Category: Development

National treasury adopts DA position on titledeeds

National Treasury has adopted the DA position on private property in effort to stem the massive shift in allegiances over the land question. “From April, the Treasury and the department of human settlements, will spend an estimated 1.6 billion rand over three years to reduce the backlog of residents without formal ownership of their homes by among other things, paying the legal conveyancing required to get the deeds registered to the proper owners.”

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Land debate: Adopting ideology over pragmatism doomed to failure

THERE is a current in South African politics which sees the land debate as the culmination of the freedom struggle. For these persons, undoing the constitutional guarantees of private ownership and security of tenure, both enshrined by the Constitution, in favour of ‘expropriation without compensation’ and thus custodianship of property under the state, is the magic bullet which will right historical injustice, remove inequality, level the playing field and boost opportunity.

Driven by Marxist texts which espouse the abolition of private property in favour of state control of the land, such persons point to mythical Communist experiences but few real examples where this ideology has actually succeeded in lifting millions of peasants and the rural poor out of poverty. Not only are they just plain wrong on this account, but in all the examples cited, agrarian reform without title-deeds turned out to be a massive failure, requiring corrective action and drastic amendment of prevailing dogma.

It is worth examining two sad examples.

When the Chinese Communist Party assumed control over mainland China in 1949, “it did not follow Russia’s Bolsheviks in immediately abolishing the private ownership of land. In the countryside, a violent land reform movement brought a change in owners, but not in the ownership regime itself;  full collectivisation did not occur until the late 1950s.”

The result was that under Chairman Mao, an estimated 15-30 million people died of starvation during the much vaunted “Great Leap Forward”.  Widespread famine was the order of the day, the result of drastic changes in farming policy which eventually prohibited private farm ownership, and also later extending this to urban areas.  Far from achieving its goals, state seizure of control of the land, resulted in economic mismanagement —  bureaucracy, over-regulation and the absence of economic calculation on the ground. With no incentive to grow food, and with inter-generational knowledge, farming skills and tenure disrupted, authoritarianism produced one of the World’s major agrarian disasters.

This situation was only corrected under the government of Deng Xiaoping who introduced a policy of Household Responsibility, a practice first adopted in agriculture in 1979 and later extended to other sectors of the economy, “by which local managers are held responsible for the profits and losses of an enterprise.” This system partially supplanted the socialist ‘egalitarian distribution’ method, whereby the state assumed all profits and losses, much like the situation within our current SOE system which until now has relied upon annual bail-outs from government.

Far from being a model of communism, the trend in China has been towards private enterprise and individual ownership of property for some time, leading one analyst to suggest the country has restored private property in everything but name and that the open-ended ‘automatic renewal’ of leasehold by government is, by all accounts, a de facto return to the market-lead reforms of the West.

‘If the first 30 years of the People’s Republic saw the gradual erosion of private ownership and the growth of state ownership, the last 20 years have seen the opposite trend. By the late 1980s, the state was looking for ways to marketize land use and raise money, and so — in a process that began experimentally in 1988 and was formalized in law in 1994 — it began selling long-term leases to urban land, known as land-use rights (LURs). LURs for residential use could last for up to 70 years; for commercial use, 40 years; and for all other uses, 50 years.”

Thus in 2007 a new Property Law declared that residential LUR renewals would be “automatic.” The result,  was a paradox, according to Donald Clarke, a paradox, in which the state ostensibly owns all the land, but where de facto private ownership continues.

“This system allowed the state on the one hand to obtain the economy-wide benefits of market allocation of land as well as the revenues from leasehold sales, while on the other hand to maintain that the principle of state ownership of land had not been compromised: after all, buyers got “merely” leaseholds of several decades, not ultimate ownership.”

In contrast the Tanzanian land reform programme known as Ujaama was a similar experiment in collectivisation. “Land reform was viewed as pivotal to the socialist agenda due to the centrality of agriculture in developing economies. Tanzanian president Julius Nyerere initiated one bold experiment in land reform in the late 1960s when he introduced the villagisation process called ujaama .. under ujaama tracts of land were transformed into community-based farming collectives.”

