How Fragile Is South Africa?

In a recent piece for Foreign Affairs, Nassim Nicholas Taleb (risk expert and author of ‘The Black Swan’ and ‘Antifragile’) and Gregory F. Treverton wrote an article in which they set out some criteria for broadly measuring the fragility of any state.

There is in our country, for the first time in many years, a sense that the future will not be brighter than the present. Taleb’s fragility test is very applicable to the South African situation, as it gives an adequate framework for a summarised political and economic analysis.

An excerpt from the article:

Thus, instead of trying in vain to predict such “Black Swan” events, it’s much more fruitful to focus on how systems can handle disorder—in other words, to study how fragile they are. Although one cannot predict what events will befall a country, one can predict how events will affect a country. Some political systems can sustain an extraordinary amount of stress, while others fall apart at the onset of the slightest trouble. The good news is that it’s possible to tell which are which by relying on the theory of fragility. 

Simply put, fragility is aversion to disorder. Things that are fragile do not like variability, volatility, stress, chaos, and random events, which cause them to either gain little or suffer. A teacup, for example, will not benefit from any form of shock. It wants peace and predictability, something that is not possible in the long run, which is why time is an enemy to the fragile. What’s more, things that are fragile respond to shock in a nonlinear fashion. With humans, for example, the harm from a ten-foot fall in no way equals ten times as much harm as from a one-foot fall. In political and economic terms, a $30 drop in the price of a barrel of oil is much more than twice as harmful to Saudi Arabia as a $15 drop.

For countries, fragility has five principal sources: a centralized governing system, an undiversified economy, excessive debt and leverage, a lack of political variability, and no history of surviving past shocks. Applying these criteria, the world map looks a lot different. Disorderly regimes come out as safer bets than commonly thought—and seemingly placid states turn out to be ticking time bombs. 

  1. A centralised decision making system

We live in a country, where sadly many South Africans have a natural affinity for socialism, and favour the notion that it is the role of the government to solve problems and address inequalities. In this case, the basic ideologies of those in government, and that of the majority of voters conveniently align. Virtually all major national policies are decided by the top 6 in the National Executive Committee, the effective politburo made up of the ANC elite. The number one criterion when appointing ministers and other senior officials are loyalty, unbending loyalty to the president, and to the party.

Government is a very complex system. When its size doubles (measured by staff, budget etc.), the inherent complexity of the system doesn’t double, it far more than doubles. In this case, the relation between size and complexity is non-linear. To paraphrase the analogy Taleb uses in his book Antifragile, that of a car crashing, he asks: “what causes more carnage, a car crashing into a wall once at 100 km/h, or a car crashing into a wall 100 times at 1 km/h?” A larger government is more prone to be negatively affected by shocks precisely because it is more complex. There is a larger risk of contagion within the system, the dominoes are in effect placed closer together. When there is a shock, the falling dominoes trigger the rest to fall.

The majority of provincial funding comes from national government, as do most of the provincial appointees. Provincial governments have fairly little autonomy (apart from the opposition run Western Cape). There is no mass involvement in the political process for the average person apart from placing a ballot marked with an X in a box once every five years. In South Africa, we have no congressmen, senators or local constituency MPs to contact in the case of grievances. Hence, the whole government is more centralised, the dominos are stacked closer together.

“Democracy is the road to socialism” – Karl Marx

  1. A diversified economy

South Africa has never had a truly diversified economy. During the apartheid years, South Africa had thriving mining and agriculture sectors, with the economy largely resource driven. Today, mining has largely been decimated by government policies. Firstly due to the over wielding bargaining power of unions, and the reluctance of government to take them on, and secondly due to complex new mineral rights legislation (effective partial nationalisation of minerals) and BEE ownership quotas which have made it near impossible for mining operations to function effectively, especially in a depressed commodities market. This has also caused South Africa to largely miss out on the China fuelled commodities boom of the early to mid 2000s. Politicians seem to be more concerned about doing things in order to be seen doing something (fighting perceived western imperialism in order to ‘share the wealth’ with the people) without considering the implications, which often affect the populace the most in an adverse way. The same could be said for agriculture. South Africa is now, embarrassingly, a net importer of food, despite having millions of hectares of arable land, and having been on of the breadbaskets of the world not so long ago. This decline is due to 3 reasons, all to do with government. Firstly, farm murders are unquestionably an epidemic in South Africa (while perhaps not being genocide quite yet). The disgraceful murders (often preceded by torture) have taken its toll on South African agriculture; there can be no farms without farmers. Secondly, government is too intimidated to confront unions about violent strikes and ludicrous wage demands. Bizarrely, in 2013, members of the ruling party in government openly supported the violent strikes and did nothing to discourage damage of property caused by striking farmers in the Western Cape (as part a ‘make the Western Cape ungovernable’ campaign – which failed). Thirdly, land reform and uncertainty around property rights. Many farmers have immigrated to the US, Australia or Zambia because they want to be sure that the government would protect their property rights. In South Africa, there is no certainty surrounding this issue. The vast majority of land reform thus far has been disastrous due to the lack of skills and training of new farmers who are simply given land. There are talks of ‘expropriation without compensation’. This does nothing for South Africa’s food security.

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