 Good afternoon everyone. My name is Mashuru Masuta Ramudle. I would like to welcome you all to the fifth of sixth online policy dialogues as part of the Southern Africa Tours Inclusive Economic Development Essay Tide Programme Research into Policy Series. Essay Tide is a collaborative research policymaking and capacity building partnership between the National Treasury, UNU-Wider, the South African Revenue Services, the Department of Planning, Monitoring and Evaluation, the Department of Trade, Industry and Competition, Trade and Industry Policy Strategies, the International Food Policy Research Institute and the European Union. The programme also includes a number of local and international universities and the work of Essay Tide has been generously supported by funding from the EU to which we are very, very grateful for the support. Since its inception in 2017, the programme's goal is improved economic research for informed evidence-based policy to promote inclusive growth in South Africa and the region. It is a result of a unique collaboration between local and international officials and experts under six work streams, mainly rather namely enterprise development, public revenue, macro-modelling, inequality, climate and energy and regional growth. You are all able to access all the research that's been done over the past three years by the team at Essay Tide on the Essay Tide website. And today's dialogue really is hosted under the workstream macroeconomic modelling and we will seek to unpack and discuss the macroeconomic aspects of South Africa's high inequality. We will begin by a synthesis of research findings produced under the macroeconomic modelling workstream. This will be delivered by Rob Davies, economist and non-resident senior research fellow at UNU Wider. And to our audience, a very warm welcome to you and we do encourage you today to be part of a conversation by writing your questions in the chat box or alternatively you can raise your hand to which all our panellists this afternoon will respond to any questions that you might like to post to them. So Rob, we'll give it over to you for that synthesis presentation. Thank you. We can't hear you Rob. Sorry for that. I'm going to give you a quick run through of the macroeconomic modelling work that we've been doing under work streams. I'll take you through some of the papers that have been published under this workstream and then get into some of the few of the things we've learned from this work. So workstream three works with the all three units in economic policy in the national treasury modelling and forecasting micro and macro policy and with a budget office. And the aim is to strengthen macroeconomic policy formulation. There's a bias in our work towards the use of appropriate models, but it's not the only focus that the workers have. So like the other work streams in SA Tide, we've worked through training, direct support to the national treasury and communications and research. Let me take you through the first two of those very quickly. So in the training and support we've run short courses, not only for modelling and forecasting stuff, but for economic policy and in fact for other divisions, ministries in the South African government, such as the National Planning Commission and also Saab. These courses have been on economic modelling, economy-wide modelling and we've run courses on econometrics. We've also had some round table discussions with staff on recent developments in macroeconomics. We've had some of the staff undertake an online course in the economy-wide modelling that we developed. There's been the Young Scholars Program which has brought in people doing postgraduate work at South African universities to present their work, to get some feedback from experts and eventually to publish papers under the SA Tide banner. We've also, and this is not the same as other work streams, we've also provided some support to Treasury, hiring some staff to not only train in forecasting and economy-wide modelling, but also to advise staff on how to do that and on the actual modelling they do. I want to mainly focus on the research that we've sponsored. We've published by my account 42 working papers. There's one technical paper and a number of policy briefs. These papers have involved 64 different authors from both inside and outside Treasury and inside and outside other branches of government and also South Africans and non-South Africans. These projects have been selected by a number of different mechanisms. We encourage NT staff to submit proposals. We help them to develop proposals. An important part of the work we're doing, we think of as learning by research as the capacity-building work that we do. In these papers, which are available, we've thought of the staff with mentors, not staff as researchers on projects, so the staff being responsible for their own work. We've also put out several calls for papers which have solicited some of the work to be published. We've also directly commissioned papers from experts on topics requested by economic policy. There are many topics. I won't go through them all, but you can look at the table. A brief thing with fiscal policy, a number of different papers, monetary policy, both papers that are directly dealing with monetary policy, but also papers that are filling in aspects or assessing aspects of monetary policy. We've also published papers that work on labour markets. An important part of macroeconomics is what's happening to employment and unemployment in the economy. We've published a number of papers on labour markets. Some of these papers, looking back at experiences, other papers, such as the one by Dirk van Sevente and myself, are looking forward into what technology is going to do in the future. Then there are a bunch of miscellaneous papers, some of which I've listed here. These, as I say, were requested by Treasury for because they