National Planning Commission on the National Development Plan

The NDP’s observation that “full employment, decent work and sustainable livelihoods” with “improving living standards and … dignified existence for all” can be achieved only if there is a high rate of economic growth, is the core idea, the importance of which cannot be overemphasised. The world’s experience shows conclusively that these are two sides of a coin. Social objectives have never been achieved anywhere without high growth resulting in national prosperity. Conversely, there has never been prosperity without these objectives being advanced. The only confusion that arises in international literature on this point relates to inequality. It is often asserted that inequality tends to increase with prosperity. This is a dangerous illusion, which derives from misleading conceptions of “equality”, on one hand, and a failure to consider enormous improvements in absolute as opposed to relative conditions for lower income groups.

Poverty and inequality 


There is a near universal propensity to speak of the supposed need to eliminate “poverty and inequality”. The Commission echoes this phrase uncritically. Unfortunately the phrase is profoundly flawed and misleading. “Poverty” and “inequality” are often used even and unfortunately in scholarly literature as if they are two sides of a coin. It is suggested that there should be little or any concern with inequality and uncompromised attention paid to alleviating poverty, even if doing so increases inequality.


“Poverty” is a dangerously ambiguous term. To most people it means what has been termed to minimise ambiguity “grinding poverty” or “destitution”. In its other meaning, poverty is purely a relative term, which should enjoy little or no attention in government policy. Millionaires are poor compared to billionaires, and billionaires poor compared to multi-billionaires.  As a relative term, “the poor” in rich countries refer to people who are amongst the wealthiest on earth. The poorest 10 per cent in rich countries would, if they were a separate country, have higher per capita incomes than the richest 10 per cent in poor countries.


There is a destructive tendency in many countries towards obsession with the rich at the expense of concern for the poor. As Abraham Lincoln observed, “You do not help the poor by pulling down the rich”. South Africa has not escaped this destructive tendency. There are passages in the NDP which show that the Commission’s primary concern is the alleviation of poverty – which should rather be referred to as destitution – than with reducing inequality. It is respectfully suggested that relative incomes should be of no concern and the NDP should target only rapidly improving conditions for low-income people regardless of levels of inequality as measured by, for instance, the gini co-efficient to which the NPC refers. It is extremely probable that any policy aimed at reducing inequality will, in the real world, undermine the prospect of eliminating poverty / destitution as envisaged.


The converse is equally true, namely that policies that benefit the poor will also benefit the rich. The idea that wealth accumulation by a few should be discouraged is an unwitting attack on the poor. Fortunately the NDP in all its references to the need for growth, entrepreneurship and incentives, neither states nor implies that wealth per se at the upper end has to be discouraged except to the extent that it calls for a reduction in the gini co-efficient.


Source: Extract from the FMF’s submission to the National Planning Commission on the National Development Plan (NDP)


FMF Policy Bulletin / 2 October 2012

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