There are two disastrous and related tendencies in the South African economy. One is the catastrophic increase in total unemployment, the other is the ruinous increase in political employment.
Statistics South Africa tells us that total unemployment is now 44.4%. This is by the ‘expanded definition’, which includes those who have given up looking for work. It is about the worst in the world, only exceeded by countries like Zimbabwe, whose policies the ANC now wants to copy, including expropriation without compensation (EWC).
As total unemployment grows, the number of people working for the state also grows. South Africa has an enormous, highly paid and mainly incompetent cabinet, and a gigantic army of bureaucrats, officials and functionaries working for the central administration, the provinces, the municipalities and the state-owned enterprises, earning higher wages than in the private sector.
Eskom employs twice as many people as comparable electricity utilities in the world, and does so with an increasing level of incompetence, as the recent generator explosion at the new Medupi Power Station shows. (It happened during the simple, routine procedure of purging hydrogen from the generator casing.)
Not only does this huge state workforce drain money from the fiscus with its enormous wage bill but it fights ceaselessly against the wealth-making private sector, using every policy it can find to make the cost of doing business in South Africa as high as possible, and so destroying productive jobs.
In a limited sense, the ANC has honoured its 1994 election promise of ‘jobs, jobs, jobs’. But these are restricted to unproductive jobs in government, and only for relatives, chums, cadres and the politically connected. The only other jobs that have been made are for rich white lawyers, who make a fortune implementing the ANC’s complicated labour laws, which make it difficult for poor black people to find employment.
Two ideologies
The ANC has two ideologies; black nationalism and socialism. (The EFF is the same but even more so.) Socialism means state control, with politicians running the economy. Socialism hates the market and hates free enterprise (capitalism).
When the ANC sees a successful private business, it wants to do two things. First, it wants to loot it. Second, it wants to punish it for being capitalist, with crushing labour laws, miles of red tape, heavy taxes and crippling regulations. Often it combines looting with ideology, as is the case with Black Economic Empowerment, where businesses are forced to hand over a big chunk of their hard-earned wealth to ANC cronies, and forced to employ ANC cadres they don’t want at high wages.
The stakes are high for state jobs. An incompetent, poorly qualified person of the correct race may earn a fortune as an ANC MP and even more as a cabinet minister. If he or she lost that job, nobody would want to employ them because they are fundamentally useless and wholly dependent on the favour of the ANC. This explains the furious, often murderous, faction fighting within the ANC for the lucrative top jobs.
Meanwhile the poor people of South Africa, overwhelmingly black, are systematically shut out of the formal economy. Much of the energy of the huge civil service is dedicated to making sure they cannot get jobs. ANC politicians preside over central bargaining councils where rich white businessmen and rich black trade unions conspire to prevent any poor black employer from starting a business.
ANC politicians, aided by snobbish white academics, pass minimum wages laws which decree that it is better for a poor black man to starve to death than to work for a wage he might accept but they don’t approve of. ANC ideologues, with the full support of rich white lawyers, pass dreadful labour laws that make it dangerous for any little businessman to employ anybody.
The economic history of the world over the last ten thousand years shows a clear trend. Every population of every country, black or white, of whatever nationality, contains a considerable fraction of people who can make wealth. Everywhere there are natural business people, engineers and inventors. But they can only bring prosperity within an enabling political system that facilitates free enterprise. If the government provides this, the nation will prosper. If it doesn’t, it will stagnate.
Capitalism brings happiness
Look at North and South Korea, Cuba and Florida, the old East Germany and West Germany – the contrast between them shows that small government and capitalism bring happiness, and big government and socialism bring misery.
Suppose you have worked hard, saved money and now want to serve South Africa while improving your own welfare. You have two choices.
You could invest your life savings in a small factory in a township making cheap blankets and jerseys for poor black people. Or you could put your money into RSA Retail Bonds giving you 4% above inflation over ten years.
In the first case, you would be condemned as an exploiter, taxed heavily, buried under bureaucracy, punished by the trade unions, and spend half of your life in CCMA labour disputes.
In the second case, you could drink red wine on the beach and watch the sunset.
Which would you choose?
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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