Pravin Gordhan. Picture: AFP PHOTO/MUJAHID SAFODIEN
Pravin Gordhan. Picture: AFP PHOTO/MUJAHID SAFODIEN

WHAT a relief it was to read Linda Ensor’s report in Business Day in which she quoted Finance Minister Pravin Gordhan saying the South African economy is not in recession and not projected to slide into one, whatever the doomsayers may say.

Not to worry, then. If Gordhan says we should take heart from the World Bank’s expectation that the economy will grow between 1.4% and 1.6% a year during the next three years, many of us will grab whatever tenuous tendril of hope is extended as though all that should worry us is that delightfully technical definition of a recession being two successive quarters of economic contraction.

That is, if we permit that an aggregate contraction of 1.5 percentage points over the past 10 years or so does not constitute a disaster, we should not worry about a little contraction or two.

It could mean we are fine, really, though some of us are bothered. Take the personal assistant to the intermediary whose little racket administers for the member (of the Upper Jukskei Flyfishing Collective). When she heard the Royal Bank of Scotland’s admonition to sell everything, she immediately started hedging.

"When the hoi polloi say sell, it means buy. We (we?) must go offshore."

"That would be un-South African," said the member. "Shouldn’t we invest in another retail mall and stock up with baked beans against the doomsayers?"

Which is why the member does not feel quite as upbeat about the economy as Gordhan does. How he feels is a bit like that fellow who offers a car valet service to everyone in the queue at the traffic lights, but flatly ignores the member’s dust mobile. Clearly, some prospects are just clogging up his system.

"Hey," said the member to the valet as he hurried by, "it is in the interest of water conservation you know. Doing my patriotic bit here."

Gordhan’s confidence may be justified in terms of a convenient technical definition, but others, one JM Keynes for instance, are blunter. The term recession gained favour among labour-centred economists as a relatively short period in a business cycle during which economic activity slows, prosperity is halted and unemployment rises — a minor depression, as it were.

Gordhan may be right about his recession outlook for the immediate term, but that is because his assumption about the longer-term business phase is quite wrong. SA is not in that part of a business cycle in which economic activity can slow much more; that is, it is not in any condition to describe a dip steeper than its already precipitous careen. A more accurate assessment would be that the economy is in a state in which workers and machinery remain persistently unemployed; a major depression.

Talk of a recession, therefore, is redundant.

Gordhan should be familiar with these definitions. It is, after all, his employer’s policy to resist labour flexibility and wage cuts against the possibility of lowering consumption and aggregate demand. He knows as well as we all do that SA’s experiment with Keynesian economics has run its course and that we now know no government can assume the role of business, yet it continues to do the same thing while hoping to spin the wreckage it has created into something desirable.

The only way to begin to salvage anything is for Gordhan and the government to admit that the experiment has failed, that for the traffic light valet service the bi-quarterly fluctuations in a deepening depression are irrelevant for as long his potential customers are desperately looking for a rand hedge. It is time for a change.

• Blom is a freelance journalist. He likes to flyfish