“13 years after its inception in 1967, it is now generally acknowledged that the policy of creating ujamaa villages has failed in terms of what they had been designed to achieve: namely, the building of a socialist society in the rural areas of Tanzania where more than 90 per cent of the population lives,” writes Zaki Ergas

Expropriation of land without compensation, centralisation and seizure of the commanding heights of the economy, all present attractive goals to doctrinaire socialists and communists. With elections around the corner, we ignore the abject lessons of history at our peril. Given our nation’s track-record of pragmatism and problem-solving, it would benefit everyone, if instead of shouting down ones opponents, we rather spent more time listening, opening the debate on land reform to discuss solutions based upon empirical evidence instead of purely ideological concerns.

SEE: Sasha Planting’s response on Moneyweb

Op-Ed published 8 March 2018, Natal Mercury

Op-Ed Natal Mercury 8 March 2018



CompCom collusion investigation avoids implications of cartel

LAST week the Competition Commission announced that it was investigating 28 media companies, including Media24 for collusion on advertising pricing, and that Caxton and Independent Media had already pleaded guilty and/or had paid fines. The investigation avoids the troubling impact of cartel behaviour already demonstrated and reported here and here.

While some may accuse the CompCom of casting its net too wide, it is most certainly picking low-lying fruit and scratching the surface. One can only hope that its next port of call  is to investigate the over-concentration and cross-ownership which is stifling journalists and readers alike.

Cartels and monopolies are not simply bad for business and competition but create the situation where news itself is overly centralised and where public opinion is subject to newsroom censorship. The result is bad for democracy and the outcome, the manufacture and manipulation of public opinion, unacceptable in a constitutional state.


Land ownership, is it so desirable?

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.


Here’s where Cape Town’s water is going

A YOUTUBE video posted by Adam Spires, substantiates claims that millions of gallons of drinking water are being allowed to escape, flowing downstream from a major dam, apparently to save farmers. Posted earlier this month, the video shows the sluice gates are open at a dam site outside of Cape Town, posing the question why is this happening? With Zero Day approaching, and the water crisis beginning to impact upon households, why are wealthy farmers in the country’s wine estates benefitting? Is this another case of the Stellenbosch Mafia coming first while ordinary citizens’ needs are sacrificed? Why are local media houses publishing incorrect information on water shortages?

READ: The City that ran out of water


Hellkom like no SOE ever scorned (Part 2)

My saga of moving my Telkom landline continued from part 1.

DAY 28 A bearded Telkom technician arrives with his assistant. They are unable to install the line because my apartment requires a cable to be installed via a conduit which can only happen with the landlords permission. I am inundated by SMS from Telkom requesting me to rate their service online. I get a call from my landlord’s company offering me a 10mps wireless connection. No Telkom. Apparently this would entail gaining the password to his router. I attempt to decline the offer.

DAY 35 Still no home Internet. I am forced to use Internet cafes to file my SARS tax return. Problem is, I can’t find a cafe that is compliant with SARS efiling demand that I use adobe flash player 11. Apparently everyone in the real world is operating with flash 23. I head over to SARS office in town. There is no public access terminal available to do the task. Speak to an inane SARS employee who keeps telling me to file the return online. I seem to be in a boot loop, explaining that even my bank has a self-service terminal and doesn’t rely upon its clients to have private Net access. Fail.

DAY 36. I get a phone call from my landlord inquiring about my letter explaining why I believe a ‘fibre and cable’ option, and separate ‘voice and data’ services would be far better for my needs than low power radio access to his router. He has sent an Internet access form for his &*(^ provider, detailing its wonderful contention ratios, its commercial quality bandwith, (but no voiceline) and patiently tries to solve my voice and data issues by explaining that Skype offer a Skype-out service where one can call local numbers, I don’t even try to explain why paying for local calls in Dollars or Euros  to  isn’t going to be worth my while (Surely a gap in the market?), and in my case a choice between having connectivity or health insurance. He appears to relent when I explain that in order to access his marvellous router for which I would be handing over precious cash, some R150 more than my current service via MWEB, and without a guarantee on latency, I would need to invest in a WIFI receiver. I feel like a hillbilly holding out for Grandma, because she has a landline.


