Ivo Vegter
Ivo Vegter

Zuma: Reap the whirlwind

For they have sown the wind, and they shall reap the whirlwind: it hath no stalk: the bud shall yield no meal: if so be it yield, the strangers shall swallow it up. — Hosea 8:7

The two faces of Jacob Zuma (from Tim Burton’s film, The Nightmare Before Christmas)

It felt strangely like a wake, watching the inevitability of Jacob Zuma’s election as the new head of the ANC, and proposing a wry toast. Unless he is convicted on corruption charges, which is far from certain, South Africa’s list-based proportional representation system makes him a near-certainty to become the next South African president in 2009.

That’s what you get for half-hearted commitment to market reforms and economic freedom.

Although many praise the ANC for having steered a sensible economic course, I’m far from enamoured with its record. Instead of freeing the economy, it has largely pursued a brand of national socialism not unlike that followed by the racist National Party during the apartheid years. That the intended beneficiaries of the government’s policy were infinitely more fair doesn’t change the fact that it tried — and failed — to deliver services that are beyond the ability of a government to deliver. If national socialism didn’t even work for a tiny fraction of South Africa’s population, what chance would it have of providing for the entire population?

Yes, inflation has been kept under control. Yes, economic growth has been positive. But South Africa has muddled along at a sluggish 3% or 4% GDP growth per annum, from a low base with high unemployment, in a global economy in which many developing economies achieved 8% or 10%. That’s what we needed to create the wealth to alleviate poverty and reduce unemployment. That’s not what we got.

Many industries were controlled by the government, and many reforms were bungled. Land redistribution has progressed (if that’s the right word) at a snail’s pace. The bureaucrats in charge of land affairs appear to be largely unaware of (or uninterested in) the basic business of agriculture. Despite a surfeit of willing sellers and willing mentors, land transfers were delayed for years while farms dilapidated and equipment rusted for lack of maintenance and capital investment. When they did happen, the transfer came with no regard to the seasons, so many changed hands at the most difficult time of the year for new farmers to begin operations.

Even then, the farms that did change hands were heavily encumbered: new farm owners couldn’t sell their land; they couldn’t even raise working capital because they couldn’t use their farms as collateral. Some emerging black farmers, perversely, face land-restitution claims themselves. In all the bureaucratic mess, full property rights were low on the agenda, even though they are the key to make investments, growth and economic success possible. The result? Highly visible failure, a rural economy in terminal decline, and many thousands of disgruntled poor people who have nowhere to turn.

When Aids emerged as a crisis, the government got itself in the most awful tizz, managing at various times to deny that HIV causes Aids, to refuse offers of free anti-Aids drugs from evil multinational profiteers, and to fail for years in rolling out antiretroviral treatment. Its intentions, immaterial though intentions are, were probably good. It merely tried to offer a holistic disease-management programme that included providing good nutrition, preventing opportunistic infections and building hospital capacity to manage out-patients who require regular long-term medication. Admirable. But ultimately, the determination for a large-scale government response proved useless, as South Africa’s Aids crisis grew to world-leading proportions.

When access to medicines became a populist issue, the government intervened by heavy-handed regulations imposed on pharmacies. It regulated not prices, but profits, and not profit margins, but absolute profit amounts per transaction in the form of fixed “dispensing fees”. As a result, a pharmacist that stocks slow-moving, high-value medication stands to gain no more than one that stocks fast-moving, inexpensive drugs. You can guess the results. Some drugs are simply no longer on the shelves, and pharmacists are going out of business hand over fist. The intention was to improve access to medical care, but the result left the people with less access than before the government intervened.

Private charity once thrived in South Africa, by offering tempting cash prizes in return for generous donations. Who can forget the ubiquitous scratch cards that funded charities such as Operation Hunger and the Ithuba Trust? What does the government do? Ban them, and establish a monopoly on anything even remotely resembling a lottery. This step severely hobbled a thriving and effective charity industry that was funding essential social investment and poverty relief, in favour of a profiteering national lottery. And even this, the government can’t manage. When it does operate, it struggles to distribute the proceeds that are meant to fund the government’s ambitious social development projects.

A similar thing happened with the casino industry. Once, a wide selection of mostly small venues offered good-value entertainment and created many jobs. Instead of regulating them to protect local communities, in the way licences impose conditions on liquor stores and bars, the government chose to establish a cosy cartel by issuing only a handful of high-value licences. Customers can now choose between loud, crass Vegas-style rip-off joints or loud, crass, Vegas-style rip-off joints.

Instead of making title deeds to township properties a priority, the government put a communist in charge of building matchbox houses for the poor. Some did indeed get built, but many promptly started falling apart. And as with farm redistribution, the “owners” of the new houses can’t sell them, or use them as collateral to raise money to start a business. So much for property rights. The government merely wasted public money on increasing, slightly, the stock of what Hernando de Soto famously called “dead capital”. Those people who did receive houses were left unhappy, and those who didn’t receive houses are now simply angry.

In telecommunications, the government established a monopoly, in partnership with profiteering foreign “equity partners”. The distressing results, ably summarised by William Currie and Robert Horwitz, read like the script of a disaster movie. Ironically, cellphones were considered expensive luxuries, inessential to “basic services”, and were left to a comparatively free private industry. Unlike “basic services”, which never were delivered despite 14 years of state-managed policy designed to do so, tens of millions of mobile handsets are now in the hands of South Africans, rich and poor. By some estimates, eight out of 10 households have access to telecommunications thanks to mobile telephony.

The government, disingenuously, tries to cover up its failures in telecoms by claiming credit for the fact that today, virtually everyone with a job has a cellphone. Meanwhile, not everyone has access to internet bandwidth, which, thanks to the monopoly on international cables, backbone networks and the local loop, is world-leading only in its ludicrous price and low quality. The government’s conflict of interest in both owning half the telecoms industry and tightly regulating it hasn’t helped. It talks of “market failure”, when a free market in telecoms never existed. It claims “privatisation” didn’t work, when all it did was turn a government department into a profiteering private monopoly, which is arguably the only worse option than a government-run telecoms system.

Throughout, the government neglected its most basic duties and core responsibilities, namely maintaining public order, protecting property rights and enforcing contract law. As a result, South Africa now faces a wave of crime that is highly organised and absurdly violent, and which thrives under either government impotence or, in some cases, active complicity at the highest levels.

I could cite many more examples, but in short, the Mbeki government ensured that its pretence at market-orientation was at best a half-hearted concession to foreign investors and what it saw as the white establishment whose wealth it needed. The result of its socialist instincts has been sluggish growth and nary a dent in unemployment. It ensured that neither the hobbled market nor the incompetent civil service managed to deliver the growth and prosperity that South Africans were promised as the dividend of freedom and a peaceful transition to democracy.

The sad thing is that undermining markets with ill-disguised socialist projects does not result in the realisation among the electorate that only economic liberty can generate the prosperity the country needs to deliver on its promises. Because the status quo had been described as “market-friendly”, the result is a rejection of those principles. Like those who argue that the failures of foreign aid to reduce poverty can be remedied simply by increasing foreign aid, or that failed government regulation can be fixed simply with more regulation, the people are demanding more from their government.

The communists, unionists and left-wing NGOs — Zuma’s support base — have been pushing collectivism and subsistence farming, in preference to sustainable agriculture that is able to feed the nation. They have argued for nationalising land and “essential” services. Despite the horrors socialism wrought in the rest of Africa, they want socialised healthcare, subsidised housing, state-created jobs and government service delivery. And who can blame them? They were promised services, and they didn’t get them. They were promised jobs that never materialised. They were promised prosperity, as if a government can wave a wand and conjure it up.

