The big news this week was about Tourism SA’s proposal to spend just less than R1-billion on a sponsorship deal with the London soccer club Tottenham Hotspur to encourage tourists to visit South Africa. The idea has all kinds of pros and cons which have been exhaustively debated on social media and in the press. But it got me thinking about good ideas by governments.

As I noted earlier this week on a different topic, one of the problems with governments all over the world is that they tend to be dominated by reactive politics. Governments tend to look for the problems and try to fix them, rather than focusing on the successes and trying to do more of them.

We want governments to be bold, but often the peculiarities of being elected to office mean constituents judge performance by what problems the government can fix, not actually doing the good things better. Often problems faced by governments are actually beyond their ability and/or capacity. Good examples are unemployment or inequality, just to cite the most obvious. Government can mitigate, but fix? The net result is a kind of political double-speak in which governments claim to be working on an issue to satisfy the clamouring of the crowd. But at the same time, if they’re honest with themselves, the solution does not lie entirely in their hands, at least in the short term.

This is a huge problem, but an understandable one. Governments are retrospective by nature, and perhaps more so by culture. So what about this question: which governments have bucked the trend and come up with a brilliant idea or ideas?

For me, two stand out. The second prize goes to the Australian government. I don’t think enough people are aware of how that government changed global history by embracing a full-tilt Keynesian response to the global financial crisis in 2008. The epicentre of the crisis was of course the US, and the US response was first and foremost to ensure the survival of its banks. But the Australian government at the time under Labour party leader Kevin Rudd adopted a different approach.

Rudd, famous for his “rule-of-three” summations of government policy, decided to “go early, go hard and go households”. Instead of spending enormous amounts supporting the balance sheets of banks, thereby rewarding the institutions that had caused the crisis, or embarking on huge infrastructure projects which would inevitably take years to get off the ground, the government sent all adult Australians a cheque for A$900. Simple as that.

The payments cost the government $42-billion, and at the time were contrary to the advice of the International Monetary Fund, which was punting infrastructure spending. But they were fast, and they hit the spot. The second round of the Australian stimulus programme did in fact focus on infrastructure and suffered the same problems as other infrastructure projects around the world, including those in South Africa, which were an abject failure.

But the scope of the Rudd government’s idea was simply breathtaking. It was the largest one-off payment in Australia’s history. The result was that in 2009, advanced economies fell into recession, and average GDP contraction was 3.3%. Australia was almost unique among advanced economies, growing by 1.9% that year. It should be noted that Australia was in an excellent position to adopt this policy, since terms of trade were heavily in its favour, and the country was largely debt free.

Rudd’s idea subsequently became part of international economic lore, so much so that when the Covid pandemic hit, almost all first-world countries adopted his approach. The results are still out because the stimulus cheques signed by US presidents Donald Trump and Joe Biden are cited as helping boost the current crisis of high inflation. But there seems little doubt the cheques played a huge role in preventing the world from descending into a long, painful economic downturn.

My first prize goes to the US government for its decision to create the Defense Advanced Research Projects Agency (Darpa). Again, it took a crisis for this to happen, and in this case, it was the launch of the Soviet satellite Sputnik. The central idea of Darpa was to chase wild dreams – moonshots of different kinds.

The things that Darpa can claim at least partial credit for are weather satellites, GPS, drones, stealth technology, voice interfaces, the personal computer, and the internet. That is a pretty awesome list, I think you will agree. Darpa has been so successful, there is now Darpa-E for environmental solutions, and Darpa-H for health solutions, partly initiated because of Darpa’s role in helping create Moderna’s Covid-19 vaccine.

So, of course, there have been plenty of failures that we have heard little about. Look at the list of projects Darpa is investing in now, and frankly, a lot of them are a bit creepy. But the crucial thing here is to note the formula for success, and that, it strikes me, is similar to the logic of venture capital. By focusing on a whole bunch of way-out projects and knowing that many will fail, the whole project can, with luck and good planning, be sustained by the extraordinary success of the very few projects that do succeed.

Anyway, agree or disagree, these two examples serve to underscore a simple truth: governments are capable of grand, successful ideas. And by the way, it’s worth noting that the Hong Kong government has just decided to fund the national airline, Cathay Pacific, by buying and giving away 500,000 airline tickets to lure back tourists. The cost will be about $250-million.

Now let’s do some quick maths. If South Africa, instead of investing R1-billion in a soccer club sponsorship, gave away air tickets worth the same amount as that deal, how many more people would visit South Africa? The Hong Kong government is effectively paying out around $500 per ticket, and the South African cost/ticket would probably be higher. But working at the same rate, would result in a little more than 115,000 visitors to the country and all that currency they’ll bring to spend while they’re here.

Good idea? BM/DM