Karol on Stiglitz
My better-half, Karol Boudreaux, wrote this letter to the editor of the New York Review of Books.
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To the editor:
In his problematic review of Naomi Klein’s The Shock Doctrine, Joseph Stiglitz makes a series of claims about South Africa that are both insulting and inaccurate. For example, he claims the ANC “didn’t fully understand how important economic policy was.”
Rubbish. The ANC is filled with highly educated, competent people who knew full well that radical redistribution would likely fuel violence and capital flight, generally not a recipe for economic growth. The ANC recognized that their economic policies had to accommodate a broad array of domestic interests--business people, small entrepreneurs, farmers, and union members—as well as international donors. Its economic policies reflected this reality.
For example, far from introducing “labor flexibility” to meet IMF and World Bank demands, the ANC has kept the labor market excessively rigid, which penalizes poor black South Africans but makes its political partners, the South African Communist Party and the nation’s largest labor union, COSATU, happy. Indeed, the high black unemployment rate and the ever-expanding informal sector are evidence of this rigidity. Despite the fact that South Africa is ranked 35th out of 178 nations in the World Bank’s most recent Doing Business report the country scores a poor 91 in the category of “Employing Workers;” the lowest mark of the 10 categories the Bank considers.
Finally, to argue that 5% per annum growth rates are “disappointing” is disingenuous. As the OECD said in its African Economic Outlook report (2006) “In 2005, the South Africa economy experienced GDP growth of 5 per cent, its highest since the end of apartheid.” The OECD goes on to say that “although this good performance is due in part to a favorable international environment, it also reflects the sound economic policies that have been carried out since 1996. . .”
To be sure, South Africa has plenty of problems, labor rigidity being key among them. It is disappointing, however, that an economist as prominent as Mr. Stiglitz should be so wrong about what ails this beautiful country.
Sincerely,
Karol Boudreaux
Senior Research Fellow
Lead Researcher, Enterprise Africa!
Mercatus Center at George Mason University
.....
To the editor:
In his problematic review of Naomi Klein’s The Shock Doctrine, Joseph Stiglitz makes a series of claims about South Africa that are both insulting and inaccurate. For example, he claims the ANC “didn’t fully understand how important economic policy was.”
Rubbish. The ANC is filled with highly educated, competent people who knew full well that radical redistribution would likely fuel violence and capital flight, generally not a recipe for economic growth. The ANC recognized that their economic policies had to accommodate a broad array of domestic interests--business people, small entrepreneurs, farmers, and union members—as well as international donors. Its economic policies reflected this reality.
For example, far from introducing “labor flexibility” to meet IMF and World Bank demands, the ANC has kept the labor market excessively rigid, which penalizes poor black South Africans but makes its political partners, the South African Communist Party and the nation’s largest labor union, COSATU, happy. Indeed, the high black unemployment rate and the ever-expanding informal sector are evidence of this rigidity. Despite the fact that South Africa is ranked 35th out of 178 nations in the World Bank’s most recent Doing Business report the country scores a poor 91 in the category of “Employing Workers;” the lowest mark of the 10 categories the Bank considers.
Finally, to argue that 5% per annum growth rates are “disappointing” is disingenuous. As the OECD said in its African Economic Outlook report (2006) “In 2005, the South Africa economy experienced GDP growth of 5 per cent, its highest since the end of apartheid.” The OECD goes on to say that “although this good performance is due in part to a favorable international environment, it also reflects the sound economic policies that have been carried out since 1996. . .”
To be sure, South Africa has plenty of problems, labor rigidity being key among them. It is disappointing, however, that an economist as prominent as Mr. Stiglitz should be so wrong about what ails this beautiful country.
Sincerely,
Karol Boudreaux
Senior Research Fellow
Lead Researcher, Enterprise Africa!
Mercatus Center at George Mason University
Posted by Don Boudreaux on
Saturday March 29, 2008 at 4:41pm