Jacob Zuma, and the new crop of unionists and Marxists that from today head up the ruling party, have promised to do the people’s bidding. Zuma has no apparent policies of his own. He has promised to bow to his left-wing support base, yet he has promised not to do anything to scare investors. He has promised to deal with Aids, though he apparently believes a vigorous after-action shower is an effective prophylactic against the disease. He has promised to curb crime, though he faces charges that prove him to be either corrupt or incredibly careless and naive. He promises to be all things to all people, and if anyone doubts it, just listen to all his people singing: “Bring me my machine gun!”

Having heard nothing but empty rhetoric, the people apparently stand ready to believe that a president Jacob Zuma can deliver where President Thabo Mbeki failed. That all will be well because “Zuma cares about the people”.

Just yesterday, someone asked me whether I think being populist or socialist really is worse than being corrupt, self-serving and possibly a rapist. Assuming for the sake of argument that those charges against Zuma are true, I answered that yes, a socialist rapes and pillages the entire country.

That’s the price of the ANC’s policy, which adopted the apartheid government’s national socialism instead of turning away from it. Having failed to liberate the economy, a Zuma-led South Africa will try to harness it in service to the people. It will merely extend the crony capitalism that has deeply corrupted this country, rather than freeing the people from patronage. It will create a new socialist elite, instead of permitting the kind of growth that creates jobs and clothes the poor. And the people will be too busy singing and dancing and celebrating the great victory of their populist idol to fret about the fact that enslaving the productive in service to the unproductive destroys the engine of the economy. Redistribution not only reduces the creation of new wealth, it also actively destroys productive capital.

My gut feel about Zuma, my fear about the combination of populism and economic illiteracy that begets socialism, may be wrong. He did, after all, position himself as all things to all people, and the new unionist secretary general of the ANC promised its policy would not change. There are definitely two faces to Zuma. But I fear that his left-wing supporters will get to party in the short term, and as sure as night follows day, will face a devastating economic hangover.

They have sown the wind, and they shall reap the whirlwind.

(First published on my own blog.)

  • Kevin Hughes

    Don’t be self-righteous with your doomsday mindset. Whites have unfairly benefited from apartheid and the Mbeki administration has done nothing to redress the injustices committed in the past. If socialism is necessary to redress these injustices and the fact that SA has the greatest inequality in the world, then let there be socialism or any policy instrument that would level the playing field and redistribute the fast wealth of the few to the masses. I think Jacob Zuma is up to the task and will deliver on the delayed transformation of this country. My advice to you is if you do not like it then you are free to go to Britain or the USA where you may feel more at home. This country is for the Africans and those people who fought for the liberation of SA from apartheid and colonialism. Viva Jacob Zuma. Look forward to 2009.

  • Gareth

    A very well writen and researched article Ivo, thank you.

    I must say that the irony of Zuma’s promises vs. his personally actions is as clear as day, although still only allegations. It makes you think about his followers’ faith to him or perhaps their ignorance, but maybe Zuma’s claim to fight crime might be real, for he speaks from experience…(once again only allegations, it might be conspiracy).

    On the note of a near socialist political structure:
    … Yes the poor and underprivlaged suffer and should not. But is it entirely due the unfair advantages given to those in the winning seat by the past regime. Well that sertainly is part of the equation but in our current state of democracy… ‘the world is what you make of it for yourself’. Although for some it is more difficult than others and in some cases near impossible.

    I have personally witnessed the neglagance of oppertunity, of post apartheid youth in schools for I was in such a school. The learners failed due to self negligance and blamed it on the past, which had nothing to do with their present commitments. Schools in rural areas get vandilised by the very people who benifit from them, these could be phycological or disaplinary issues, most likley caused by poverty.
    The point is that while some grasp the oppertunities tenaciously (like Zuma has risen from the depths, amounst thousands) others throw them to the ground and would rather blame other sources… its easier than blaming yourself… and hence poverty.

    What socialism would fix is the lazy getting favoured over the dedicated which in many cases is a consequence of the old regime giving wealth to the non-deservant.

    Is Zuma the answer? Are the issues in our country acually non-political? I think the latter although we might need some serious BALLS in the big seat.
    My stance is indifferant. Whatever the political structure or leader… ‘VIVA South Africa VIVA’.

  • Jim Bob

    It’s going to be hilarious to watch the reactions of the Kevins Hughes of the world when white South Africans do leave en masse, as he suggests, and take their money and skills with them.

    I find it depressing that people still believe in socialist idiocy when it has not worked anywhere in the world, even once. Welath ‘redistributed’ to the poor seems turn into vapour or into fat bank balances for people like our Mugabe in waiting, Jacob Zuma.

  • http://ivo.co.za/ Ivo Vegter

    Where did I dispute that whites unfairly benefited from Apartheid? Where did I dispute that justice and redress are both fair and necessary? I did not dispute the justice of land redistribution, did I? I pointed out its failure, and the failure of other attempts at state-led service delivery.

    I certainly dispute that socialism will redress injustices, but the reasons why socialism will fail are entirely independent of my race or my wealth. They do not depend on the presence or absence of whites in South Africa. They do not distinguish between black and white. Socialism is not “necessary”; it will only exacerbate poverty, and like socialism, poverty does not distinguish between black and white. Prosperity is something that is created. It is produced. It is not something that can simply be redistributed without destroying it.

    Equal sharing in misery hardly constitutes justice in my books, and I’d prefer to see a leader who has a grasp of elementary economics.

    Do I, by virtue of being white, not have the right to prefer some, and oppose other, politicians?

    Presume about me or my wealth what you will, but ease up on the xenophobia, the nationalism and the thinly-veiled racism, please.

  • Nasdaq7

    Just remember most of the economy is still in private hands, 77%. The economy is growing at 5%. The debt to GDP ratio is at 30%. As far as socialism is concerned Zuma wasn’t voted in with a ticket to nationalize anything. Business will resist any and all attempts. South Africa can borrow over $300bn in the international credit market to finance programs for the poor. Only policies of nationalisation, excessive money printing, price controls, changes to the constitution will result in deterioration and fall like in Zimbabwe. And Zuma and co have stated that investment will be directed to the poor and no major policy changes. Yet you only mention a few major industries that are still in government hands such as Telkom, Eskom etc. I mean the majority of business is still in private hands, while Manual constantly cut taxes without increasing government spending the past 10 years ( in secret constantly reducing the size of government in the economy ). We constantly have a budget surplus. Aids will reduce unemployment by 5% within 5 years to 20%. And now you are very negative about everything else? …??

  • Owen

    I think you missed the biggest fault of all – electricity. We have reached maximum supply and so for at least the next 5 years we cannot grow.

    I agree with you on the Nat national socialism thinking. The only difference between the Nats and the ANC was race.

  • Azania2010

    Vegter, you make several sound points in your essay, specifically on the govt’s role in bungling the telecomms sector, plus its failure to deliver on its wider policy promises.

    I am unsure however, if you realise that Zuma has no policy of his own to contrast against that of anyone else, simply because ANC policy is made nt by individuals, but by a collective. It is tempting to imagine that Zuma’s election to party leadership is on the same level as being to national presidency against the backdrop of competing policies with those of the opposition.

