PRIOR to 1994 persons defined as black did not possess the vote. The majority of people in South Africa were relegated to so-called independent homelands, most did not own land as such, and if they did, were dispossessed in one way or another by a labour system, which imposed a hut tax, drafted labourers onto the mines, and created a migrant population, which eroded both tribe and family, in the process shifting profit from the land, into the hands of the rand-lords and barons.
Some 87% of the land was thus owned by white persons under apartheid and only 13% by black persons. There was no child-care grant to speak of, no disability grant, pensions were skewed in favour of the white folk.
Today we all possess the vote, the social wage comprising child care grant, pensions, disability and veterans grant is growing, more black people own houses and vehicles than ever before and there is unprecedented level of economic activity and inclusion compared to similar periods during apartheid and sanctions.
More needs to be done. The country is beset by a taxation crisis, its fiscus strained by staggering levels of debt and its state-owned enterprises and interventionist strategies weighing heavily on the future outlook for the economy.
The controversial decision to adopt ‘expropriation of land without compensation’, taken at the ANC 54th Congress may seem like a panacea to socialists within the party and a magic bullet to members of the radical left opposition EFF, yet as both leaders of the DA and COPE have rightly pointed out, the constitution expressly forbids depriving citizens of property without compensation.
It is no policy to shout home about when South Africa is rated second on the world misery index after Venezuela, a country whose radical socialist programme the ANC is myopically imitating while under pressure from the far-left. Under Chavez, the country adopted nationalisation and expropriation as the solution to almost every problem, resulting in runaway inflation and a massive drop in living standards, in many respects a similar tragedy to what occurred in Zimbabwe.
Any foreigner listening to the opposition debate following SONA could be forgiven for believing that nothing substantial has changed since the first democratic election. The facts behind the reality of land ownership in South Africa are rather different than they were in 1994.
For starters, the post-apartheid state currently owns 14% of the land in the country , only 79.2% is in private hands.
Between 57-84% of homes owned and fully paid off in the country (depending on tenure) measured over the past year, were black owned, the result of mass state housing becoming available for purchase at low prices.* This is not to say that the relative value of black-owned property versus white-owned property is something to be sneezed at, the value here is still undoubtedly skewed in favour of the white minority.
Likewise equity, when it comes to shares, 30% of the stock on the JSE is either in black hands, or in companies controlled by BEE, with the rest either “white-owned” or under foreign control. An uneven and unequal state of affairs that certainly deserves correcting. The question is how to close the gap?
One need only examine two different models of socialism and their pedigrees to realise the abject lesson. The one form of socialism is more consistent with the British welfare state than the hyperpopulism of Chavez and South Africa under Jacob Zuma, the other more consistent with Cuba and the Soviet Union than the Scandinavian social democracies in which a thriving market economy coexists with welfare as the result.
One cannot have one’s cake and eat it is a popular saying that expresses the problem of two socialisms and not enough time and leeway to adopt or experiment with every socialist idea out there in the marketplace of ideology. The solution to Eskom for instance, isn’t to run the entire country like Eskom, again, our failing SAA and Metrorail systems offer stark reminders why the mantra of ‘jobs for life’, sheltered employment, cronyism, statism and nationalisation merely create unaffordable bureaucracies.
The absence of economic calculation inherent to state bureaucracies has created a fertile bed for corruption and state capture, undoing the damage will of necessity entail frank and honest discussion as to what to do about these utilities. Adopting massive state intervention, without weeding out what has failed, from what works in our mixed economic system, is also not the solution to our countries troubles.
Deregulation, competition, inclusion and participation are far better vectors of growth. I have already proposed the creation of an ‘energy commons‘ and ‘water commons’ in a deregulated environment, as a third way out of the socialism versus capitalism quagmire, the mess in which the bulk sale of services results in no service at all.
Is land ownership all that desirable if it comes at the expense of the social wage, dependent as it is on taxation? If all that one has is land but no access to capital, and no marketplace in which to sell one’s goods, what is the use of radical quick-fixes which merely return productive land over to subsistence agriculture?
Is the breakdown in social cohesion that will invariably result if the state is able to expropriate without compensation, really worth the trouble? White landowners, difficult as it may be, are unlikely to simply give up their land without costly legal battles, resulting in unintended and ancillary conflict. If anything the reality of implementing such a policy, one which would need to define both its victims and its beneficiaries, in terms that are anything but conducive to social cohesion, could make the land reform programme unworkable, at least without a resort to extra-legal and even violent means.
