Peter Hain knows how to fix everything. Government, he says, should be smart, risk-taking, entrepreneurial, efficient, effective, honest and responsive to public demand. Now why didn’t I think of that?
The Right Honourable Lord Peter Hain, Baron Hain of Neath in the County of West Glamorgan (Wales), recently delivered himself of a lecture to the memory of Anton Lubowski, a Namibian anti-apartheid activist who was assassinated by the apartheid government in 1989.
Hain has been a Labourite since 1977 and a peer of the realm since 2015. He describes himself as a democratic socialist.
In his lecture, Hain rightly commended Lubowski’s contribution to the liberation struggle despite its grave personal dangers, which would tragically claim his life before he could see his labours come to fruition.
Hain proceeds to observe, correctly, that today, ‘South Africa is involved in another struggle – to free itself not just from the dwarfing millstone of apartheid, but from the cancer of corruption and cronyism that has betrayed the freedom struggle’.
He notes that ‘the liberated countries across southern Africa … today seem tortured opposites of the bright futures for which Anton and many others fought’, and argues that ‘we must strive to reclaim those values of morality, integrity, social justice and equal opportunities which inspired him and everyone involved in the freedom struggle’.
So far, so good, but his being a socialist, Hain’s discourse promptly falls off the rails.
Neoliberalism
‘In that cause,’ he said, ‘a priority today should be to persuade the world that there is an alternative to the suffocating embrace of global neoliberalism infecting every country….’
By ‘neoliberalism’, he means, of course, classical liberalism. He merely uses the disparaging vernacular of the radical left. He describes it as, ‘An ideology that favours so-called free market forces wherever possible and tolerates government regulation only where absolutely necessary, whatever the consequences for social justice, resulting in grotesquely widening inequality.’
Of course, widening inequality isn’t really a problem. Ten years ago, I called it ‘ginidiocy’. Inequality, as measured by the Gini coefficient, is an invented crisis to which the left appeals because they cannot claim that ‘neoliberalism’ has exacerbated poverty, or caused anything other than tremendous progress, no matter which other measure of human welfare you use.
As the idea of free markets began to spread around the world, global poverty began to decline dramatically. Despite population growth, the number of people living in poverty has consistently declined in the last half-century. Surveys consistently find that economic freedom is strongly correlated with prosperity, and conversely, continued poverty in some countries, mostly in Africa, can largely be attributed to a lack of economic freedom as a result of socialism, corruption or conflict.
Hain, like all leftists, glosses over the awkward problem that by denouncing free markets, they are denouncing freedom itself. What is more critical to a person’s liberty than to have ownership over their own bodies and the fruits of their own labour, to use or dispose of as they wish? What is more tyrannical than a state that dictates what people may earn, and what they may buy and sell, at what prices, and in what quantities?
Smears and sneers
‘A system,’ he continues, ‘that seeks to shrink the size of the state by slashing the budgets that public services depend upon, and which pay for the pensions, child benefits and social security entitlements that cut poverty, encourage greater equality and promote social justice.’
Classical liberals do seek to shrink the size of the state, yes, because it is a dangerously bloated destroyer of value and thief of wealth. Many would oppose an excessively generous welfare state, but to accuse them of seeking to slash pensions and child benefits, as opposed to wasteful, fruitless and corrupt spending, is not only false, but manipulative. Classical liberals can tolerate a welfare system perfectly well, provided that it is affordable and fully funded.
Hain continues in this vein for a while, accusing ‘neoliberalism’ of all sorts of evils, including undermining civilisation and equality ‘whatever our race, class, gender, sexuality, disability or religion’.
That is just a blatant smear. Classical liberalism is founded upon the idea that all people are inherently equal, endowed with the same rights.
Hain reserves a special sneer for those (like me) who ‘for long had screamed “magic money tree” at those like me advocating more, not less, public investment’, but who do accept that public health is a proper function of a small government. If you’re not a full-blown socialist, you must be a principled anarchist or be considered a hypocrite, in Hain’s opinion.
On the money
‘In my view,’ he said, ‘South Africa should not have to choose between a neoliberal “small state” and its current corruptly bloated state.’
Here’s where it gets good. Hain has a solution!
‘To succeed, South African progressives of the left and centre-left need to redefine their stance on the state, not least as a credible alternative to the neoliberal “small state”, which will otherwise continue to sweep the board,’ he argued.