    Zuma may, or may not be RSA leader in 2009, at which point a more pointed criticism of his party’s policies and performance can be made. Sadly too many people are willing to offer us doomsday predictions, like yours, without showing much patience and appreciation of the fundamental structural flaws in our society. Randomly plucking 8 or 10% growth figures from the air is a bit like saying you dont understand why with its vast wealth, the USA cannot eradicate poverty in its inner cities.

    The answer, my friend,is always blowing in the wind.

  • Brandon

    It is very easy to focus on specific negatives to present a bleak picture.

    Trying to compare the growth rate of our economy to other developing economies is ill-informed. Just one factor for instance relates to economy of scale where you have a market base of 1.3 billion people in China and somewhere near that in India…this is most pertinent to manufacturing input……there are equally important factors – apolitical, which would make it very difficult for the SA economy to develop at the rates you have quoted. Generally the SA performance off a low manufacturing base has been phenonmenal. While the global scenario has provided the paltform for this, our government must be applauded for maximizing the environment.

    On the point of redistribution – the way the author put it, is extremely immature. What is described is a consumption of wealth created in the past…..the after party. It is common cause that prosperity of today is the fruit of past endeavours. Some imagine that the wealth they see emminates from a bubbling spring somewhere in the motherland.

    JZ would not be so naive as to imagine he could just redistribute wealth and appease the masses. Imagining this to be the key to South Africa’s woes belies an absolutely uneducated view. It is imperative that South Africans look to the future, that we focus on endeavours that will produce wealth tomorrow. (and with or without whites this is what needs to be done). This means South Africans should be more focussed on education and manufacturing, than redistributing the paltry wealth we currently have.

    We are witnessing one big after party, the nation as TITO has indicated is spending, and spending, buying, the trade deficit gets bigger and bigger as we send our cash away year on year.

    Just like the household budget, if you keep on spending, and stop working, soon the money dries up, and lavish status turns to humiliation.

    It would seem that our consumption appetite, which supports the manufacturing sectors of these other economies, has become so gluttonous as to desire even more rapid consumption.

    As said, destruction comes from within….and unless the redistributive revolution of the past is abandoned now, skills and knowledge are attained by old fashioned hard work in the books, and translated into manufacturing goods for us to sell to the rest of the world……..soon, not even JZ will have anything left to redistribute!

  • Lehlohonolo

    I presume, Jim Bob, that when the whites, with their money and skills leave, the savage natives would run around naked… pillaging everything that the great white minds have built over some years..heh?!

  • http://ivo.co.za/ Ivo Vegter

    Interesting comments, all. Thank you. A few specific points I’d like to respond to:

    1. My first comment was aimed only at Kevin Hughes — a few other comments were moderated later and may have confused my intent. Though I do think his “if you don’t like it, leave” position is xenophobic, racist and nationalist and doesn’t solve any problems, I could have been less harsh in expressing that. Perhaps I should have just quoted the constitution: “We, the people of South Africa, recognise the injustices of our past…and believe that South Africa belongs to all who live in it, united in our diversity.” My presence in South Africa and my preference for economic liberty and warning against socialism is motivated by my desire to see South Africa perform to its potential. Telling me to leave, besides being insulting, won’t make any difference to the economic future South Africa might have.

    2. I’m not trying to predict Zuma’s policies with any degree of confidence, because he doesn’t seem to have any. His being a true populist doesn’t fill me with confidence, however, and this prompts my fear of socialist policies that, thought they may be motivated by a noble desire to deliver on the promises of liberation and improve the lot of the poor, will not result in the desired benefits but will merely perpetuate the suffering.

    3. To Nasdaq7: I cited only a few examples, true. I could add the taxes that actively discourage investment, the regulatory burden on employment that increases the cost and risk of hiring, the costs of compliance that makes establishing new businesses a complex, high-risk nightmare, the licences and government approval that so many people require to do business, and so on. These affect all industries, and already limit our economy’s capacity to create prosperity and jobs. Should such burdens become heavier, rather than lighter, the quality of life for all South Africans will get worse, not better.

    4. On our growth rate: I compare with other emerging economies because of comparable low bases of growth. I refer not only to India and China, which with their large populations are indeed exceptions (though our substantial unemployed base could be a major source of economic expansion), but also with other African countries, such as Angola and Mozambique, and Eastern European countries, in particular Estonia, Latvia and Lithuania. I’m not convinced, given a global economy that has been doing rather well, we should be satisfied with 4% (or even 6%) growth.

    5. On Brandon’s point on consumption: this is indeed a worrying phenomenon. Not because consumption and debt are inherently problematic, but because they suggest something about the economic outlook of the spenders. If you’re pessimistic about future growth, or it is hard to invest or start a business, or the money you invest is taxed again when it grows or produces income, you might think your money is better spent today. Yet our solutions to this problem are merely mechanistic intervention in the form of central-bank interest rates, or legal restrictions on credit that hurt not only the reckless borrowers it is designed to protect, but also responsible borrowers who could generate wealth given access to capital.

    6. Finally, on the charge of negativism, yes, I do think this election is a troubling development. I was to some extent dissatisfied with present economic policy, which strongly focused on government service delivery and state-led growth. I believe the fundamental principles of economics are universal, and notions of a “developmental state” that should somehow flout these principles are naively idealistic and flawed. I doubt that Zuma will offer a solution, and fear that he may deepen the problem. So yes, I’m negative in my outlook. But for what it’s worth, I feel that my economic views are inherently optimistic. Everywhere I’ve traveled, even in the poorest, most corrupt, and most socialist of countries, I see the productive power of individuals working for their own benefit. I see people working their land right up to the roadside. I see people trading for profit, deep into the night. They do not wait for the state to provide, to act as their mother. They do not discriminate with whom they trade. I’m firmly convinced that free people, in both the political and economic sense, acting in their own best interests, are bound to reduce poverty and improve the quality of life of all. And I’m firmly convinced that South Africa is not only capable of such freedom, but deserves it and will be better off for it.

  • John bond

    It’s interesting how journalists “blow with the wind”. Ivo Vecgter said previously in Info Scandal II. (While Thabo still had blue eyes)

    “I, for one, would qualify John’s last statement. I don’t believe this government is malevolent. On some issues I think it’s wrong, sure. Sometimes very badly wrong. But I am fairly optimistic that its intentions are good.”

    The synonyms for Malevolent:
    MALICIOUS – Despite international drug companies offering free or cheap antiretroviral drugs, the Health Ministry refused to provide treatment for people living with HIV
    SPITEFUL – Thabo Mbeki regularly made withering spiteful attacks in his newsletters
    WICKED – As in Selebi’s association with Agliotti and Kebbles murder. Thabo’s refusal to fire Selebi
    NASTY – “obtuse, dilatory, and negligent about HIV treatment”. UN comment
    MEAN – Favouring Black Diamonds at the expense of over 1.6 million lost jobs

    Hey Ivo,

    Maybe it’s time for journalists to do their homework and stop being sycophants. I dislike the Zuma faction intently but pray tell me, what are their policies? Oh, we don’t know! Has anyone done their homework yet???

    Our previous incumbent in Tuinhuise refused to intervene while almost half a million people died of AIDS. A journalist’s job is to tell us what the next president is going to do…

    Journalists should tell us the facts – then tell us the deductions
    No facts = nonsense (write it down somewhere)

  • JimBob

    Lehlohonolo, typical straw man response.