needed insights into this sort of work. Finally, the group of papers, which we could think of as technical data-driven papers, so the ones by, for example, Mancoba and Chilaca, Carla and Lawrence Harris, is looking at a specific issue, but it's a fairly technical investigation of the information you can get from yield spades. The paper on machine learning is one of our young scholars' papers out of her master's thesis. Finally, we've actually done some papers, which I'll talk about later, on COVID, since people are interested in that as the topic of the moment. So there's a whole lot of papers. Obviously, I can't do justice to all of the findings. I encourage people to go on to the asset-eyed website and to read the papers peruse them. I'm going to just talk on three areas if I have time. Macro-economic policy and inequality, which is the topic of this particular webinar. I'll say something about what we've learned about fiscal multipliers, and if I have time, I'll say something about COVID. I should at this point say, these are my personal interpretations, and no one can blame either Treasury or the researchers for any mistakes I make. Don't represent Treasury reviews. So in terms of research findings on macro-economic policy and inequality, the inequality is scientifically the biggest problem. The most salient structural feature. It's been high from apartheid, but it's continued to be high and hasn't changed very much. Of course, there are issues we can discuss about how we measure inequality and so on, but I won't go into that here. This concern with inequality runs through a lot of our papers. It's actually a thread that ties all of the papers together. Some of our papers deal explicitly with macro-economic policies and inequality, and some of them provide information about the particular channels through which it may work. Obviously, macro-economic policies directly impact inequality. Some of these papers show how interest rates have a differential impact on small firms, large firms, how interest rates impact consumption, which has an impact on inequality and so on. But inequality also influences the responses to and effectiveness of macro-economic policies. So understanding both of these links, both directions of these links is an important part of formulating economic policy. A quick finding on this, just to raise something that maybe will provide some discussion. In terms of scientific monarchy and fiscal policies, in terms of, in their own terms, have been relatively successful. They've been aiming at keeping down inflation at fiscal property, relatively stable exchange rates and so on. By those measures being relatively successful, but by bigger measure, the economy's performance over the past decade suggests that the policies haven't addressed the structural constraints on getting growth, employment and so on. Traditionally, fiscal and monetary policies in economics are not the tools designed to deal with these issues. The normal view, and I hesitate to talk about the structural adjustment, but I will. The normal view now, except by many politicians and economists, is that macro-economic policy should be providing a stable framework in which micro-economic measures to change structures can take place. However, the new economic thinking that we're seeing suggests that we should be incorporating these considerations, not just the considerations of what the impacts may be on poor groups, but considerations on how effective monetary policy and fiscal policy can be, that we should incorporate that into our macro-economic policy. Here I refer you to the Oxford Review of Economic Policy, several issues, which we had discussions around within Treasury as part of our training program. So my conclusion on this, and I think we'll have more debate about this, would be that Workstream 3 has made progress on moving into this new field, but it's still an ongoing issue. It's an unfinished agenda, and that raises in my mind something that I would like to ask policymakers about, the extent to which we should be, how innovative can we be in the models and the thinking that we use in formulating macro-economic policy. If it's highly experimental thought, it may be dangerous to adopt it too soon. Let me say something quickly about fiscal multipliers. Treasury has a great interest in fiscal multipliers, the impact of the budget on aggregate performance of the economy. Many of our papers focused on this directly and indirectly. The estimates coming out of these papers varied considerably from in one paper finding less than one. So one ran spent by government, increase in government spending led to decline in GDP to plus three or three or more. This variation, one could say, well, if there's such a variation, then policymakers should pick the one they like most and use that if you get such contradictory results, it seems like anything goes. However, the differences in this, the lesson, the differences come from the differences in the state of the economy when the multipliers made it. And also because the models assume different things about the feedback and constraint mechanisms. Some of our models incorporated financial measures, some of them incorporated monetary policy directly as a response to fiscal policy and so on. And the lesson from that is we shouldn't talk about the multiplier in South Africa. The multiplier is not a structural constant. It's contingent on many things and if we want to use that multiply, we need to understand what are the contingent influences and and and what the state of those contingent influences are at the time we were using the multiplier. Let me finally say something about covert. We did some work and I wanted to mention this it wasn't all under essay type, but it started under essay type. We were able to do it very quickly back in April last year to do something on looking at what the impact of covert would likely be on the economy. And