaviour in our government that Popper warned against: promising grand visions instead of fixing the problems we have. Grand new ideas can be attractive. We can all imagine, for example, having a new state bank. We can imagine how this will resolve problems we perceive such as the lack of access to finance for black entrepreneurs. But do we have evidence that it will actually solve the problem? The answer is no.

When we look instead for instances of actual failure, we can see them clearly. The Postbank, for example, has been meant to be applying for a commercial banking licence for more than a decade. At various points it has been slated as the solution to the lack of access to financial services, particularly in rural areas. In a 2012 resolution, the ANC said the Postbank must be corporatised and registered as a bank.

In 2017 at Nasrec, having failed to do this, the ANC resolved that “The Postbank should be registered as a bank as a matter of urgency. The NEC [national executive committee] must receive reports at each sitting on progress in this regard.”

This is the right way to do public policy — an institution isn’t working, so let’s fix it. The insistence on updates at each NEC meeting is appropriate, though I doubt that’s been done.

The problem is that piecemeal fixes are hard and failure is obvious. On top of the challenges of the Postbank, there are those of the National Empowerment Fund, which urgently requires R1bn of capital to stave off collapse, and that of the Land Bank, which has defaulted on obligations to bond holders. These provide evidence that running a state financier is hard.

Infrastructure debate

But instead of confronting these challenges with evidence-based interventions to fix them, à la Popper, the narrative is growing that we need a new state bank to resolve the failure to access services. Whether it will actually do that has no evidence one way or another. So it is easy to skirt accountability.

A similar tendency to take the easy route of reinventing the wheel rather than fixing what we have is prevalent in the infrastructure debate. We have an extensive infrastructure procurement framework. There are many problems with it, including that it burdens public servants with much bureaucracy to get anything done.

Instead of looking at the problem directly, including the regulations under the Public Finance Management Act and Municipal Finance Management Act that contribute to it, we invented a new structure, the Presidential Infrastructure Co-ordinating Commission under president Jacob Zuma.

This didn’t solve the problem, so when President Cyril Ramaphosa took office, he created the Infrastructure Investment Office in the presidency and the Infrastructure Fund. A few years down the line and we are now awkwardly consolidating the Presidential Infrastructure Co-ordinating Commission (PICC) and Infrastructure and Investment Office (IIO) into the department of public works & infrastructure while the Infrastructure Fund has been divisionalised into the Development Bank of Southern Africa.

One can’t help but feel that we’d be further down the line if we’d looked at where the real pain points were in the first place and focused on fixing them, instead of conjuring new institutions that then don’t solve the problem. Meanwhile, investment in infrastructure by state-owned enterprises has fallen 30% and national budget spending by 18% over the last five years.

It is not pretty, but social problems require focused, evidence-driven interventions to be resolved. We should all be sceptical about fanciful new institutions promised by politicians. The evidence that they will solve the problem is invariably weaker and accountability much harder.

Theobald is chair of Intellidex, a research-led consulting house.

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