    Quite frankly, in a country like this, the people and government should welcome and embrace anyone who wants to help develop the economy. If the country hadn’t lost so much capacity through capital and skills flight over the past 15 years, everyone would be better off.

    What left-leaning South Africans seem to forget is that South Africa spends more money per capita on social services than most other developing and many First World countries.

    They should be asking why we’re getting such bad value for money from our government rather than hoping for more cash to be thrown down the drain. I believe one reason that social services are collapsing in South Africa is because there is no one to deliver them.

    Take healthcare or education: would it not be better to be looking after science and maths teachers, irrespective of race, rather than to say anyone who doesn’t like the way things are done here ‘can get lost’? Everyone who chooses to live here has a say in what happens in the country, after all. I do think that the loss of an electrical engineer or a science teacher to the South African economy is something that should be lamented, whatever the colour of the person.

  • http://N/A Tumi

    Interesting comments indeed, but everything we have read about before.

    What surprises me about bloggers is that they are quick to come up with the statistics and criticise, why can’t we join hands and help to build a better SA for all, contribute to the development of this country, approach the government and propose your ideas to them instead of sitting on the sideline and start criticising.

    Zuma is taking over from Mbeki, instead of sitting behind your computer criticising, better use that energy and make an appointment with Msholozi, maybe something better will come out of that. As for now, we are sick of reading about how Mbeki failed as a president fo SA.

    If you strongly believe you have something to contribute to the growth and development of SA, stand up and be heard. Zuma doesn’t have time to read blogs – go to him and present your ideas, maybe they will be incoporated in the current policies and turn things around. We all want a better SA, don’t we?

  • Tman

    To answer your second point, Ivo. While you respond to this forum, the ANC under Zuma is busy crafting the policies for the next five years. So, I argue that you should stop expecting Zuma (policies) rather get the latest policies from the ANC conference and then make a concrete argument based on those policies. If you keep your argument on Zuma policies, I think you are definetely missing the point. As we speak, we hear that the Scorpion will be deployed under the SAPS and I hope no one should come tomorrow and say it was Zuma who moved the Elite Unit whereas he was not even part of the Security Commision of the ANC conference. So, get your facts correct now rather than later.

  • http://ivo.co.za/ Ivo Vegter

    @ John Bond: I take your point about the ANC’s malevolence. I wanted to express the view that I think it means well, but its intentions and the effects of its actions diverge. You disagree. Fair enough. Maybe I’m not condemnatory enough.

    It’s hard for a journalist to report what a future president might do when he doesn’t tell journalists, when his public statements are contradictory, when his promises are vague, and his policies are merely described as “what the people tell me to do”. I haven’t interviewed Zuma, and don’t do daily reporting, but I know people who have interviewed him. The answers they got were summed up by his comment that, “I’m an empty vessel”.

    Distinguish, too, between reporting and commentary. It’s impossible to report the future. This is commentary. It seems to me that educated evaluation of possible alternatives seems useful.

    Hence, I’m arguing primarily that the Mbeki government’s hesitance to commit more fully to economic liberalism caused the government failures that caused the left-wing backlash we’ve seen. Then I posited what policies this backlash might result in, and what the consequences would be if I’m right. If a Zuma government bucks my expectation and doesn’t turn left, I’ll be the first to applaud it.

    @ Tumi: Are you proposing that there is no role for the media, no role for public debate, no use in trying to influence public opinion, no role for discussing alternative views or future policies? That anyone who has a view, who thinks about economics or politics, and cares enough to write about them, should pipe down and become a politician or a lobbyist instead? That no view is worth expressing if the wielders of political power aren’t part of the discussion?

    Perhaps my views here don’t matter much, but if I can convince a few people, or influence how they vote, or be convinced myself by those who argue, or refine my arguments based on the insight of others, then I’ve achieved something, however small. And even if I’m wrong, I’m not alone. I believe that this process is part of what makes South Africa better. When people stop criticising and discussing and protesting and arguing and proposing policies, that’s the day informed democracy dies.

  • andrew lees

    Owen: “The only difference between the Nats and the ANC was race.”

    Correct me if I’m wrong, but as a whitey, you are still allowed to sit on a public beach of your choice….

  • Thomas

    After reading this article and comments i must say: What I am hearing from friends abroad is true. Most friends of mine tell me that they have never seen a media and country so negative about itself. No matter how good we do, we always seem to see gloom. Maybe it’s a good thing; it keeps us on our toes ready for any disaster.

    Famous South Africa words:

    Zuma will corrupt South Africa
    South Africa will not produce a successful World Cup
    We will never have a 6% growth rate
    Affirmative action is destroying South Africa
    The South African Rugby team can never win a game with blacks included
    The list continues

  • Jonn

    Spoton Ivo, I could not have said it better – you should be commended for your courage.

    More from me later due to work pressures but it is as it has always been. The PC liberals seem to have plenty of time on their hands and are therefore able to flood these sites with insults and propaganda-based speculative rhetoric whilst people who can see the reality just don’t have the time to comment. We have to work the long hours to keep the wolf from the door amidst anti-white racists policies such as AA and BEE as well as the 120% taxation which we are lumped with as entrepreneurs.

    Unfortunately we are the doers and if we are able to do something about this very bad situation we are in we will be saving their worthless butts as well. This has happened in every war which we as South Africans have been involved in to date.

    But watch them scoot when the sh*t hits the fan,… in the same way as many of the leftist critics of the previous government have already fled their handywork.

    See the past to see the future.


  • Nobhala Phesheya

    Dear Mr Ivo Vegter,

    I must confess I really do not know which ANC you’re talking about in your article. Or what your objectives are.

    The ANC has never proclaimed any intention to push a socialist programme. What I know is that the basic policy of the ANC is the Freedom Charter – the programme of the democratic revolution in our country. As members of the ANC, we are fighters for the Freedom Charter and its principles.

    1) Are you saying to us that by pursuing the aims of the Freedom Charter, that we are socialist?

    2) Or are you saying it would be better if we did not have sufficient intelligence to exercise our political freedom and instead chose to belong to the Democratic Alliance(DA), where your kind of thinking seems to belong?

    Mr Vegte, please correct me if I’m wrong but our expectations in the ANC are to debate ideas and programmes, including economic ones, to advance the Freedom Charter.

    If you do not like the Freedom Charter, or you think it is socialist for you and you do not like socialism, please feel free to support the neo-colonial Democratic Alliance. That is where right wing free-market capitalist economics belong.

    If your economic thinking is driven by a desire to show that Freedom Charter is not viable in South Africa, then you’re against the ANC. We will give your ideas the treatment they deserve – i.e. we will reject them not because they are bad but because they do not serve the ANC’s purpose in life.

    VIVA JZ!

    Yours sincerely,

    Nobhala Phesheya

  • Graham

    Ivo makes excellent points, not least his quote from the Bible. The ANC and Nats are both national socialists. The Nats were just better administrators, had their home-grown ideology and not as susceptible to “Greek Handshakes”. The ANC borrow their neo-colonial ideolgies from the discredited ideas they studied as exiles. Zuma will be OK and a bit like Ronald Reagan who also was no intellectual nor academic. Reagan was a shrewd politican who could delegate. Zuma is also delightfully political incorrect.

  • http://www.nickvanderleek.com Nick

    Your gut feel seems right, unfortunately. Hitler was also uneducated, and perhaps tried to do things in the name of ‘good’. Not saying Zuma is Hitler, just that it is crazy to elect an uneducated leader in times when we ought to be becoming more sophisticated and civilised. Nice column here though.

