IN RECENT weeks business, labour and the government have presented a united front to fight economic uncertainty and stagnation. Too many people are excluded from meaningful economic activity in SA, manifest in high levels of unemployment (catastrophic for the youth) and inequality.
The toll of exclusion is felt in many other economies across the world. International Monetary Fund economists Ravi Balakrishnan, Chad Steinberg and Murtaza Syed have found that even in Asia, economic growth is now accompanied by rising inequality. In addition, the higher the level of income inequality in a country, the less economic growth contributes to poverty reduction.
The nature of the economic bargain behind American success is also under threat. As many authors including Joseph Stiglitz and Rana Foroohar, have argued, capitalism seems to serve super-elites in a country that once prided itself as the land of opportunity.
The resounding response from mainstream economists has been a prescription of inclusive growth that benefits the poor as much as, if not more than, the wealthy. It is also becoming increasingly clear which government policies favour inclusion. Public investments in infrastructure, early childhood development, quality basic education, a sound social safety net and transparent institutions are likely to boost widespread productivity.