And, yet again, on what kills economic growth ...
Not long ago an economics Associate Professor based in South Africa argued for expropriation of property in South Africa.
The Nobel laureate Douglass North argues that (good) institutions are the main determinant of economic growth. And Acemoglu, Johnson and Robinson in their papers argue that an increase in the risk of expropriation (a proxy for institutional quality) is associated with lower growth rates.
And again, education matters!
More on what kills economic growth ...
Former Brazilian president, Lula da Silva, has been sentenced, by judge Moro, to nine years in prison. Apparently (and I keep using the word 'apparently' because in the age of fake news, nobody knows what is and what is not) the former president and his government were corrupt. Coincidentally enough, Brazil has displayed negative growth rates. Perhaps it is just a negative correlation between corruption and growth, but some (the economists William Easterly from NYU, Paolo Mauro from the IMF and all Brazilians losing their jobs) will argue that corruption kills growth.
On a more positive note, the role of the Brazilian judiciary in constraining the executive, or the role of institutions on governance, is an interesting institutional development taking place in Brazil.
What is killing economic growth in South Africa?
Well, according to the (previous) public protector the state has been captured. Cryptic? Okay, William Easterly from NYU suggests in one of his books that governments can kill growth by, amongst other things, running high public deficits and providing poor public services. Not enough? He also suggests that corruption is not a good idea for growth. Perhaps Easterly has a valid point (as well as the previous public protector). Do you want to know more? Then either attend my lectures, or read Easterly's book.
More on 'Manoel, what are you doing in South Africa?'
From a development economist's perspective this question should be redundant, but let me elaborate on the need for education.
First, the (current) public protector has recently suggested that the constitution of South Africa should be changed, that is, she argues that the mandate of the South African Reserve Bank should be changed so that the Bank can implement policies which will (hopefully) generate economic growth in South Africa. Very honourable, no doubt. But, not terribly sound economics, is it? Of course not!
There is a vast literature suggesting that inflation is bad for growth (to be fair, there is some literature suggesting that 'a bit' of inflation is good for growth, but the public protector does not mention that. More importantly, the inflationary experiences of Germany, Hungary, Israel, South America and Zimbabwe, to mention a few, speak for themselves). Why is inflation bad for growth? Because inflation distorts the price system, erodes the value of the currency and increases macroeconomic uncertainty. A bit cryptic? Okay, because governments that switch on the printing machine (after capturing the central bank) are governments that are losing control of their own finances and the printing machine gives governments access to resources - money - and inflation erodes not only the currency, but also the debt. Well, then we go full circle, right? Of course! South Africa is not growing, and that has an effect on public finances (there are less people investing, less people working, less people paying taxes, and more people on welfare) and switching on the printing machine is always an `easy' solution for a `government that has lost control.' If you want to know more, either attend my lectures, or get yourself a half-decent Macroeconomics textbook and start reading. Education matters, don't you think?
Secondly, recently the deputy finance minister has also argued that inflation targeting is not necessarily good for developing countries. Yes, you read it right, the deputy finance minister thinks that the policy implemented by the (supposedly independent) Reserve Bank is perhaps not good for South Africa (in case he is including South Africa in the 'developing countries' bunch). Why is that so? I don't know, the deputy finance minister apparently never cited any paper on the subject and consequently never elaborated much on the economics behind his reasoning.
Education matters, don't you think?
'Decolonisation' of the curriculum in South African universities (or is it curriculum `transformation'?)
Recently South African universities (one of which pays my salary, but does not host this site) have been debating on how to change the curriculum (some call it curriculum 'transformation', others 'decolonisation').
At first blush I was wondering about the lingo: `transformation' or `decolonisation'? As an aside, I was wondering (yet again) whether a PR company (perhaps based in London) is behind the confusing lingo? Just wondering ... More to the point, and given that we are talking about academic institutions, South African universities could perhaps coordinate amongst themselves and use the same word for whatever they want to do with the curriculum so that we all know that we are on the same page.
Then I was thinking about Philipp Lenard and his 'German physics' (Lenard attempted to 'dejewish' physics and implement his own brand of 'German physics' in the 1930s). Unfortunately Lenard, and the Nazis, succeeded and a lot of damage was done to physics and education in Germany. I was also thinking about all those students demonstrating against 'jewish physics' in the 1930s in Germany (perhaps, just like Lenard, they wanted to 'dejewish' the curriculum) ...
Then I was thinking (yet again, I know I am getting a bit repetitive) about `HIV/AIDS denialism' and all the human cost attached to it (unfortunately the 'denialists' managed to delay in a few years the implementation of ARVs in South Africa). Apparently the `denialists' wanted to `delink' HIV from AIDS ...
Then I was thinking (I promise to stop soon) about Uranus (the planet) and the structure of DNA (things which existed before we got to know about them, and you can call them natural phenomena, facts, regularities or natural laws), and diesel engines (things that we had to invent, and you can call them a set of instructions or techniques). Let me explain: an invention (diesel engines) usually gets a patent (additions to prescriptive knowledge), the discovery of Uranus does not (additions to propositional knowledge). Ah, almost forgot to mention the link between them: discoveries add to propositional knowledge which in turn determines prescriptive knowledge (inventions, or what an economy can do). Recall that economic growth is determined by technology and technologies are knowledge. Full circle? Sure.
The bottom line is that having committees of `experts' deciding what knowledge is, or is not, is not in any way new in history. What remains to be seen is what the damage, or gain, a `decolonised' or `transformed' curriculum will have to South African propositional and prescriptive knowledge, or ultimately to progress.
Education does matter!
Manoel goes to conferences abroad, and the question is ...
Every year I give papers at conferences, mostly in Europe and the US, and some of my colleagues (mostly development economists) ask me (usually after a few pints) the following: `Manoel, what are you doing in South Africa?' My reply is always the same: I am doing what all development economists should be doing, that is, learning and spreading knowledge in Africa!
I am Associate Professor in the Department of Economics at the University of Pretoria, South Africa.