  • MidaFo

    It is much easier to write negatively than it is to write positively.

    With few exceptions, and Vegter for all his touching concern about our future (‘—if I can convince a few people—‘)is not one, our chattering class is not leading: it is a drogue.

    On the aggregate strength of the tone here our educated classes are letting us down as they always have in SA.

  • Lebogang

    Hi Ivor… perhaps part of a series of solutions is not complete state shrinkage but a redirection of the state’s attention towards education and healthcare. Alternative development strategies now in vogue stress human development and enhancing individual capability towards the attainment, ultimately, of the things that these individuals have reason to value. The private sector, as we know has no real incentives in advancing free education/healthcare for all, let alone making serious qualitative and quantitative improvements to these sectors for the benefit of as many people as possible…I do hope that the SA state will not shy away from making the necessary qualitative and quantitative investments in these spheres!

    as for constant reflection and critique, these are the hallmarks of a people who are aware that there are alternatives to current strategies that fail…whether talking to Zuma over a cuppa tea about policies, or typing away at our laptops on a range of forums, all and any expression is important and necessary!

  • http://ivo.co.za/ Ivo Vegter

    I guess one highlights what is wrong, because what is right doesn’t need fixing. Electricity is a good example: people in the know were negative about it ten years ago. Now they’re negative about it in the dark. It needed fixing, so it needed to be highlighted. By contrast, you hear far less about water, because in most places outside Delmas it’s not a problem.

    Criticism doesn’t imply binary negativity. You can be negative about many things while remaining positive about the country, or vice versa. But granted, between AIDS, blackouts, cost of doing business, unemployment, crime, government service delivery, and acres of shacks, there’s a fair amount to criticise. Several observers and political analysts I’ve heard said that the ANC’s vote against Mbeki was exactly that: an expression of negativity, rather than a positive affirmation of Zuma.

    Draw your own conclusions whether specific instances of criticism (or negativity, if that’s what you want to call it) are justified, but if they are, they need to be raised. That’s where the effort of government, business and the rest of us needs to be focused.

    Besides, I don’t know where you live, but the British media is at least as negative about the government and civil service, and it is more aggressive and often less fair. Perhaps you haven’t read the independent press in Zimbabwe lately either.

  • http://www.thoughtleader.co.za/kanthanpillay Kanthan Pillay

    Ivo: Who is it you believe has sown and who has reaped the whirlwind?

  • ross

    Ivo, I think you’re absolutely right about a lot of the nitty gritty stuff here — lotteries, those crazy pharmaceutical regulations, HIV/AIDS, telecoms, RDP housing v property rights as collateral, etc. I also think you’re right that a socialistic Zuma government will result in a lot of patronage and corruption and zero growth. The overall message that full-blown socialism DOES NOT redress injustices is a timely one. And we need a freer economy in a lot of important respects.

    All of that said, I think it’s still a mistake to describe this government as a proponent of the sort of national socialism that the NP employed. Perhaps under Zuma it will come to be, but it was never so under Mbeki. I also think it’s a grave mistake to think, as you clearly do, that South Africa’s problems can be resolved simply by freeing up markets. Significant intervention is needed to prevent income inequalities from further increasing, but that intervention has to be extremely delicate and cleverly managed. Chances of the great lumbering Zuma brigade achieving that is extremely small indeed.

    But I would be cautious to contend, for instance, that government’s failure to maintain public order has resulted in a huge crime wave — and simply leave it at that. As if simply enforcing property rights would make the problems all go away. That’s typical of the narrow-minded thinking that the economic right often succumbs to. Crime stems from poverty, poverty from unemployment, and South Africa’s high unemployment problem can in large part be traced to the massive trade liberalisation that we carried out during 90’s. A lot of economic research in this field shows that the Mbeki government liberalised too quickly, not too slowly. Half a million jobs lost in agriculture, over a million lost in manufacturing and mining… on the back of exactly what the economic right were calling for. Where’s the 8-10% growth rate from there? All I see is cheap Chinese imports for our wealthier consumers.

    What are the pillars of economic policy? Trade policy, fiscal policy and monetary policy. And on none of those three can Mbeki be described as even remotely socialistic. Fiscal policy is extremely tight – probably unnecessarily so, given our sizeable socioeconomic backlogs. Monetary policy has been similarly conservative — inflation targeting which fails to take differences between cost-push and demand-pull price rises into account is frankly even more conservative than the current U.S. system. Sure land redistribution has been slow and the AIDS thing has been a fiasco and it would be nice if lotteries hadn’t been turned into a cartel. And sure these are social problems that do have some important economic implications. But they are certainly not central to the economy, in the way that you have hinted they are. They don’t indicate, as you stated at the start of the piece, that government is half-hearted when it comes to market reforms. Most of the time it isn’t protectionism in disguise — it’s just inanity. And, as I said, on the most important fronts: government level of spending and taxation, interest rates, trade liberalisation, etc the ANC has been quite laissez faire – and often more so than necessary.

    Sorry bout the long post.

  • Nobhala Phesheya

    Ivo Vegter, I asked some questions and I don’t know if you’re going to reply.

    I think your economic ideas are rightwing and conservative. I think they belong to the DA but you’re stuck because the DA has no prospect of winning political power in SA as a de facto colonial party.

    Your strategy of smuggling rightwing economics into the ANC will not succeed this time.

    Good luck with the DA of Helen Zille.

  • Mike

    As you point out, Zuma is always at great pains to declare that he has no personal agendas, ideas, plans or policies for SA – he is merely a facilitator of the collective policy of the ANC-Cosatu-SACP alliance. This seems to be in contrast to Mbeki, who stamped his own intellectual views, e.g. Aids dissidency, on government policy.

    This is also, it would appear, one of the main reasons why Mbeki was voted out and Zuma in – that the alliance partners and those within the ANC who were marginalised by Mbeki, wanted a change of leadership style. Zuma promises an “inclusive” style and this is what has underpinned his popularity, apart from the relative warmth of his personality and singing and dancing populist style.

    While I don’t personally like or trust Zuma, I think you go too far in predicting the kind of negative consequences of the ‘new-look’ ANC under Zuma. The extent to which it will pursue economic or political strategies that have negative outcomes is as yet unknown; however the fact is that whatever outcomes are forthcoming will come from debate within the ranks of the ANC and the broader alliance, albeit inclusive of the kind of dodgy thinking that oft characterises the Left.

    However, some points to ponder: firstly there is no doubt in my mind that unfettered “free market” capitalist strategies will not solve the deep-rooted problems that beset SA, particularly unemployment and skills development. Modern capitalism loves technology and not labour, so jobs for unskilled or even semi-skilled people will continue to be lost under this system.

    Secondly there is a dire need for improved education systems, particularly the kind of free education we whities enjoyed under apartheid. These factors appear to call for increased state involvement in social systems and the economy, rather than simply “freeing the markets” to do as they will. This does not mean that private enterprise should be fettered, but rather that there is a distinct need for a more socialist outlook.

    Perhaps Zuma & Co. can take a leaf from the Chinese book – as the late Deng Xiaoping said, “It is glorious to be rich” – and he is credited with enabling China to become a modern, industrial nation under a socialist market economy, lifting millions of people out of poverty in the process.

    While I personally find Zuma to be rather repugnant, I can only hope that the ANC, in its collective wisdom, can bring about the kind of changes that SA needs in order for its people to prosper – not just the few rich whities and the black BEE elite.

