Piketty’s Lecture on Inequality in South Africa

Thomas Piketty, the “rock star economist”, was in Soweto, South Africa recently to deliver the 13th annual Nelson Mandela lecture. He spoke about inequality, drawing on his recent best-selling book, Capital in the Twenty First Century but also from his country, France’s experiences in inclusion and welfare reforms since the French Revolution in the 18th century.

It is a very interesting submission, for many reasons. I particularly liked his historical and comparative approach, and his caution in making reference to often-unreliable data on tax returns, wealth and of course inequality.

The talk is topical, and couldn’t have been delivered at a more appropriate time. South Africa, which has the most developed, diversified economy in Africa, is currently the world’s most unequal country in income distribution according to the World Bank’s Gini Index. What is most striking is that 10% of the population control 60-65% of the country’s wealth, compared to 50-55% in Brazil and 40-45% in the United States.

What makes the disparities in South Africa more stark is the racial dimension of it all.  Within the top 5% income earners, 80% is white. Therefore, the white population which comprises 10-15% of the total controls most of the resources, making it much harder to address economic inequality given such a relatively large share of the population, compared to say a “top 1%”. As Piketty mentions, in France, after the French Revolution, it was much easier to address these disparities because with a uniform skin colour “after a couple of generations, you sort of forget who comes from what group”.

The ideas for potential solutions he advances are known to all. They include land reform, a national minimum wage (I find it strange there’s no minimum wage in the country already), increased tax on the wealthy to fund public education, healthcare and  and social welfare, to address the skills gap within the black population. He draws from Europe and North America’s experiences with welfare reforms in the post World War II period.

He also emphasises an oft-ignored aspect of addressing inequalities, implementing these solutions is a politically charged endeavour – the rich and wealthy have to make concessions in their enlightened self interest. Are South African elites ready to tolerate a little discomfort and move beyond the Black Economic Empowerment (BEE) programme? It’s a question yet to be answered. I’ve never been to the country but it seems like there  is a lot of pent-up tension, if the very recent xenophobic riots, the #RhodesMustFall and the #FeesMustFallForAll movements are anything to go by.

His talk is relevant to other economic giants across the continent. Unfortunately the discussion on rising inequalities has barely begun in Nigeria although some of its consequences – rising violent crime, communal conflict and insurgencies – are manifest in certain parts of the country.

There’s also a global dimension to it all, illicit financial flows, tax avoidance and transfer pricing by multinational corporations, the narrowing of economic opportunities and the flow of African migrants to Europe…

Enjoy, it’s 1 hour 30 minutes long.

2 thoughts on “Piketty’s Lecture on Inequality in South Africa

  1. Thanks for putting this here. I think it’s time we dumped our old ‘inequality’ lenses of viewing political and soco-economic problem. Lately, I’ve favoured the word equity more; but not the policy-driven, government-structured, or power-derived/allocated fairness; but the sort of equitable distribution we find in nature itself. It is a bit naive to suppose that, under the current economic order which brazenly advocates the ‘maximization of profit’, there can be any sense of justice in wealth distribution, or that the ‘rich would tolerate a little more discomfort’ – I’d imagine enough to make the rich, poor. A little too naive.

  2. Hi Zainab, asalaam alayk. I am AbdulHamid Adiamoh, one of the many subscribers to your blog and more importantly, to your thoughts. I am also a journalist and publisher of a national newspaper in The Gambia until last year. I am now working on WealthAfrica, a new West Africa focused business magazine and it is for this reason that I write you. I’ll like to respectfully ask that you contribute an article to the inaugural issue which is billed for December. The choice of topic is yours and the article could be new or a reworking of some of your old writings. I’ll be pleased to provide detailed information as well as answer any questions you may have regarding the magazine. I await your response.

    Thanks and regards,

    AbdulHamid Adiamoh

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