"Competition, inequality and inclusive growth"
Presented by Joel Netshitenzhe
at the 4th BRICS International Competition Conference,
Durban, 10 - 13 November 2015.
It’s quite apposite that the concluding plenary of this Conference should be on issues of inclusive growth, inequality and competition.
Quite often, in the midst of agonising over macro-economic balances, the very purpose of economics can be missed. The indicators assume a life of their own.
This session reminds us that economics ultimately should be about the people. And the fundamental question of political economy remains: how wealth and income are shared.
Competition policy should also be judged on this basis.
TRENDS IN INEQUALITY
The global dimension
Throughout the world, the issue of social inequality has moved high up the agenda, precisely because the gilded age, to quote Paul Krugman, is once more upon us. The Gini coefficient in the OECD countries is on the rise.
During much of the 20th century, the division of national income between labour and capital owners was essentially constant – but in recent decades the labour share has been declining.
The global economic downturn has somewhat aggravated the situation.
It is also a matter of interest that economic growth and reduction in poverty even on a mass scale such as in China does not necessarily result in the reduction of inequality. And so, special interventions have been introduced at least to lift the floor of the minimum wage.1
Latin America has generated great interest in terms of success in the past 15 years in reducing income inequality. Of course, the sustainability of this in the context of a slowing global economy is a question that continues to exercise the mind.2
The South African experience
What are the major trends in South Africa, particularly since the dawn of democracy? I’ll select just five observations.
One: income poverty has been declining since 1994.3
Two: functional distribution of national income has worsened, with the share of national income resorting to the richest having grown massively4; and the Gini coefficient hovering in the mid to late 0.60s over the past 21 years.