  • Lebogang

    Nobala Phesheya…much of this debate would be made ever more compelling if you could stop with the uncritical ANC skip-to-the-beat, not because you do not have the right to do so, but because it distracts from dealing with the substance of the critique and the ideas put forward. And anyway, this article is NOT about who to support (or not)come election time (though these might be cogent reasons to consider for whichever party one does vote)…that’s a matter for 2009 – or sooner(?). I’m not sure if it was not at all clear, but I got the distinct impression that Ivo did not write this article as a ticket into the good books or membership sheet of the ANC (or any other party for that matter, these right-wing free market capitalists tend to distrust all organized politics, even their own right wing strand), so giving him the boot and wishing his vote well for the DA again takes up space and gets us no closer to threshing out “substance”!

    for now, let’s deal with the substance and details of Ivo’s argument, and get over the fact that he’s happily and proudly liberal (keeping in mind that our constitution and the freedom charter protect his right to be thus)…

  • http://ivo.co.za/ Ivo Vegter

    @ Graham: Thanks. The Reagan comparison is interesting. I can’t see it happening, but it’s a possibility — as I said, who knows what Zuma will do? Just last night, in his SABC interview, he said, “I don’t have to think”, which raises the question why one would need a president in the first place… One point, though. I don’t buy that the Nats were better administrators. Other than perhaps the paperwork involved in oppression (call it the efficiency of zealotry), they had less to deliver to far fewer people. They weren’t less cronyist, corrupt or incompetent either. In fact, almost every administrative criticism leveled at the ANC in the last 15 years could have been leveled with as much or more justification against the Nats. I’d argue the ANC is in most ways (and several obvious ways) a major improvement over the Nats, despite having adopted a broadly similar national-socialist economic policy line.

    @ MidaFo: Without taking your bait, may I point out that writing positively just for the sake of positivity, without rational cause to do so, is probably a sign of delusion. If I were a psychologist, I’d reach for my texts on optimism bias, the planning fallacy, and rose-tinted glasses. As I’ve mentioned, most of my views are inherently quite optimistic — I instinctively recoil from the irrational nagativity and even apocalypticism that is so common in popular political views about the condition of humanity and the state of the world. So just calling this piece “negative” won’t do. If you wish to dispute the reasoning, by all means do so.

    @ Lebogang: I’d welcome more effective and well-directed government activity, since it surely trumps ineffective and wasteful action by the state, and while I’d agree that if the government is going to spend money, spending it on education is among the best investments it could make, we disagree on what the state can/will do and what private business can/will do. No, it seems unlikely that private business will provide free healthcare or education for all, but then, neither does the state. Was it PJ O’Rourke who quipped, “If you think healthcare is expensive now, wait until it’s free”? Private business has an incentive to supply, at micro-level, consumer demand. It has an incentive to find innovative, local solutions to meet complex needs and specific circumstances. But it won’t (and can’t) compete with tax-funded services delivered at artificially low prices, which is why, for example, private schooling remains limited and expensive. The state, by contrast, has a mandate to deliver a one-size-fits-all we-know-what’s-best-for-you lowest-common-denominator. You’ll excuse the cliché soup; they’re clichés for a good reason.

    @ Kanthan: I believe the ANC, by its belief that it could control, appropriate and harness markets, using names like “harnessing market forces” and “managed liberalisation”, and its consequent failure to deliver on either its promises or the economic vitality required to improve unemployment and poverty, has “sown the wind”. Its well-intended but misguided efforts have merely resulted in discontent and dissatisfaction. This caused a backlash, not against “harnessing” or “managed”, but against “market forces” and “liberalisation”; it reaped populist pressure to adopt more strongly interventionist, socialist approach to redressing the country’s problems. The ANC sowed half-hearted market economics, and reaped not a determination to increase economic liberty and take responsibilities away from the state, but a rejection of free markets in favour of increased reliance on the state.

    @ Ross: Let’s leave it at honest disagreement for now. Answering the details would take another lengthy essay, as well-argued details usually do, and is probably best left for a new post on another occasion. Consider your comments added to my “to do” list :)

    @ Nobhala: I’m puzzled. I spent two hours replying at length to your post last night. I have no idea why it doesn’t appear in the comments. In short, I answered “yes” to the question of whether the Freedom Charter is socialist, but your questions deserved a more comprehensive and detailed response, which it appears I’ll have to rewrite. My apologies.

  • http://ivo.co.za/ Ivo Vegter

    Ah, clarity returns. Nobhala, you posted your questions both here and over at my own blog. Due to moderation delays, I didn’t notice it here until this morning. My detailed response is here.

    Apologies for the confusion. I’ll be more attentive in future, and prioritise answers in this forum when my posts are published here.

  • Jonn


    I would love to have your profile. The stereotype communist that I know owns very little, their personal equity is virtually zero and they have not made much of a success of their lives but feel that society owes them a living. They generally have much to gain through legalized theft of someone else’s hard-earned possessions and hope that communism will give them this opportunity.

    Even your writing and a few others on this tread, is speculative and predictive with no factual basis whatsoever, e.g. “there is no doubt in my mind that unfettered free market capitalist strategies will not solve the deep-rooted problems that beset SA”, with a few well placed lies thrown in, “particularly the kind of free education we whities enjoyed under apartheid”.

    In terms of your other communist propaganda:

    Virtually everything that has come out of Zuma’s mouth has contradicted something he has said before or has been in response to his evasion of legal action or campaigning. You cannot trust a word he says.

    The free-market capitalist system is the only one that will save this country. Capitalists like myself avoid using labour due to the contradictory and erroneous labour laws and the inept running of the labour department. This is as a direct result of your much-vaunted government interference and not of the capitalist system.

    You glibly speak of “the ANC, in its collective wisdom, can bring about the kind of changes that SA needs in order for its people to prosper” but you conveniently neglect to mention that the government you speak off is the same government that, due to incompetence, corruption and nepotism, have been unable to make a success of running the country in 13 years. You now want them to be given unlimited powers to seize and “distribute” the property of all concerned in this country and you expect us to believe that this will be done fairly. It is also the same government that had the opportunity to distribute “fairly” more that R 60 billion under BEE but gave it all to the same 4 cronies. And before you rush to point out that it now has a new leader in Zuma, let me point out that “the government is run by the ANC collective and no single individual”.

    You also fail to mention that communism have failed in most of the previously great communist countries such as Russia, etc. etc. You also fail to mention the bloody past of communist China under its doctorial rulers as they imposed the “will of the people”, on its defenseless people or that China only became successful and “rich” when it started to embrace capitalism.

    I am a whitey, born in this country in 1949, and I can tell you from personal experience
    • I have never received free education but had to pay for it all my life.
    • “Apartheid” is not responsible for the ills of today’s society and for the government’s corruption and incompetence.
    • There is already much more “state involvement” in enterprise than what there was in the past and, as yet, there are no successes, only failures.

    It is an interesting feature of this site and Zama’s election that many communists are now creeping out the woodwork to feed on the misery of the general population. When this much vaunted “socialism” have come, failed and gone, communists such as “Mike”(Dexter?) will be long gone with whatever booty they can gather.

    Be careful what you wish for people, you will get the government which you deserve.


  • MidaFo

    Britain and Zimbabwe are not good examples of effective debate. Neither is America if you wish to try.
    Read Socrates. Until you can express the best of the other you will not be meaningful, effective, or useful in criticism.
    It is, however, easy to express the best of your bent. It is two a penny here in SA. It was once only the English but now South African aeroplanes do not stop whining when the engines are switched off.