we were able to do that quickly because of all of the work that have been done previously under essay type of building up the tools for for looking at this. The message we've done a subsequent paper on looking at recovery options and the broad message I would take out of the key message is that the recovery, the impact was very uneven. The recovery it's been surprisingly rapid looking at the data in aggregate terms but it's, it's also very uneven it's uneven across sectors, it's uneven across income groups, and so on. What are the surprising given the poor performance of the economy before the pandemic, given the poor shape that the economy was in before the pandemic we would have expected, much less resilience and rebound. In part we find in our research that that rapidity is because of the intervention through through the grants, topping up of grants and and the socially social relief of distress grants that are into intervened. There have been a lot of criticisms on the grants and so on and they may well be valid but from our point of view. A big lesson is that South Africa was able to use this mechanism, both to protect people vulnerable people and to stimulate the economy, because it already had the infrastructure for distributing grants. That's an important lesson that it wasn't set up to protect from pandemics or shocks like this, but it did provide an instrument that many other African countries and other countries don't have. Our conclusion from from that work is that these, when we look at alternative financing financing through borrowing financing through increased taxes or reduced expenditure elsewhere, it leads us to say that the the financing the grants through some form of borrowing should probably be continued in the near future particularly as we don't know what the third wave of the of the COVID is going to do. Let me stop there. Thank you very much Rob for the insightful presentation and all the good work that you're doing there at SA Tide. So one question for me, just to wrap up all the good work that's been done at SA Tide. From your perspective, what are the three or four principle lessons from the SA Tide macroeconomic modeling work stream. This is a question I'd like to ask to a lot of the work stream leaders on these dialogues just to get their thoughts on the four or three principle lessons from the different work streams. Okay. Sometimes one gets too close to the trees to see the wood and being involved in many of these projects and assessing them. I find it very difficult to take to draw the key lesson you know what what what would I tweet about work stream three. I would, I would say that you know the material on multipliers. I find very interesting and very thought provoking this this notion that you know we often bandy about the word multiply as economists or policymakers and the notion of how important the the context within which we we thinking that is extremely important. I actually think moving forward, we should have a round table discussion with the people who are coming up with different results to try and get a better handle on exactly what multipliers we should be using and and when then that was one of the things. I'm afraid that many that you say to three lessons. One of the lessons I have is not so much essay type but a frustration that I have in this. We do a lot of training and capacity building and the capacity is. I like to think of us as capacity enhancing because the the people who we working with are extremely good and extremely well well grounded and willing to learn hard working. And one of the frustrations that I found it from a from the top in is they also highly overworked saying saying to a young researcher in the Treasury, sorry, not young researcher young person in the Treasury, you've got to produce a paper. We're going to train you through this is just adding to the load and one of one of the things I would like to like to get us thinking about it's how how well it's possible how easy it would be or how we could better train people. It's hard to find time for them to do that. That's not a lesson from work stream three I think we all get that and it's a lesson that the people higher up in Treasury understand fully but trying to find a better mechanism for keeping people up to date. So that would be that's one of my takeaways from the whole process. I'm not sure what what other things I do and maybe, maybe my colleagues can add to that. Perfectly fun thank you so much Rob so we've received some questions in the chat box but I want to introduce our panels before we tackle any questions in the chat box. And I do joining us this afternoon is the Deputy Governor of the South African Reserve Bank the CEO of the Peridential Authority and a member of the Monetary Policy Committee. We're also joined by Dr Serena Moreno essay tied researcher and sub fellow. She's also a member of use UCL where she lectures on macroeconomics and other subjects a very good afternoon to you and thank you so much for joining us this afternoon so I want to get your thoughts on the work that essay tied has been doing Rob has given us a Vincent's presentation. What are some of your takeouts and I'll start off with you Dr Serena on your thoughts on what Rob has presented to us today. Thank you Masudu and thank you for having me thank you Rob for the great presentation actually I don't know if I can add anything about these great synthesis because he made such a it was such a hard task in in 10 minutes. As I said it was a lot of papers what I cannot personally as a researcher of the essay tied project is that the capacity announcing the Rob was mentioning is really true. And I experienced it on my on my skin because he gave me the opportunity to, to, to research in South Africa to, to improve my, my research skills and actually, you know, the research projects, they are not over with the essay tied because research is a lot of