The politics of being really, really rich: (Part 1) An economic apartheid

In an article for The Atlantic, Chrystia Freeland talks about the new super elite and how America (and perhaps the world) may already be a plutonomy, where “the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.” While not entirely convinced on the later two parts of that statement (blame the eternal rose tinge of the optimist’s mind), the first is certainly true. The rich the world over do hold a disproportionate amount of political sway. If a plutonomy is in deed the current (or near-future) state of global politics, herein lies the rub: it renders untrue one of the core arguments in the fight for social justice and equality, that the fate of the rich is inextricably linked to that of the poor.

It is estimated that the American 2010 mid-term elections cost US$4 billion. That’s a mind-numbing sum to you and me but for the super rich, the ones who in Ms Freeland’s article say (with no hint of irony) “20 [million] is really 10 after taxes”, US$4 billion is a half a day’s work.

We don’t have a complete picture of election spending in South Africa – only information on public funding of political parties is required to be disclosed. But we do know that in the 12 months leading up to the 2009 national elections, the Independent Electoral Commission, tasked with allocating and disbursing election funding from the public kitty, paid out almost R90 million (approximately US$12.8 million) to 19 political parties based on their representation in the National Assembly and provincial legislatures. The ANC received R61.1 million and the Democratic Alliance, the official opposition, received just R10.5 million, however, based on the spending of both it is clear that private funding does find its way into their coffers.

Campaigning for the 2009 elections, the ANC spent R200 million, most of which it says it raised from selling paraphernalia. Now I fail to see how that’s even possible unless of course they were selling their custom leather jackets or trademark black, green and gold flags for R20 million a pop. The truth is, some of the funds came from the ANC’s own investments (of which it has plenty) and the rest from private donations from local and foreign (possibly mostly Chinese?) sources. Without information on these private donations, we’re left to educated conjecture to answer our questions. The majority of the US$4 billion spent on the mid-terms came from corporations, rich and super-rich individuals, and advocacy groups, so it stands to reason that the same possibly held true for the R200 million spent by the ANC on the 2009 election campaign.

Sure, there is nothing to suggest that this private funding came with strings attached, but in my eight long years as an auditor, not once did I ever come across an exchange of funds without strings attached. And further yet, there’s nothing to suggest that any conditions, if they exist, are contrary to the interest of the (as in the ANC’s case) 11.7 million people who voted for the party – except of course there is. If strings exist (and I am saying they do), they will almost always be contrary to the election manifesto/policies by which parties and politicians are elected to office, otherwise there would be no reason to make the private donation in the first place (at least not at the disproportionate levels we see being made currently) other than to subvert the said manifesto/policies.

So there it is. The super rich have most of the money and have used it to purchase significant political power, and thanks to globalisation, this applies to developed and developing country alike. The fate of the super rich, is well and truly set apart from that of everybody else, like an economic apartheid of sorts. What links us now is but a strand of common humanity and the fact that we occupying the same hunk of rock, third from the sun.

Is this then enough then to convince the super rich that social justice and equality are worthy pursuits? Is their cooperation even needed to achieve social justice and equality? I will attempt to answer this in part 2 to this post.

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Further reading:

• Kevin Bloom also discusses the same The Atlantic article in the Daily Maverick, siting Thabo Mbeki’s “two nations” speech.
• Who funds who? A comprehensive resource on the private funding of South African political parties
• 6 August 2010 submission to parliament by Lance Greyling of the Independent Democrats: Private Members Bill to Regulate Private Political Party Funding