TCS Daily

Away From the "New Conservatism"

By Richard Tren - June 28, 2004 12:00 AM

It looks like South Africans are going to be in for a rough ride over the next few years or, more likely, the next few decades. Yesterday in parliament, President Mbeki signalled a policy shift to the left; perhaps what he meant was a shift further to the left. Mbeki criticised what he calls the "new conservatism" that to him enshrines the individual and denigrates the state. This is precisely what South Africa does not need. We have had a stagnating economy for the past 30 years and if the government goes ahead with its leftists plans we should start to see the economy contract.

In the past few weeks the minister of trade and industry, Alec Erwin, confirmed that the government had no plans to privatise the massive state owned industries that produce electricity, run the railways and airports and that produce weapons. Much to the chagrin of consumers, the government has dragged its feet over issuing a licence for a competitor to the state controlled fixed line telephone company. As a result of the state imposed monopoly, South Africans have among the highest telephone costs in the world.

Over four decades of Apartheid, successive National Party governments used taxpayers' money to build up massive state owned enterprises that they then used to empower Afrikaners. White affirmative action put Afrikaners in control of these industries and even the most incompetent whites were guaranteed jobs as ticket inspectors on the railways or in other companies. Instead of recognising the folly and damage of these policies, the ANC government is perpetuating them. The government still uses taxpayers' money in exactly the same way, only this time to advance the interests of black businessmen instead of whites.

Black economic empowerment has been under the spotlight as well. The minister of minerals and energy, Phumzile Mlambo-Ngcuka, announced that new investors in South Africa's mines were sabotaging empowerment and should be forced to sell 51% of their enterprises to black companies.

South Africa's own style of affirmative action or black economic empowerment (BEE) has been wildly successful at enriching a few politically well connected black businessmen. According to Tony Leon, leader of the official opposition party, last year there were R42.2 billion ($6.8bn) worth of black economic empowerment deals. That might sound impressive, but 60% of that amount (or $4bn) went to companies owned by only two men. While a few have become billionaires almost overnight, the economy has continued to stagnate as a result of policies that add enormous costs to private industry and stop businesses from growing.

A couple of days before Mbeki's parliamentary lurch to the left, Tokho Didiza, the minister of agriculture and land affairs (and a very prominent member of the ANC party) proposed that foreign ownership of property be limited. The minister is apparently concerned about the increase in house prices in South Africa and blames foreigners who have been buying up prime real estate, particularly along the scenic Cape coast, and pushing up prices. Her solution is to offer foreigners only 99 year leases on the property they buy.

To say that her plan is stupid is an understatement and we can only hope that parliament blocks it. Her statements should however been seen in the context of Zimbabwe's downward, and violent, spiral into chaos when that government started to undermine property rights. Namibia looks as if it is embarking on the same course. The message to foreign investors is that your property and investment is not safe in Africa. This is a great pity because other countries in Africa, such as Botswana, rigorously defend private property and the institutions of a free society (and have been rewarded with nearly 7% annual economic growth as a result).

During his speech, Mbeki quoted liberally from the leftist English writer Will Hutton. Mbeki wants, for South Africa, what Hutton calls "the broad family of ideas that might be called the left -- a broad belief in the social, reduction in inequality, the provision of public services, the principle that workers should be treated as assets rather than commodities, the regulation of enterprises..." and so on ad nauseum.

It would have been more useful if, instead of reading Hutton, Mbeki had read a few history books. Hutton's own nation grew wealthy precisely because it didn't have the leftist ideology to which he seeks a return. Europe can perhaps afford to flirt with leftist policies that slow growth and bloat government because their economies are large enough and rich enough now. But western nations would never have become rich if they listened to the likes of Hutton in the late 19th century.

There is simply no intelligent debate on what makes a country rich and what keeps a country locked in poverty. If governments limit their role to protecting property rights and the institutions of a free society, people begin to prosper. Unsurprisingly governments that burden their business with regulations (and we have a surfeit of that in South Africa) stagnate or contract. In economically free countries the rich get richer but the poor get richer much faster. If Mbeki is truly interested in a better South Africa, he should stop undermining liberty and start protecting it.

Of course perhaps he isn't interested in a better South Africa for all; perhaps instead he is just interested in protecting the interests of his well connected billionaire friends. Luckily for Mbeki, as a star pupil of the Lenin International School in Moscow during the 1970s he will have no shortage of policies with which to enrich his friends and perpetuate poverty.

Tren is a director of the health advocacy group Africa Fighting Malaria and is based in Johannesburg.


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