interviews and so I think like the one of one of the best thing of the of the whole thing is that I will continue on the same projects and they will improve the this on the same field. And then I have is based on the contents, particularly referring to the discussion topic today which is my economic policy and inequality. Maybe I should expand on what Rob was saying. Because I agree with with him when saying that monetary policy in a classical sense in a standard sense is told of as a stabilization tool the main purpose of my economic policy stabilization of economic situations business cycles. And we should also reward both the SARB and the National Treasury for having done a great job in South Africa because inflation targeting on one side has been able to reduce and to stabilize inflation which is a great gain for poor households in South Africa let's remember that inflation is really detrimental if you are poor, because the proportion of income that you consume is very high you rely on cash on non indexed grants. And so that has been really benefiting poor households and individuals in South Africa on the other side. I was mentioning the grants infrastructure that has been developed in the post apartheid regime is really redistributing income and wealth in South Africa, especially income I would say. So it's inequality reducing and very effective. Maybe the question that I would like to pose in a kind of thought provoking way is, as we've done, are we done with my economic policy and inequality in South Africa, have my economic policymakers, then everything possible in their hands to tackle inequality. Because if we remain on this classical standard assumptions, then maybe it's all done because monitoring fiscal policy they have certain limits and they've done already a great job. But as Rob was saying, probably we should jump on this new horse of new economic thinking. Maybe we are lucky enough to, to experience the witness this rethinking of my economic policy that came out of the global financial crisis, whereby inequality and the terogeneous effects of my economic policy are acknowledged and give another maybe an extraordinary kind of role to my economic policy. So what I want to say is that maybe today we should reframe the discussion about my economic policy by thinking that income and wealth inequality in South Africa are spectacularly high. And, but of course they are problems with the solution, because if they are problems, there must be a solution. So maybe we should ask my economics to do an extraordinary work to tackle inequality. So I would like the discussion to be optimistic in this sense. Thank you. Thank you so much, Dr Serena. We've got deputy governor. It's your turn. Thank you so much, and thank you, Rob and Serena. Let me start off by complimenting the UNU wider team and SA died. It's a fantastic program. I can't think of a single research initiative in South Africa that is as relevant to policymakers as in-depth and that contributes towards capacity building in such an organized and structured way. So well done to the team and congratulations. I'm going to, and I've really enjoyed Rob's synthesis and I've read several of the papers. I'm going to, I guess, take the audience backwards, right? Why did we have the economic, the macroeconomic policies that we have? You know, most of us came out of the liberation movement. We came from a sort of a left background. How come we implemented the macroeconomic policies that we have? And are they pro-poor and are they good for reducing inequality? So let me take a step back. Our starting assumption since 1994 is that South Africa is essentially a small open economy with a low savings rate. That means two things that one is we're reliant on foreign capital to supplement our savings needs and that means that we're reliant on the global economy to supplement our savings needs, right? And that means that we've got to run certain macroeconomic policies that are able to attract foreign capital, right? That introduces a huge set of constraints in one sense. It means you've got to worry about what foreign investors think. You've got to worry about what rating agencies think. Now, why have we done that? Essentially, we've done that because 1994, South Africa had a very low savings rate, 15%, 16% of GDP. It's barely moved. It probably went up to about 18, 19 at the high point, but not much more than that. And if we want to genuinely transform the structure of the South African economy, you need much higher levels of investment. You need investment levels of somewhere between 25 and 30%, which essentially means you're reliant on foreign capital. And so a lot of the macroeconomic policies have, in their intent have been to raise the growth level, raise the potential growth level, be able to attract long-term foreign capital, raise the investment level so that you could tackle the unemployment challenge, you could tackle the poverty challenge. Have we been spectacularly successful? No. I think that Serena's right macroeconomic policy has played a positive stabilization role. There's no doubt about it. But I don't think that the combination of macro policies, social policies, micro policies have essentially allowed for the structure of the economy to change. We still have a population where educational standards are probably mid-ranking on the African continent, where it should be on top. We still have an institutional structure where cost of production are high, poor tariffs are high, electricity costs are relatively high, transportation costs are relatively high, telecoms costs are relatively high. So all of these areas, we have essentially what I would argue are microeconomic blockages to higher levels of investment and lower cost structure, so that you can get growth and investment going, which would impact on poverty and inequality. And I would conclude by saying that I think in general, macro policies