Influential economist Chris Hart was taken to task following a post he made on social media site Twitter on Sunday, which was deemed to be racist.
The Standard Bank employee began a series of tweets on Sunday with the following: “More than 25 years after Apartheid ended, the victims are increasing along with a sense of entitlement and hatred towards minorities…”
The tweet drew strong criticism, with users calling on Standard Bank to take action against the respected economist.
The bank duly distanced itself from Hart’s comments on Monday, stating that it “will be instituting appropriate internal disciplinary processes”.
It said it had suspended Hart pending an inquiry into the events of his commentary.
Hart apologised for his initial tweet: “This tweet has caused offence – never intended for which I apologise wholeheartedly. Meant to be read in context of slow growth.”
However, before his apology, the economist fired off a number of posts relating to the country’s lack of growth.
Hart said the economy is capital deficient and is struggling with low growth and high inflation.
The consequence of low growth is that unemployment continues to rise, he said.
Hart said that Apartheid is the country’s national scar. But unemployment has become a bigger scar.
He concluded that for transformation and exclusion to be resolved, SA needs a massive expansion. “The economy is currently way too small,” he said.
The sequence of Hart’s tweets on Sunday were as follows:
Poisonous ideologies are flourishing – Economies are never built on entitlement but on productivity.
To sort out the maladies, the economy desperately needs growth derived from bottom up not trickle down. Investment in business activity.
The reality (whether a legacy of any sort or not) is that all wealth gets originally produced by business and enterprise activity.
The reality is that (whether a legacy exists or not) that no new economic activity comes into existence without investment.
The reality is that (whether there is a legacy or not) that all investment is resourced through saving point is, that whatever the past has been, SA needs to win the future.
That does not mean ignoring the past, but it is needs to be helpful.
The vitriol is expected. All about ‘white privilege’ apartheid beneficiary. But nothing about building the economy.
Let’s take education. Pass rate falls: reality of hiding problems through lowering standards is being exposed. Lower standards did damage.
In education, there are schools that don’t have proper ablutions. More than 20 years after 1994. Yet money has been allocated to fix this.
No ablutions in schools? Blame is very appropriate on the Apartheid govt. but now? Blame very appropriate on current govt.
Firstly, my opening tweets were observations, not my view. Secondly, the economy faces major challenges. Thirdly, we can and must do better.
The economy is struggling and with a local election looming, blame game is in full swing. If policy strategy is not changed econ (economy) will struggle.
The economy is capital deficient and is battling with low growth and high inflation. Jobs are not being created.
Policy strategy involves increased state spending and a focus on infrastructure spending led by the SOEs.
However, against that strategy, there is a triple deficit: current account; govt budget and households (tax base).
SOE driven infrastructure spending has not worked well. Cost overruns, schedule overruns and capital deficiency are problems
At the same time, sovereign credit rating is at risk to be downgraded to junk. A certainty if govt expenditure grows against stagnant econ (economy).
There are four expenditure threats: wage bill; national health; SOEs and nuclear. All unsustainable without economic growth
The consequences of low growth is that unemployment continues to rise. SA needs to turn itself around and avoid a downgrade.
The rise in state spending has effectively transferred resources from high multiplier activity to lower multiplier activity, slowing growth
Falling state institutional effectiveness further reduces the expenditure multipliers.
Yet to get growth, investment into business and enterprise activity is most important. Infrastructure of secondary importance.
Like water flows downhill, capital also gets attracted to the more welcoming jurisdictions. SA has become more difficult to do business.
SA now 96th most economically free. Ease of doing business also more difficult. These things must improve for SA to grow and lead Africa.
The three key mistakes: labour unrest; regulatory escalation and taxes that target capital formation and investment viability.
So while the global economy slows, SA is seen as a risk destination. We should become a haven destination.
Essentially, redress policies have focused on economic transfer rather than growth. Yet exclusion is perpetuated by lack of growth.
The labour force numbers: (roughly) 110 000 unemployed whites; 8 million unempl(oyed) blacks; 14 million employed (total); 2 million employed whites.
The actual numbers show unemployment problem is essentially a black problem. If one normalizes participation rate, 10m+ jobs are required.
Even if there was full economic transfer and full exclusion of white from the economy, there would be a massive black exclusion problem.
The reality is that we can bemoan the legacies of Apartheid but that does not solve the problem of the massive number of unemployed.
Economic transfer policies may satisfy the more emotional side of Apartheid redress but provides zero solution to the excluded.
SA also needs foreign investment to be part of the modern economy. Foreign investment brings technology that we could not possibly replicate.
In conclusion – for transformation and exclusion to be resolved, SA needs a massive expansion. The economy is currently way too small.
Apartheid is SAs national scar. But unemployment has become a bigger scar. SA needs saving, investment and growth.
Resolution of unemployment diminished most other socioeconomic problems: poverty, inequality, education, health, crime, housing.
Unemployment has to be the most important policy priority. At the moment policy confusion has relegated job creation to a low priority.
Unemployment needs employers. If 10-15 million new jobs are needed, then 2-4 million new businesses are needed. Businesses employ. Infrastructure doesn’t.
Govt strategy of creating 100 black industrialists problematic. Nowhere near a solution when it needs to be tens of thousands at least.
A focus less on what exists but what needs to come into existence is what will really accelerate transformation.
While it is psychologically NB to focus on the lack of black top 40 CEOs, reality is we need to be building another crop of top 40 companies.
…and that is not saying transformation of existing companies must be ignored.