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The French economist Thomas Piketty’s visit to South Africa began with some bad luck. Because he did not have two blank pages in his passport, he was not allowed to board his flight from Paris, and he missed the lecture he was due to give at the University of Cape Town. As the audience waited for a video connection to Piketty in Paris to start up, a small but vocal group of student protesters from the Rhodes Must Fall movement—which recently succeeded in its efforts to have a statue of Cecil John Rhodes, the British colonial governor, removed from the campus—briefly took over the stage.
The video connection still wasn’t working, so Murray Leibbrandt, an economics professor at U.C.T. and a leading researcher on inequality in South Africa, gave an ad-hoc presentation of Piketty’s slides. “I wasn’t sure what the punchline was, but it had to be about South Africa, so I thought I would tease out the main points,” he later said. The protesting students left without listening to Piketty’s evidence about inequality, but about half the audience remained. “It was a remarkably South African thing, this type of dialogue,” Leibbrandt said. “We couldn’t have contrived it if we tried.”
Piketty arrived in Johannesburg the next day, in time to give the Nelson Mandela Foundation’s annual lecture in Soweto, the township where Mandela had lived before he was imprisoned. Some two thousand people snaked in lines around the Soweto campus of the University of Johannesburg to get into the hall where Piketty, whose book “Capital in the Twenty-First Century” has sold more than one-and-a-half million copies, was to speak. Local newspapers had described him as “the rock-star economist.” The Mail & Guardian, a Johannesburg weekly, took the analogy further: “It’s almost the equivalent of the Rolling Stones playing at your neighbourhood bar.”
In South Africa, Piketty, whose book chronicles the growing gap in wealth in developed countries, had come to the equivalent of the Hall of Fame. South Africa is the most unequal country in the world. The top ten per cent earn sixty to sixty-five per cent of the income; in the United States, by comparison, their share is forty-five to fifty per cent, and in Europe it is thirty to thirty-five per cent. Even in Brazil, long held to be one of the most unequal countries in the world, the top ten per cent’s share is fifty-five to sixty per cent of income, and falling, Piketty said in the Mandela lecture. “South Africa is really at the top of the class, so to speak.”
It’s no coincidence, then, that Piketty’s book begins with the story of the Marikana massacre, in which police opened fire on striking platinum workers, killing thirty-four, in a bleak mining settlement northwest of Johannesburg in 2012. The miners were demanding that their wages be doubled. “This episode reminds us, if we needed reminding, that the question of what share of output should go to wages and what share to profits—in other words, how should the income from production be divided between labor and capital?—has always been at the heart of distributional conflict,” Piketty writes.
At the U.C.T. lecture, Leibbrandt showed a graph that tracked the income of the top one per cent in South Africa, the United States, and France from 1913 to 2012. It tells an unsurprising story of the years of apartheid, but a rather bleak one of the post-apartheid period. In 1948, when the formal policy of apartheid was enacted, the top one per cent of the population received about twenty-two per cent of income (compared with about nine per cent in France, and eleven per cent in the United States). By 1975, the share for South Africa’s top one per cent had dropped to about ten per cent, where it remained until 1991, still “at world-beatingly high levels,” Leibbrandt told me. But in the twenty years since the demise of apartheid, the top one per cent’s share of income has increased to nearly twenty per cent. The South African shift is “extremely puzzling for all of us,” Piketty told his Soweto audience. This was partly due to international factors beyond South Africa’s control, he said. But it was also partly because “the South African revolution, so to speak, did not deliver as much as one might have expected.”
South African studies confirm this steady rise in inequality. Mike Brown is the operations director for the National Income Dynamics Study, a biannual survey of twenty-eight thousand South Africans. Its graph of income distribution shows a meandering flat line that rises sharply on the right margin, meaning many have little and a few have a lot. “It’s a very bipolar country in terms of haves and have-nots: you have income or you don’t, you have wealth or you don’t, you have education or you don’t, you have health or you don’t. There’s very little middle ground,” Brown told me earlier this year.
Prospects for the post-apartheid generation have not brightened even though South Africa spends almost a fifth of its national budget on education. According to the National Income Dynamics Study, the number of years of schooling has increased substantially for the new generation. South African children now have an average of ten years of education, compared with five to six years for their parents and just three years for their grandparents. But occupational mobility has not changed. If your parent was a domestic worker, you are likely to be one, too—or worse, unemployed. Official statistics put formal unemployment at more than a quarter of the working population. A Brookings Institution report revealed that sixty-three per cent of the South African youth labor force was unemployed, approximately 3.2 million individuals. Since the global international crisis of 2008, the economy has limped along and is now growing at just 1.2 per cent, well below the rate the government estimates is necessary to create new jobs. The high unemployment rate has been identified by Leibbrandt and others as being one of the key drivers of inequality in the country.