have been positive for growth. In general, they've been positive to tackle inequality, but they've certainly not been enough. They've certainly not been successful when you take a combination of macro and micro policies in tackling the level of inequality that we have. So I'm going to leave it there, Masjida, and see what other people think. Thank you very much, Kuben, and to our audience members. We do encourage you to be part of the conversation by writing your questions in the chat box or raising your hand so that the panelists can respond to any questions that you might have for them this afternoon. We do have a question in the chat box. It's two questions. This is from Maria Audendahl. The first question, I think this will really be directed to Rob. Did any of the research examine the possibility of a big rather than the current patchwork grants? If not, isn't this something on which work should be done? So we'll just respond to that question and then we'll come to the second question on fiscal multipliers. Let me just pose the question. I think this one is pointed to Serena. Perhaps a big in the form of investment is people that could produce better fiscal multipliers in brackets if I've understood the multiplier concept correctly. Thanks, Rob. Thank you. Marie, the answer to your, the direct answer to your question is no, we didn't. And yes, we should. You know, we should be doing something on it. But I will say we did have, we did have work which in a way is going on the patchwork that you're talking about some of the, the subsidies to youth employment and so on. And that's one of those issues. But in a, in a program that preceded essay tide, sponsored by, by Union wider with, with treasury, the Union wider actually brought a leading proponent of not big but something related. The basic income share which I actually think is a better concept but they brought them out on a lecture tour. In one week gave six lectures at the Reserve Bank at Treasury at UCT and vits and tips. He's created enormous amount of interest and excitement and no follow up. As far as I can tell talking to the people who were going to make things with him. Nothing has happened, although they were incredibly excited by it. You know, we've tried that but we should be doing more on it. I don't know if Serena wants to talk about the multiple I think those issues can be there but Serena why don't you take it over. So, yeah, of course we can find ways to increase the fiscal multiplier, which means how to make government spending effective for the real economy and so the GDP but also employment consumption investment and so on so forth. The research that we have started with the essay type program points towards the direction that is to identify the ways which are better in terms of multiply their effects on the South African economy. You're right when saying what about investment and investment on the people. One of the results of my own paper because unfortunately I can't remember every paper out there. But one of the results which is in line with the existing literature is that increase investment, increase public investment rather than increase public consumption as a higher multiplier effect. And so this question I think it relates to the kind of growth that South Africa has been pursuing in the last decade. And probably my answer should also refer to what Kuban was saying. The macroeconomic policy has been at least for a while able to stimulate growth at good levels in South Africa, but it's also true and we shouldn't forget that this kind of growth has been biased towards high skilled service financial sectors that take apart the majority of the population in South Africa. So, this means that even the investment in education in health infrastructure that the government has undertaken in the last decades have been a kind of dead end, because if on one side on average is now on the secondary level. These people are still not enough for the very growing sector of South Africa, which are the service or the financial sector while agriculture mining and especially manufacturing, which have on one side the potential to compete globally if structured appropriately. And on the other side, the very important potential to include and to embrace low and medium skilled jobs. These sectors have been deindustrialized by the South African economy and are now declining. So, what I want to say is that unfortunately, just to reiterate the point made in the question, investment in education in South Africa has increased quite a lot and like the results are evident are out there, but they come in contrast with these with the structural tendencies of the economy, such as the service led and financial growth. Thank you. I hope I answered. Thank you very much, Serena. We've got another question in the chat box. This is from Michael Sacks. He's saying, isn't it time we turned to Ben's argument on its head. Instead of seeing capital inflows as the answer to low domestic savings, we see waves of capital inflows and our flows in commodity dependent small open economy with an uber globalized market as a fundamental cause of macroeconomic instability in South Africa. And the central development problem that macroeconomic policy must contribute to. And we've also got another question to come in. This is from Zinzi Parla. She's saying that why doesn't macroeconomic policy try and focus more on increasing the savings rather than alongside focusing mainly on attracting foreign investment. So I think that's a secondary question. I think those two questions or also comment from Michael Sacks, who Ben can respond to before we carry on. Thank you. Oh, thanks for that. I'm not clear what Michael is asking right so what he's essentially saying is, we've got a choice how open do we allow our capital markets to be. We can allow free inflow and outflow and you know they're varying degrees to how open you can allow your