  • majola

    So Zuma does not have policies, policies are ANC policies. What hogwash. Haven’t the sponsors of a Zuma presidency I mean those who were not judging the beauty pageant but those who portrayed the divisions as being about issues of policy, people like Vavi have referred to Mbeki policies.

    What’s changed.

  • http://ivo.co.za/ Ivo Vegter

    I cited Britain and Zimbabwe as counter-examples to the statement: “Most friends of mine tell me that they have never seen a media and country so negative about itself.” Simple Aristotelian logic is sufficient to establish that these counter-examples effectively refute the term “never”. Whether they’re good examples of effective debate is moot.

    As for your reference to Socrates, his method of establishing arguments in debate (as opposed to thought) involved dialogue, not self-contradiction. It is indeed useful to understand opposing positions and be able to counter their best arguments. I try to do exactly that when making my arguments. By taking the time to respond to the questions and arguments posed here, for example, rather than leaving my original piece to speak for itself, I’m engaging in Socratic logic.

    I see plenty examples of the Socratic method in the South African media, too. Not only have several different points of view about Zuma been put forward, each of which informs the others, but editorialists and columnists with opposing views frequently challenge each others’ positions. Increasingly, readers are able to get involved too. This process of logical debate serves to confirm or deny those positions in the minds of observers.

    Perhaps your intent was merely to allude to a Socratic term, “dialectics”, that to the modern mind evokes Marx?

    Either way, debating the mechanics and philosophical underpinnings of economic or political debate, seems to me a little far from the points I raised, which attentive readers may recall involved the cause of Zuma’s victory this week. If the Socratic method is what you desire, perhaps the Socratic method is what you should be engaging in yourself.

  • MidaFo

    Well Ivo

    A neat exhibition that you do know your way around some of the words associated with Socratic debate.

    What you seem to miss is that in the attempt to debate nothing that is said is of value without the desire to understand the opposition. You cannot debate meaningfully unless you try to believe as the others do, for the reason that without this belief you cannot possibly understand them.

    Sophists who argue solely and selfishly to win may know all the words but they do not identify in this way with the other. They may be clever but they are not wise. They merely wish to be cleverer and beat the other and get accolades(cash) or just a thrill for it. Think on the meaning of the word BEAT in this connection a moment. In short debate at this level is not a schoolboy activity or S&M: our lives, us, we out here, depend on it.

    It is not winning that counts. Do you like these people you castigate and diminish? Other than the fellows who conveniently tag along with you there is no indication in your writing that you like anyone. But Ivo there is no wisdom achieved unless you do.

    This is the power of the statement that ‘Zuma cares about the people’. See the wisdom of this and you will be a wise South African.

    Geddit now?

  • http://ivo.co.za/ Ivo Vegter

    I’m afraid I don’t. Will love and caring feed the starving masses? Will liking socialists make their policies any more palatable or less consequential?

    It’s not about “beating”, it’s about what is right and what is wrong. And that is determined not by intentions, but by actual consequences. Wrong economic policies cause real harm — lower quality of life, or even death — to real people. By contrast, correct policies cause real benefit. Therefore, it is important to determine who is right and who is wrong. You don’t do this by blithely believing everyone, accepting as valid everyone’s point of view, and claiming that “caring about the people” is sufficient.

    It is necessary, perhaps, but certainly not sufficient. If I didn’t “care about the people”, for example, I wouldn’t waste my time arguing here for free. Instead I’d simply write corporate press releases for lots of cash. If you “care about the people”, it is all the more important that you know your economic policies are valid and will are likely benefit those people. Failing to do so, thinking that caring alone is sufficient, is the kind of blind populism that causes poverty and death.

    You’re welcome to your happy relativism in which everyone is right and you believe everything and everyone cares and liking each other is the highest expression of human endeavour, but if you’ll forgive me, I will speak up and argue when I think our people or our leaders risk following misguided policies with very real consequences. Because being right matters.

    Can we put this meta-argument to rest now, please? There used to be a point to this thread.

  • Mike

    In response to John’s rant, I would like to point out that firstly I am not a communist – calling for socialist practices does not equate to communism, but rather to increased government involvement in the economy.

    Secondly, this is not the place for an extended critique of economic policy nor of the SA political environment, so we can’t cover all the bases. However, my observations are based on my own experience and perceptions and are not “lies” nor “propaganda”.

    Third, South Africa is a democracy, whether you like it or not (obviously not, judging by your derogatory and paranoid tirade).

    You say “You now want them to be given unlimited powers to seize and “distribute” the property of all concerned in this country and you expect us to believe that this will be done fairly.” Where did you suck that from? I certainly never said anything of the sort.

    My essential point is that, like it or not, the ANC is the governing party in SA and Zuma and his coterie now lead it. It is up to these people to make the policies that will determine SA’s future. In order for this future to be a good one, we need good people in charge – and presently those in charge suffer from the lack of adequate education that apartheid system foisted on black people. So for the future we need a solid education system in place – and only government can produce this.

    The vast majority of SA’s population are too poor to afford a decent education and the education system itself is in need of much upgrading. Extensive government involvement in education, health, transport etc. is a socialist principle, as opposed to “free market” capitalism that holds markets responsible for the provision of such services.

    Ivo’s critique of the ANC government and its initiatives is fairly extensive – and I don’t disagree with all of his points. However, his negative assumptions/predictions about the future such as “crony capitalism”, “a new socialist elite, instead of permitting the kind of growth that creates jobs and clothes the poor” and “economic illiteracy that begets socialism” are simply prejudices.

    We need a new vision in SA – not just facile cliches and empty rhetoric to prop up unthinking bigotry and chauvinism. If Vegter or anyone else can offer realistic solutions to the problems that beset this country – particularly the vast majority of very poor people – then they will be welcome.

    However, once again, I contend that unfettered capitalism is NOT the answer because it is fundamentally based on profits, not people. As such it can NEVER address the poverty suffered by the overwhelming majority of people in this country. That is not to say we need pure socialism or communism or capitalism – but rather a mix of elements combined with solid skills and sound leadership. No policy is perfect, but Vegter’s prejudiced pessimism and John’s self-righteous rants are just not particularly helpful.

  • http://ivo.co.za/ Ivo Vegter

    …unfettered capitalism is NOT the answer because it is fundamentally based on profits, not people. As such it can NEVER address the poverty suffered by the overwhelming majority of people in this country.

    Can you eat people? Don’t you need profits to reduce poverty? And if you need profits, how does discouraging profits by expropriation (whether it’s through redistribution or taxation) help?

    Worldwide, there’s a strong statistical correlation, and indeed a virtuous cycle, in data that measure poverty or quality of life against economic freedom. The more free an economy is, the fewer the number of poor, and the less poor they are. This correlation makes logical sense, because new wealth gets created by individuals who stand to profit from their endeavours, and are free to trade with others. So wealth is created in free economies, whereas this is implicitly discouraged or actively suppressed in statist, socialist economies. In the latter, existing wealth is redistributed, which neither raises overall wealth, nor offers an incentive to producers to create wealth, so it doesn’t improve the longer-term wealth-creating capacity of the economy either.

    I arrived at this conclusion by reading history, studying economics, researching statistics, and applying reason. If I were prejudiced, I’d still be the emotion-driven quasi-socialist I was in my youth.