Telkom cable hanging in the road

DAY 38 I am in a strange new world, in which the Tantalising Internet is both absent and present. (see The Curse of King Tantalus) For the vast majority, the Internet is whatever can be gleaned via occasional free wifi hot spots in cafes, (just buy a coffee). Or the traditional Internet Cafe (a dying breed) where you can hire a computer for a few rands per half-hour. Metro-rail still do not have wifi on their trains. It is like being the last person on earth after the flood. The problem of too many Android apps, competing for precious storage space, the insanity of every company pushing out its own app, at the same time as palming off services into the digital realm, the real beneficiaries are the mobile technology providers. For a brief time I marvel at how everyone must be doing, walking around with terabytes of ram on their phones and tablets, but sadly, like most people, I only have 4 gb on my phone, Android Lollypop takes up most of the space of the Vodacom unit and this version prevalent in the third world, doesn’t like SD cards, and won’t let me expand. I am forced to call a hotline to access my health insurance which relies on its app to service customers, miraculously, they provide the line as a free service and I don’t need to load airtime.

DAY 42 I receive an SMS alerting me to a bill in the amount of R456.11, not only is the inhuman Telkom system billing me for a non-existent service, but they also have the wrong call plan. Prior monthly average has been R310, and the last bill was a credit for R10.93. I call a helpline, log a dispute and am told “the extra fees are for ADSL”, it appears Telkom have taken over the ADSL portion of my service without my consent. Seems as if the beast is unable to accommodate real people with real-life problems, and is instead introducing new problems of its own. I also get the sneaking suspicion that Telkom bills are all just a thumbsuck with no real bearing on usage. Am forced to leech internet (keep those passwords!). Pickup a telephone directory from the Post Office (remember those?), just so I can call my data service provider MWEB, alas, they are not listed in the phone book. Then remember that I have an Mweb helpline listed as a memo in a notepad on my desktop. Call them on a “sharecall” to explain the situation. I must first log a fault, then seek a refund for the two months I am without service etc etc. I swear many service providers make money out of ‘sharecall’ services.

At first I speak to the accounts dept, then the technical dept, and finally the “moving dept”.

Apparently I should have called MWEB to begin with. Why didn’t Telkom bother to tell me what was required? The confusion is all the result of an ANC SOE policy whereby Telkom is the monopoly cable operator, (these days in name only) but where third parties offer data services, a complete fibre-to-the-home solution lurks on the horizon, great if you end up getting bundled voice and data. Why has the beast unilaterally taken over my ADSL “line” (read “account”)? To make matters worse, there has been no communication from MWEB alerting me to any of this, (they are also billing) nor from Telkom for that matter. The latest glitch of epic proportions has all occurred because of the mysterious power wielded by faceless operators sitting behind anonymous switchboards and cold cathode computer screens. In all likelihood there is no connection between my past service and the new, as yet unconnected one. R50 later and I am still not at the bottom of it all.

The woman behind the helpful MWEB “move desk” is cut off, another victim of Vodacom extortion. (Mobile rates priced as if Euros, Dollars and Sterling were all benchmarked by an accountant whose life depends upon getting lattes on executive flights to Mauritius). Again, those sharecalls seem like wishful thinking when it comes to using mobile phones, an excuse to ramp up consumer spend. I miss the Pacific Bell sales pitch from my days in California, Friends and Family Are Free. Before Telkom had even considered broadband, there was a big bang in the USA. It revolved around breaking up Ma Bell, the one-size fits-all national telco into baby bells, all competing with each other. The result was the Dot-Com explosion. In South Africa, we had quite the opposite, a National Telco Monopoly that went from Ma Telkom to GrandMa Telkom. A dinosaur currently in its death throws. RIP Public Telephones. Yes Telkom exists as a mobile phone company, but its life as a cable company is numbered, like the sales pitch at RSA web suggest, fibre is coming at lightening speed, and its not Telkom who are making the offering to connect, despite similar offerings from mobile operators. Despite the seeming progress, there are still plans afoot to calf a “National Internet Service provider” out of two separate units, broadband infraco and sentech ), a case of fiddling while Rome burns and quite the opposite of what happened in the US.