capital markets to be our capital markets are relatively open by international by developing country standards. We've got very little exchange control restrictions on non residents so capital can flow in and can flow out. He's saying, you know, let's turn that argument on its head. Aren't we getting too much capital inflows at the moment. And isn't that just going to a small group of elite rent seekers effectively. I would go back to that on average. Right. In general, we've got a low savings rate. It might rise when commodity prices are high, but it's still low. We might run a current account surplus as we're doing now but for much of the last 25 30 years we've run a current account deficit. So we are reliant on foreign capital. How that capital is used how that capital is deployed is largely a function of public policies largely a function of fiscal policy, largely a function of tax and spend policies, largely a function of the incentive structures for investment in the economy. I equate capital flows with rain. Right. You can get too little and you can get too much. If you get too much. Do you have the dams do you have the ability to store do you have the ability to use wisely. If you don't have the dams if you don't have the irrigation infrastructure then yes you can get too much. And yes, it can rain and it can be, it can be wasted. The commodity boom is effectively when it rains and rains heavily. I think the question is not to ask well, you know, can't we aren't we getting too much rain and is it going to the wrong people. I would say what is the question, you know, do you have the structures in the economy to be able to manage that. As akin to a dam if you're a farmer, and you manage that. And as a small open economy, you do get capital inflows you do get capital outflows as a farmer would know there are times when rainfall is high and rainfall is low. And it's about the infrastructure that you have to be able to use that productively on the question of the basic income grant. I've got no ideological objection to a basic income grant, but I do think as a country we've got certain choices. I would like to live in a country with a basic income grant I would like to live in a country with free university education. I'd like to live in a country with a national health insurance system. I'd like to live in a country with a well resourced higher education system a well resourced policing system. I can't afford all of that. And so you've got to make some choices. When we significantly increased funding for higher education to accommodate the fees most fall campaign, those budget cuts mainly came from school education. Right. When we significantly increased the welfare grants in the late 90s when we extended child support grant from six up to 18, those cuts effectively came from school education. And to a certain extent the health system. And now, you know, is that the most sensible way of spending our money. I'm not saying that a basic income grant is a bad idea. I'm saying that there are choices. The first choice as a country is how much do you invest for tomorrow relative to consumption for today. And is a basic income grant contributing to investing for tomorrow, as opposed to consumption today that's the first choice you have and it's not an either or the second choice you have is when you make those investments. Is it in human capital is it in young children is it in university students is it in roads is in factories is it in power stations those are choices, public policy choices. Unfortunately, you know, whether no matter how you cut the cake they are trade offs here and and I think, in some ways, our inability to make those right trade offs has become a problem. Thank you very much. And we had a secondary question from Zenzi but I see Serena has given her a link to a paper that she can follow. I'm not sure whether she still wants somebody or the panel to respond to the question but let me pose it and then we will take it from there. She's saying that she's got a more general question for the panel to what degree is macro modeling moving to being more gen more gender way away more gender way. So I'm not sure whether Serena needs to want to respond to that question or whether the link that you provided to Zenzi will be sufficient. I'm really not an expert. I've just been to some conferences and and dialogue like like this but yeah this is a great reference. Marani is a professor at the University of Greenwich, if I'm right. And it's about just the only thing that I can say is this is an aspect which is part of the reform in macroeconomic policy think microeconomic thinking. So yeah the gender gaps wage gaps and also the non paid work made by female agents in the economy is to be taken into consideration this trend of the literature tries to address the issue. Thank you. Thank you very much. We'll move on to a question by Kelvin ng any reason why did we not loosen monetary policy earlier when the country was headed into a back to back financial recession from 2017 to 2019. That would have helped business confidence and therefore employment. I was going to say that as a Zimbabwe and I'm very skeptical about losing money money too much. We've had some bad experiences with it. Yeah. And they were bad for the poor more than the rich. You know, I guess, I'm not sure whether you're able to, whether you permitted to answer that. I will. I will. I think the short issue is why were we in a recession in 2017 to 2019. Was it because of tight macro policy. There's something else. Right. My reading of the situation and you can disagree is that the growth slow down from 2015 2014 2015 is two thirds domestically induced and one third internationally induced. What happened internationally commodity prices fell. Most commodity indices were peaked around May 2013 2014. The US had the taper tantrum financial conditions started to tighten globally and emerging markets had