    Claiming that the state should be limited to providing public order, protecting property rights, and enforcing contracts, does not deny the right to democracy. It does, however, limit the damage the state can do to individuals and the economy individual citizens create. Extending those powers to redistribution or other socialist notions of state-led service delivery makes democracy little different from winner-takes-all mob rule. Democracy is meant to confer political power. When politicians, whether democratically elected or otherwise, appropriate economic power too, they not only commit an injustice against producers, but discourage that economic activity. Productivity belongs to the people who produce, or the people they choose to sell their production to, not to the state.

  • Wynand Meyering

    I’m going to narrow this debate down to one single sentence: ‘ if there are more SA people not working and living off hand-outs than there are people working, SA society will deteriorate and collapse ‘ And as example, I would like to point to Cuba and Zim.

    The key to this country is capitalism – the complete free market and Democracy. Government can use taxes and grants to the private sector to help the poor, middle income, elderly, women pay for private services etc. But under too much socialism decay in living standards is inevitable.

    An economy that is also completely nationalized, has no competitors and eventually falls technologically and in terms of jobs and money generation ability behind the rest of the capitalist world.

    As far as Mike that states that the free market is not the answer to solving SA’s high unemployment. I would like to point out that the free market will go a long way in providing work for uneducated people. The thing is: if the free market economy is growing fast enough, it will first grab up all the educated people, then the semi-educated people and finally, if there are no more educated people left, it will spend the money on training programs for the uneducated. It therefore depends upon the speed at which labor enters the market. If more educated people enter the market as did from 1994 to 2007, than the older apartheid generation, business will not take the risk to educate the older generation and will prefer to give jobs to the younger, more educated population. It therefore depends upon the relation between job growth and the number of market entrants each year from school and the scarcity of labor.

  • Mike Aldridge

    *Sigh* – I am not trying to defend communism, expropriation of property and all the other leftist bogies that you rightly fear.

    What I am saying is:
    1) The structural logic of capitalism prefers profits over people – yes, profits are needed for an effectively functioning economy. However the means of ensuring profits is very often not people-friendly. For example in pursuing profitability, Telkom laid off thousands of skilled workers. Another example – the National Ports Authority has a vision of the future where its harbours are mechanised, so laying off thousands of unskilled or semi-skilled dock workers. Contrast this reliance on cost-effective machinery to nations such as China and India where labour-intensive productive mechanisms are preferred over machinery, e.g. in construction.

    2) The extent and depth of poverty in SA is a hindrance to the productivity of the population. The genius of Deng Xiaopeng in communist China was to abandon the rigid ideological thinking that had previously characterised the communist regime and to usher in market-related reforms that enabled the country to achieve the very high growth rate it currently enjoys.

    For the poor of SA – the vast majority of the population – the state is the only entity that can materially affect the conditions of their existence to enable them to escape the cycle of poverty, through interventions in education, health, services, housing, economic enterprise and capital support. In “free market” economies these benefits are available only through purchase (market forces) and so access is predicated on economic means – which in SA is largely lacking for most people. (Consider the fact that some 70% of economically active people in a city such as Cape Town earn under R2500 per month and you start to get the picture).

    3) Ivor says: “So wealth is created in free economies, whereas this is implicitly discouraged or actively suppressed in statist, socialist economies. In the latter, existing wealth is redistributed, which neither raises overall wealth, nor offers an incentive to producers to create wealth, so it doesn’t improve the longer-term wealth-creating capacity of the economy either.”

    I quoted Deng as saying (famously): “To get rich is glorious”. China these days has many millionaires – but within the context of a socialist society that ensures state support for economic enterprise and social upliftment in various ways. This is not to defend China’s human rights record, which is apalling – merely to say that economically they are doing something right, hence the country’s vigorous economic growth.

    Please note that SA’s current “free market” economy HAS NOT benefitted the poor to any great extent – the poor are getting poorer and the rich are getting richer. The poor are the overwhelming majority and the “rich” (that means you and me, kid) are getting richer.

    The South African Institute of Race Relations has made the case that between 1996 and 2001 the number of South Africans living at less than a dollar/day rose from 1.9 million to 3.6 million. It is a reflection of the fact that between the same years in which people living at this level of poverty doubled the number of unemployed South Africans rose from 2.0 million to 4.4 million. On the expanded definition of unemployment the figures are far greater.

    Post 2002 the number and proportion of people living at less than a dollar/day begin to recede off the peak totals in that year. Concomitantly the number of recipients of social grants rocketed by 300% between 2001 and 2006. In the period 2002/2003 rising levels of unemployment begin to slow and decline marginally to 2006. Despite this decline the number and proportion of people living on less than a dollar/day remained twice as high as in 1996.

    So much for the glories of the Mbeki/Manuel/Mboweni economic policy; and if you’re looking for reasons why a chauvinst, homophobic, HIV-showering, populist pig like Zuma gets elected president, you don’t have to look too much further.

    The upshot of all this is that a) capitalism alone is not currently and will not in the future adequately address SA’s structural economic problems; b) the rise of Zuma and the Left is a direct consequence of the present regime’s failure on the economic front; and c) increased state intervention in SA’s economy and social upliftment is essential for productivity and growth to be assured and to benefit many more people in SA (and we can take China as an example).

    Take a good look at the realities of the situation and forget your predjudices. The enemy is rigid thinking, not a particular economic system.

  • http://alleman.wordpress.com Gerhard

    Ivo regarding your comment on ‘December 20th, 2007 at 9:01 am’, I would like to know whether you consider China a developmental state or not.

  • http://ivo.co.za/ Ivo Vegter

    I’d call it a “developing nation”, and point to the growing liberalisation of its economy. I don’t buy the notion that a “developmental state” is different from any other state in that it requires a statist economy. (The Chinese case is different, because of its specific political situation. The reasons for its strong state are political and historical, not economic.)

  • Onne

    The reality is that we do not have an informed or educated democracy, so no matter how much we debate or criticise or promote economic policies and political ideology, the voting masses are still going to vote for the man who is from the people, for the people, mostly without regard or understanding of his policies or those of the ANC executive that fills the “empty vessel”.
    It is sad to hear that the beloved Freedom Charter seems to be the ANC’s only roadmap, as this wonderful document does not and was never intended to give direction on the nitty gritty’s of economic policy that Ivo has addressed here.
    My view is that we can learn from Singapore’s success story and need to have a similar focus on education, starting at pre-school level, with a 30-year plan to produce a better educated, better informed electorate that can
    a) create their own opportunities, businesses and jobs, and make a success of this country
    b) fill key posts in government and industry and be well qualified and educated to do their jobs with competence
    c) understand political and economic policy, and make wise and intelligent decisions at election time.
    Of course, I do not intend to offend some by suggesting that all who vote for the ANC are uneducated or ill-informed. But truth is that many voters in our country are uneducated and ill-informed, making it possible for a populist, empty-vessel, “man for the people” with questionable integrity and poor education like Zuma to actually become president of this country. This is the same reason why Mugabe is able to get away with raping and pillaging his own country like that and still win at election time! Like sheep to the slaughter, the people will vote for any populist or political party who appeals to the poor, uninformed masses, not caring or knowing whether their policies and ideologies are going to work or not.
    So while we wait for my 30-year plan to realise, perhaps Ivo can offer his services to the current government as independent economic advisor.

  • http://www.google.com/ Tiger

    Great article but it didn’t have evretyihng-I didn’t find the kitchen sink!