Thus in Pretoria the bureaucrats in the Zuma administration still dream of building a Kremlin large enough to get lost in, and thereby eliminate the need to work, while another dept, plots its journey to the Sun, no worries, we will travel at night! I contemplate how a system designed upon a talking drum backbone and witchcraft would work? Am ready to start sending Morse Code, or Ham Radio. Do I begin constructing my very own “Net”, this time, starting with node to CTWUG? All cost money, we so dependent upon the Net that we have become strangled by it.

DAY 49 I receive the Telkom bill printed on chlorinated white bond. It affirms that Telkom have placed me on the wrong call plan and are double-billing for ADSL services already “supplied” by MWEB. I call MWEB, the technical dept agree with me, but a lady at the accounts dept wants to argue. I request to speak to a manager, instead she puts me on hold for so long, I eventually put down the phone and decide to write the manager a letter. Meanwhile USB stick is overwritten by a virus at a City Internet Cafe. Appears some Trojan posing as a Windows “driver” updater is merrily making copies of itself. After deleting all the .ink and cmd.exe files that propagated (and then reformatting), I inform the owner, who gratiously declines to accept payment. I relocate to the City Library, where there is at least a room filled with computers, and virus-free Linux. Better work conditions as a Micro-serf, means I get to attend an ISOC party.

DAY 52 Having penned three letters in the matter, and as many complaints, I finally receive a missed call from my landlord, I pay for the call to his golden mobile phone, to finally receive lordly permission for the wiring of the conduit to go ahead. Telkom technicians will be under supervision. I thank him profusely and also thank my lucky stars that at least I’m not a Telkom employee, — can’t live with them, can’t do without them. A light is at the end of the tunnel. People are singing the praises of the Digital Jehovah, the Internet Christ will Return.

DAY 58 An electrician from a frontline state arrives. Fairly decent fellow. According to him, it will take two days to pull the wire into the building. He appears to think the cable is simply two wires. I attempt to explain that the cable needs to be Telkom compliant and that my ethernet cable has six cores. I receive an email from MWEB technical dept complaining about my not informing their MOVE dept. (Oh, the fiction) I respond that Telkom are the ones providing the infrastructure and that I have simply relocated my MWEB router.

DAY 65 5 October I receive nasty email from MWEB claiming they are ‘merely a subscription company’ and thus not liable for any loss of service due to Telkom and them managing a non-existent line. Letter goes on to explain that they can’t refund me any money, even the “subscription” for the entire month of October (Read: We don’t care a damn about our customers as long as we getting their money!)

9 October SMS Dear Mr Lewis, a dispute has been created on your account ref: 28437870 we apologise for the inconvenience and will endeavour to resolve your dispute as soon as possible, Telkom.

SMS Telkom Technican: U can take it up with them cause the job from a technical point is done. Let them know that the line is on the premises but not in ur flat due to renovation. (So much for the guaranteed installation of a fixed point inside my home)

12 October SMS Good Morning Mr D Lewis, dear value customer, you have your Internet/DATA with another service provider however your ADSL Speed Facility is with Telkom SA. Please contact your service provider to contact Telkom SA so that they can port ADSL over to them. So in mere fact you pay DATA with them and ADSL with Telkom SA. Current account of R456.11 outstanding.

DAY 79 19 October still no connectivity. However a paralegal is attending to mediation with my landlord, and an attorney via legal insurance is apparently dealing with Telkom. There is no sign of the electrician from a frontline state. I meet one of my neighbours who is paying some R150 extra to Skype, just so that he can have an 021 number. I ask him if he gets free unlimited nation wide calls to RSA telephones, he appears to grimace, but I get invited for a braai.

DAY 81  I receive a bill from Telkom, this time I owed them R843.85 for a non-existent line where the telephone number has not yet been issued.