And what might that state look like?
‘To retain taxpayer support, the state needs to be efficient, effective, honest and responsive to public demand, not swollen, hopeless, corrupt and indifferent to citizens’ needs – as the South African state has become in ways that have surely left Nelson Mandela turning in his grave.’
Well, then. That’s the neoliberals told. The neoliberals who say exactly the same thing.
‘It simply isn’t sustainable for 70% of tax revenues to go on funding public sector wages and servicing the national debt. South Africa’s citizens, black and white, will not tolerate continued inflation-busting pay rises for public sector workers while the state’s productivity and delivery collapses, private sector workers suffer real-wage declines and economic growth is stagnant to negative.’
Any neoliberal could have written that, and they certainly do not share Lord Hain’s socialist viewpoint.
‘The South African state needs to be radically transformed. There are around 900 state-owned enterprises – most of them inefficient, many bankrupt and leeching on the taxpayer, who should be funding other things such as better education, health, housing, infrastructure and scientific research.’
Huzzah! We’re in agreement again!
Off the rails
‘But a neoliberal, small state is not the answer either in the modern age – if it ever was. In the most successful economies, the state plays a vital role, not simply by providing high-quality public services, but by encouraging economic growth, in part by actively promoting innovation,’ he said.
‘A smarter, interventionist, risk-taking, entrepreneurial state is therefore the answer.’
So Hain wants a big government, but he expects it to act entirely unlike big government does.
If big governments were smart, risk-taking, entrepreneurial, efficient, effective, honest and responsive to public demand, then neoliberals would not need to advocate against big government.
However, the more power governments have, the more power there is to corrupt. The more involved they are in the economy, the more cronyist their relationship with big business becomes.
We’ve recently been surprised by a billionaire’s 20-minute rant attacking the ANC for making South Africa ‘uninvestable’. This kind of brave, brutal honesty is rare, because for the most part big business is entirely beholden to the ANC.
Big business depends for half its revenue on government tenders, and cannot afford to be seen criticising the ruling party. It knows where its bread is buttered, and pleasing government paymasters is more important than advocating for the interests of private customers.
No matter how you structure it, a government that so dominates an economy will inevitably get mired in corruption and graft. Doesn’t matter where in the world you are, the larger a government is, the harder it becomes to manage, the more expensive it becomes to run, and the more self-serving chancers it will employ.
Big government
An ‘entrepreneur’ is someone who takes the initiative and risk to start a business venture in an attempt to make a profit. Governments can by definition not be ‘entrepreneurial’, because they do not operate under the same incentives as private individuals do.
They are not good risk-takers, because they don’t face the same market pressure. They are not efficient, because they aren’t ruthless in the pursuit of profit, as private industry is.
Many a private entrepreneur lives on a shoestring for years just to save enough to keep a fledgling enterprise afloat, living in a small flat and eating instant noodles and beans on toast. Can you imagine a civil servant tasked with an ‘entrepreneurial’ project agreeing to live under such conditions?
Governments cannot respond to public demand, because without the price mechanism, they have no way to determine public demand in the first place. This is called the economic calculation problem.
The greatest experiment at a government that was ‘smart’, run by technocrats and experts, and intended to have all these pie-in-the-sky features which Hain says a government ought to have, was the Soviet Union. Like every other socialist government before and after it, it muddled along as a brutal, inefficient, bureaucratic behemoth, killing millions along the way, both by accident and design, before being consigned to the dustbin of history in a heap of corruption, ineptitude and rot.
Realists versus fantasists
‘Neoliberals’ are the realists who recognise that governments are by nature not smart, risk-taking, entrepreneurial, efficient, effective, honest and responsive to public demand. While conceding that there are some functions in society best performed by a government, they know its powers must be limited, or they will be abused. If you want a government that is efficient, effective, honest and accountable, start by keeping it small.
Hain recognises all the defects of the present ANC government, and indeed of most post-liberation governments, but he fails to recognise that the socialist project he championed then, and still champions today, caused those defects.
Merely wishing that governments had characteristics that governments do not have, never had, and never will have, is not a rational public policy. Hain might dislike ‘neoliberals’, but at least they’re not delusional fantasists.
If wishes were horses
Beggars would ride:
If turnips were watches
I would wear one by my side.
And if if’s and an’s were pots and pans,
The tinker would never work!
[Image: Patou Ricard from Pixabay]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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