Land ownership, is it so desirable?

PRIOR to 1994 “black persons” did not possess the vote. The majority were relegated to so-called independent homelands, most did not own land as such, and if they did, were largely 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 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 compared to similar periods under sanctions.

All this may one day change. Whether it is Julius Malema demanding land, or the land debate unleashed by the tipping incident, and online invective by Qwabe et al, then you may be forgiven for thinking we are still living under apartheid, and that when one arrives at white women versus the land and the dispossessed, it all comes down to real estate.

The facts behind this tragic reality are rather different.

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, are black owned, mostly the result of mass state housing being 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 BEEE, with the rest either “white-owned” or under foreign control. An uneven and unequal state of affairs that certainly deserves correcting. Despite the enormous gap and 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.

In the face of extraordinary adversity, there has been unprecedented transformation, (arguably an incomplete, unfinished transformation), —  our country’s growth has however been a mixed blessing. 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.

To make matters worse, we have gone from a long boom powered by a resource market, to a resource meltdown, starting in 2009, at the same time that we are now heading into the fourth industrial revolution and a world without jobs, where increasing mechanisation and automation translates into unskilled labour becoming forever redundant.

Instead of the bipolar world which BRICS was meant to create or supplant, (the arrangement is essentially a Post-Bretton Woods solution for the 1950s), we have belatedly, and without much planning involved, entered the digital age, kicking and screaming.

South Africa has traditionally been a slow adopter of technology, we only turned on our tv screens twenty years after the West, and likewise, our broadband cable networks. The digital age, information filled and inevitable as it is, has been another mixed blessing, it has brought us all modernity, and in turn, unprecedented choices in online media, as well as the proverbial death of distance, in which there is no economic centre at all.

In the new digital world, in theory, all parts of the globe are able to compete with each other, equally. The result has been the dematerialisation of value, the rise of bitcoin, online shopping and netflix, pop-up factories, China-on-the-Desktop, the Internet of Things, all trends for which South Africans on the lower LSMs seem inadequately equipped, and for which unions, as well as employers, have failed to prepare workers.

It does not take a rocket scientist to see the massive disruptions which are occurring in nearly every economy on the globe, and more is yet to come. SA is not alone here. Uber is disrupting the taxi industry, Amazon is disrupting commerce, P2P is disrupting copyright, Bitcoin, as already mentioned, is disrupting banking.

Unless we seize these opportunities, and figure rapidly where our next economy is going to be placed, and yes, Operation Phakisa, the Oceans Economy is one such initiative, there is a danger that we will always be on the wrong side of the digital divide, and the tale-end of the economic food chain.

There is an urgent and drastic need for better internet access for the poor, food security in the form of food garden allotments, community tool-shops which replace DIY with Do-It-with-Others (DIWO), and for a raft of safety and social security measures, these I have already mentioned to some degree on Medialternatives before, they comprise an unconditional basic income grant, income equalisation, rent stabilisation and a free education grant.

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.

Unfortunately, ultra-leftists within the ranks of the ruling party and opposition groups as well as neo-conservatives, shun such proposals as too utopian, idealistic, or mere neoliberal tinkering. What they, the rag-tag left and conservative lobby, desire and want most of all, is to kill the private market economy which funds social security, by transplanting failed centralist and statist command economy proposals from the old Soviet Union and Cuba, a state of affairs which paradoxically also benefits the conservatives who are, at the end of the day, merely oligarchs.

Instead of social security we end up with business on welfare, endless bailouts, and junk status. It is South Africa’s dirigiste economy (the directed market), not the market economy which has failed. And it is the conservatives who have failed us most of all. One has only to look at SAA.

*Source: South Africa Survey 2016, SA Institute of Race Relations.

Book Review: “Our Land, Our Rent, Our Jobs”

THIS BOOK is rather academic for the general reader but as the title suggests, it’s distinctly activist in tone; this review addresses it not academically, but from an activist viewpoint. Written by middle-class South Africans, it is animated by frustration if not anxiety at the increasing “sea of poverty” which is swamping the post-apartheid “Rainbow Nation” project. Insofar as it addresses the big question of social inequality, it is a valuable contribution to debate.

The authors cut to the chase: the land issue. However, instead of joining the sterile left/right ping-pong which pits extension of individual property ownership against wholesale nationalisation, it heads off in a different direction, picking up on the “single land tax” movement pioneered in the 19th century by Henry George, and blends it with certain elements of the thought of 18th-century economist Adam Smith (as the authors point out, Smith being a founder of the discipline, is selectively interpreted by all manner of successors and often blamed for their shortcomings). The authors’ semantic preference for “land rent” instead of “land tax” is too subtle to go into here, other than saying that it is part of the general category of “natural resource rental”, which interestingly, has already been partially applied in South Africa’s mining industry, in which one of the authors has worked.

On one hand, making land into the main revenue source for the state implies a form of nationalisation; on the other, the proponents of land tax envisage no removal of private title in owning, selling or leasing land; on the contrary, the tax to be extracted would be determined by market forces, such as positional advantage of property, assessed during the conduct of private enterprise. This decisively departs from the statist centrally-managed economic model. Hence, this paradigm shift has the potential to break the deadlock in current S.A. politics, where left and right each hold hostage elements of the social order, each desperately wielding discredited dogma.

In essence, the book’s argument is that whatever you tax, you tend to discourage – except that which is inevitable, like positional advantage. Hence under a land-tax regime, marginal areas, for example rural and peri-urban ones, may still host viable enterprise due to low or zero tax/rent – as opposed to the present situation where economic activity itself is taxed, sometimes to extinction. In short, the book treats the status quo as a market failure; recognising that the rationale for having a state at all is to regulate the market, it proposes a different paradigm for doing so (at one point referring to George Soros’s assertion that financial markets tend to create bubbles, and that central banks’ role includes restraining this).

The authors thus support a taxation system which restrains social inequality, since it falls mostly on the owning classes. Our current system promotes inequality, since consumption tax such as VAT falls disproportionately on the poor, and income tax, while theoretically targeting the rich, is notoriously easily evaded by them. Unproductive, speculative property-owning is currently a major driver of inequality, and this would also be discouraged by a land tax. It should be noted that the authors, following Smith, have no problem with taxing luxuries as a secondary source of revenue.

In order to concretise their proposal, the authors present a draft annual budget for South Africa, which includes transitional measures such as continuation of income tax for the rich. The relative size and efficiency of the state is insufficiently focussed on. Every taxation model implies a corresponding model of collection, enforcement and protection. There is a contradiction between the “libertarian” discourse of most plutocrats, and their ever-increasing need for a police state to safeguard their predatory activities. Whipping up panics over terrorism, drugs, computer hackers etc. can be seen as a way of papering over this credibility gap. The authors, being “respectable” citizens, lack traction here, beyond implying that the middle and working classes need to ally against the super-rich and the “rentier” class (the authors tip their hats to Moeletsi Mbeki, author of “Architects of Poverty”, in this regard).

Another problem insufficiently addressed is that of digitalisation. Much economic activity now takes place in cyberspace (although still linked to physical computers, it can effortlessly be transferred to different ones, thanks to the internet). Thus, transformation of taxation systems must be global to succeed fully. This must be taken into consideration by proponents of a new model.

The grapevine has it that discussion groups are forming around the book’s ideas. They may take to social media and this review may assist them.

Book Review: “Our Land, Our Rent, Our Jobs”
by Stephen Meintjes & Michael Jacques