If there is no real security of tenure and the government not the courts is the final arbiter of who owns what — who is defined as ‘unwilling donor and willing recipient’ — what we will have will be no better than what occurred in countless failed economic systems, in which the state not the citizen comes first.
Despite the enormous gap in living standards which certainly need to be rectified (our Gini coefficient marking South Africa as one of the most unequal societies in the world), the Living Standards Measure (LSM) 10 has gone from 5% black in 2004 to 29% black in 2014. This is nothing to be sneezed at in the track record of our so-called ‘mixed economy’ or ‘developmental state’.
Another vector which analysts fail to explore, since it is often politically unpalatable, is the fact that our population has grown from 20 million in 1960 to 52.98 million in 2013, which means we have more than doubled our population in 50 years. For every one job that would have been sufficient to provide an income and a house in 1960, three jobs must be created today.
Time for a four child only policy? Limiting our population over time would do a lot more to boost economic outcomes in the future than dooming generations to a form of land invasion multiplication in which invasions turn the countryside into nothing more than a slum chess board. One has only to examine China’s economic miracle to realise that densification alongside the building of entire new cities, and policies such as household responsibility under Deng Xiaoping, did more for the average worker than any rural reform under the previous Mao regime.
Another example I find fascinating is that of Singapore, for reasons that are very different to that provided by the Democratic Alliance. In fact I find it amazing that the opposition is unable to discuss the quasi-socialist policies implemented by Lee Kuan Yew, Singapore’s first Prime Minister. They are considered socialist since they entail some degree of intervention in the economic welfare of citizens and in a different manner than what is considered the norm in Western countries.
Joseph Stiglitz in his New York times piece on the subject lists four distinctive aspects of the Singaporean model:
“First, individuals were compelled to take responsible for their own needs. For example, through the savings in their provident fund, around 90 percent of Singaporeans became home-owners.”
“Second, Singaporean leaders realised they had to break the pernicious, self-sustaining inequality that has characterised so much of the West. Government programmes were universal but progressive, while everyone contributed, those who were well off contributed more to help those at the bottom, t make sure that everyone could have a decent life … Not only did those at the top pay their share of the public investments, they were asked to contribute even more to helping the neediest.”
Stiglitz then goes on to list the distribution of pre-tax income to help those at the bottom and investment in education and scientific research as points three and four.
Yes, there is an urgent and drastic need for land reform, just as there is need for better internet access for the poor, for food and climate security (in the form of food garden allotments and renewables), community tool-shops which replace DIY with Do-It-with-Others (DIWO), and for a raft of safety and social security measures, but none of these need arise as a result of nationalisation of private property and expropriation without compensation. In fact a social wage that is both tangible and living standards-related may be a far better approach to the problem at hand.
There is a grave risk of Ramaphosa (or Zumaphosa?) carrying forth the Marxist shibboleth of ‘nationalisation at all costs’ and ‘expropriation of land without compensation’ by any means, and thus the lifting of assets from citizens, simply robbing the wealthy in order to sate the poor, to its inevitable conclusion. The eminent danger of making decisions based upon purely political considerations and thus based upon ideology instead of reality, could well see South Africa adopting the failed policies of Venezuela and Zimbabwe, without any regard for the consequences.
We could do a lot better by simply listening to what economists have to say and deriving solutions from the hard lessons which have come before.
Of the four objective goals listed below and published here nearly three years ago, published under a similar piece, only one has been adopted by our government. I therefore provide these again to raise the agenda for a new South African future.
Unconditional basic income grant – this is a payment once a month into your bank account, to all citizens of voting age, essentially outlawing poverty and preventing the worst excesses of the marketplace, such as the coercion of labour.
Income equalisation – in jobs that are seasonal, a central fund evens out the high and low periods, guaranteeing safety when there is no work, and creating savings when there is not.
Rent stabilisation – a form of rent control, sets maximum rates for annual rent increases and, as with rent control entitles tenants to receive required services from their landlords and to have their leases renewed.
Free education grant – a tertiary level grant to learners enabling access to higher education.
*Source: South Africa Survey 2016, SA Institute of Race Relations.