Perspectives of a capitalist on targeting inflation at 3 per cent and on fiscal sustainability in South Africa

Abstract

It is indeed an honour to deliver the Presidential Address in celebration of this biennial conference of the Economic Society of South Africa (ESSA). This conference was planned and is hosted during a worldwide COVID-19 pandemic. One element that is missing at a conference in electronic format is informal discussions among colleagues during tea and lunch breaks. Many research ideas culminating in conference presentations and research publications evolve from such informal discussions.In choosing the title of this Presidential Address, one of my aims is to level the playing field between capitalists and socialists. As people have no hesitation calling themselves socialists, it should similarly be acceptable to call oneself a capitalist. After all, a capitalist is the opposite of a socialist. In calling myself a capitalist, I do not infer that I have a big income or a lot of wealth. I merely confirm that I believe in low or no inflation, small government, minimum regulation and personal responsibility, among others.As socialists will disagree about the role of the government in the economy envisioned by capitalists, it is necessary to foster debate between capitalists (often viewed as the right wing) and socialists (often view as the left wing) about the solutions to South Africa's economic problems. However, I get the impression that debate is impossible because those on the left think that they are right to the exclusion of all others and those on the right has therefore simply left the debate.An Internet search on presidential addresses finds few revelations on the matter. It reveals many presidential addresses but does not reveal much about the protocol to be followed with such addresses, other than when delivered by the President of a country. Dictionary.com (n.d.) describes a presidential address as 'a speech or written statement, usually formal, directed to a particular group of persons'. In the context of presidential addresses, the inauguration speech of President John F. Kennedy on 20 January 1961 is regarded as particularly famous (Kennedy, 1961). I must disappoint you by stating that I have a reasonable expectation that my ESSA Presidential Address will not be as memorable as President Kennedy's speech in 1961. However, I wish to add that I also have a reasonable expectation of not being assassinated some 34 months after this Presidential Address, despite a confession that I am a capitalist at heart. Kennedy spoke from his heart in 1961. The same is true of Prof Milton Friedman's AEA presidential address in 1967 on the 'Role of Monetary Policy', published in 1968 in the American Economic Review (Friedman, 1968), which marked a turning point in the history of macroeconomic research (Mankiw &