a really rough ride, particularly commodity exporters non oil commodity exporters Brazil had their deepest recession even deeper than the Great Depression. During that period Russia had a significant economic recession, even well run emerging markets like Chile had sort of people on the streets. You know the barricades were burning a significant macroeconomic strife in the country. In my view, those global factors explain around one third of the loads growth slowdown since 2013 2014, but two thirds of the growth slowdown is entirely domestically induced. It was the fact that we've spent 350 billion round to build two power stations that still don't work. It's the fact that you had government department after government department destroyed by rampant corruption. Right. It is because you had cost escalations in almost everything. I worked at the Treasury up until 2010 it used to cost us about 34 million round to build a standard school in in a township. Today cost 150 million round to build the same school. Now with that level and it's not just corruption it's institutional failing you lose your skilled people you lose your engineers you kick out the good people from the public service. And you can't deliver the recent example of clover dairy closing their plant in is it Liechtenberg or Leidenberg because they just cannot get clean water from the municipality. It's a travesty 2000 people will lose their jobs. There's no politician saying hey I'm not a minute why can't these why isn't the municipality delivering. So my view is that the growth slowdown has been entirely domestically induced and it's got very little to do with macroeconomic policy. And it would have been inappropriate for macroeconomic policy on its own to begin to respond to that kind of an induced recession. That's my narrow answer to that question. Thanks. Thank you very much. And I think we should go back to a point that Rob made during his presentation he said inequality is South Africa's biggest problem and he opposed a question which I'd like to pose back to him is how do we measure inequality. Thank you. I think that's a question that you should pose to a different work stream. We have a turning the tide on inequalities. One of the work streams of essay tide. Able headed by Murray labrant and he's much better place to answer. For our purposes here in this week, we're just taking a very basic thing we know it's unequal. And whether we measure it by any coefficients or I prefer a Palmer ratio which really emphasize the extremes. We know it's it's unequal and and I don't think we should be get done to Bogdan get to Bogdan in this or that measure is right for you. We know it's bad. But but I think it raises some if I if I can throw a question back out of it. You know the suggestions here. I agree with, I agree with everyone. I agree with, I agree with Michael on these things. You know that we need a new way of thinking about the macroeconomics, I think, you know, could bend the argument I think is right. But in a sense, he's pushing a, he's suggesting. You're operating in in economic terms you're operating a second best macroeconomic policy, given the constraints of microeconomics imposed by the microeconomic packages. This is the best we can do. And to some extent. I agree with that. And you've got to deal with the world as it is. But that's a very depressing thought. You know, and the question is how do you marshal that thing. The things around the economic blockages, the microeconomic blockages, how those Marshall, and maybe, you know, as I said, maybe traditional macroeconomics is right. Not just traditional mainstream things in Brazil they had the hyperinflation of a badly functioning economy. He sorted out the macroeconomics. And even when Lula came to came to power, he kept the same macro policies going saying we can't let it get out of hand. So maybe that's the best treasury can do and Saab is keep things stable and put the pressure on on the people in charge of macro policy. Maybe we're sorry in charge of micro policy, maybe micro policy. Maybe there's too much micro policy, maybe the, you know, certainly I see from my experience in Zimbabwe. When you give a ministry a policy to implement it becomes a controlling mechanism rather than a facilitating mechanism. Maybe we need to be investigating that maybe then needs to be a micro equivalent of essay tide. I'm sorry and I just say in response to something Gwyn said, you know, we don't want to get into debates around big here but but the my colleague and friend who came out to give these lectures. His point and he's a Norwegian and based on Norwegian and Scandinavian experiences, his point about things like big is not that you can't afford them, but that you can't afford not to do them in a country like South Africa. It's really important if you want to tackle these things. That's a debate we could have at a different time. Thank you very much Robin and also part of the dialogue that we are having today is about the relationship between the labor market conditions and inequality. Is that something that we could perhaps explore now that we've explored a lot of the macroeconomics but really talking to the labor market conditions and inequality. Serena, you wrote a paper on this, didn't you? Well, my paper actually is not about the labor market but it's about monetary policy affecting inequality through the labor market, which means which partly answers your question which is about the link between macroeconomic policy and inequality as we said already inequality in South Africa is driven by the labor market so even wealth inequality is the response of labor market inequality. And these polarization, these very severe segmentation, which means basically we have in South Africa there are three groups of workers or even unemployed. So one is the dominant high wage well connected to the modern sectors of labor and production. The second is