South Africa has a fairly progressive and redistributive tax system, according to a World Bank study, and the government supports about sixteen million people with social grants. Most are child support grants claimed by unemployed mothers, according to Ingrid Woolard, a South African economist. The grants are only three hundred and thirty rand a month per child (about twenty-five dollars), but without them, she says, “households wouldn’t be able to survive. They would fragment.” Most of the money is used for food, and better nutrition improves children’s educational chances. “We have found that they reduce grade repetition and that children start school earlier,” Woolard says. The grants have lifted many people out of the absolute poverty of the apartheid era, but have still not broken the stubborn inequality.
Race still plays a major factor in the equation. Piketty told his Soweto audience that eighty per cent of those who are in the top five per cent of the income bracket are white, reflecting much the “same structure of racial inequality that we used to have.”
Among the audience was Eric Miyeni, a black author and filmmaker: “These are statistics wars are made of!” he tweeted. “Change!”
History still sits heavily on South Africa. In his Soweto lecture, Piketty told the audience, “I don’t want to compare the French Revolution with the South African revolution…it’s completely a different context, and in a way the inequality régime that existed under apartheid was much more oppressive and violent than the ancien régime in France. The group that had more rights than the rest of the population, namely the whites, was much bigger. It was not one per cent of the population; it was ten to fifteen per cent, so that’s more difficult to deal with a situation like this than if it’s one per cent. The difference of color of skin is also important because when everybody is white in France, you can sort of forget a couple of generations later who comes from what group, which is more difficult with the color of skin.”
Piketty may have gotten some sense of the ongoing segregation on his brief visit to Johannesburg. He drove through Alexandra township, a dense settlement that is part houses, part shacks, on his way to the upper-middle-class suburb of Rosebank. But as poor as parts of Alexandra are, they are not as bad as some rural areas that are seen by few visitors. The Oxford professor Michael Noble, now based in Cape Town, has measured what he calls multiple indices of deprivation—income, assets, health, and education—across South Africa. The poorest South Africans are in the old apartheid “Bantustans,” largely rural areas where most black people were confined by law under apartheid. They were allowed into urban areas only to work, except under special and hard-to-meet criteria. As a result of this entrenched rural poverty, increasing numbers of people are moving to cities, where they live in vast shanty towns, euphemistically known as “informal settlements,” or in backyard shacks in townships such as Alexandra and Soweto.
Among the measures Piketty suggested in his Soweto lecture to restrain inequality were a national minimum wage, a better public education system, and a wealth tax. The South African government is currently considering a minimum wage, but the trick is how to set it in different sectors so that it does not inadvertently increase inequality through a loss of jobs. Piketty said a national minimum wage could “avoid a situation of extreme exploitation of low-skilled workers, particularly in areas of limited opportunity to move.”
Public education is a conundrum in South Africa. Although it absorbs the second-biggest slice of non-interest expenditure on the budget, the outcomes are poor. Less than half of all children who began school in 2002 actually passed the school-leaving exam in 2013, according to Servaas van der Berg, an economist at the University of Stellenbosch. And South African students perform poorly in math and literacy in comparison with other middle-income countries. More than three-quarters of the Grade Three teachers van der Berg surveyed were not confident their students could give the correct answer to “two times four.”
Yet good education is the key to better jobs, Piketty pointed out. “The quality of public, primary education and junior and secondary education that is available to the most disadvantaged groups in this country is not satisfactory….This should be a national priority.”
His proposal for a wealth tax—albeit small—is, unsurprisingly, not popular among the rich, partly because of a mistrust in the capacity and integrity of government to spend well. But, in the long run, Piketty said in his lecture, it is in the interest of the business community to promote transparency about wealth. “If you refuse transparency, it must be there is something to hide. That’s not good. In order to build trust in a country I think it’s very important to have that kind of transparency about income and wealth dynamics.”
Just before the economist arrived in the country, a Johannesburg-based business magazine, the Financial Mail, asked some C.E.O.s how they felt about his proposals. One, Johann Rupert, who is from one of the richest families in South Africa, told the magazine he was not keen on the idea of a wealth tax. “I give away my salary every year to charity,” he told the magazine. “And I put 130 kids through university every year.…I give away far more than anyone could collect through a wealth tax.”
In his lecture, Piketty countered this view: “It’s very difficult to organize a society where thousands of people just want to decide for themselves how much they want to contribute to the public good.”
After the Soweto lecture, the audience gave Piketty a standing ovation. Outside, in the warm spring evening, young women jostled each other to have their pictures taken with the economist. At the reception, held in an open tent, the red wine served was a 2012 Rupert & Rothschild Vignerons Classique from a South African estate owned jointly by the Rupert family and the descendants of Baron Edmond de Rothschild, of the Rothschild banking dynasty.
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