this marginal worker, which whose demand is very, very low and supply very high. And finally, people who are completely detached from formal labor markets because they live in rural areas as a legacy of special inequality from apartheid. So these also reconnects to what I was trying to say in before because I agree with Rob saying that monetary policy should just think about stabilization is great but also depressing on the other side and if inequality in South Africa is so extraordinary then monetary policy should take some responsibility. Even if this responsibility is limited to cooperate with with with microeconomic policy makers, but in my view, first of all, there's still space for fiscal redistribution. Well, tax in South Africa doesn't exist, if I'm right. It exists in Italy. It doesn't exist in South Africa where the genie index for wealth inequality is 0.95 at least. So this means that basically one to 5% of the population called everything, which to me is crazy. And I think to everyone else in this room. And then the other way in which microeconomic policy can interact with inequality is actually to find alternative ways to make a structural change. I don't know if this can sound maybe naive or maybe completely insane. But while studying and researching a little bit for this policy dialogue. I was thinking that many central banks in the world are now thinking of balance sheets, operations, not sterilized operation, so asset purchase and sales to decrease climate related risks in the financial sector. So why can't a central bank do something similar to promote growth in those sectors that can promote employment for the majority of South Africa that have no tertiary education, no PhDs, no masters. Is it possible through corporate asset purchases that the European Central Bank did something which is not similar. It is not sectoral, I guess. But can we think of something really revolutionary because because I know that it can sound insane. Isn't inequality even more insane than doing nothing. And of course microeconomic policy alone can solve the issue. But you know, building a dialogue and going beyond the lines while maintaining the main priorities is my provocation today. Thank you so much, Serena. I'm not sure if Kuben would like to respond to some of the points that Serena made at this point. But we have come to the end of our dialogue. Is there anything that you'd like to add, Kuben, or you're all right? Look, I think I agree with Serena, the point that she made that micro policy has to go beyond stabilization, it has to contribute towards growth. And I think that there will be a debate about how what should macro do to contribute towards growth. I agree with Rob that, you know, South Africa social security net is an absolutely critical ingredient, both in social stabilization and in growth, in driving growth. I think it was usually positive that we went from two to four percent of GDP in our social security system. That was an important thing. The question I'm raising is whether it's possible to go from four to six percent and still maintain a high amongst the highest level of spending on education in the world as a share of GDP and introduce a national health insurance, etc, etc, etc. I agree with the principle, the theory of a wealth tax. The problem is the design, right? The problem is that there are very, very few countries that have got it right in design. It's really hard to tax wealth when a large share of wealth is not necessarily monetized. You begin to bias aspects of wealth and how do you tax it on an annual basis. And I think Piketty who made a forceful argument for a wealth tax himself has acknowledged that there isn't any wealth tax anywhere in the world because the design issues are quite the technical design issues actually are serious obstacles. What you can do is you can tax income. And if you have fairly high inheritance taxes and estate duties, then you can also prevent people from leaving their children large amounts of money. But again, there are limits to how much you can do this, right? I mean, it is not impossible for people to evade and avoid these kinds of taxes. But yeah, I agree. In principle, South Africa should have a relatively high and steeply progressive tax system. Thanks. And just a comment from Zindzi before we close, she's saying that this may not be very revolutionary, but as Serena speaking, I'm thinking about social bonds very similar to the European green bonds. And I see you shaking your head firstly there as Serena, so you do agree with Zindzi. Yes, I really have nothing more to say because I'm because this was just a thought but just to say that there's space, there can be space. All right. We have come to the end of this afternoon's dialogue. A very big thank you to our panelists Serena, Rob, as well as Kuben for joining us this afternoon and to our audience members. Thank you for being part of the conversation and posing all the questions to the panelists. I hope that the panelists were able to respond to all the questions that you had for us this afternoon. And a very big thank you goes out to our official partners, without whom this would not have been possible. As it's you and you wider the national treaty, the South African Revenue Service, the Department of Planning, Monitoring and Evaluation, the trade and in trade, the department of trade industry and competition trade and industry policy strategies, the International Food Policy Research Institute and most of all, the European Union for the continued commitment and invaluable financial support for this very important program. A very big thank you to everyone and please do look out for our next policy dialogue and don't forget to visit the SA Tide website for more interesting research that has been prepared by the team. Have a lovely afternoon further. Thank you very much. Cheers. Thanks. Thank you. Thank you people. Thanks for attending.