According to everyone who knew him, Tito Mboweni, who died this month, was a lovely man. He was cheerful, friendly, humble and thoroughly decent. A virtuous man, he is more than any other single person responsible for South Africa’s catastrophic unemployment and mass poverty, sometimes causing actual starvation. He makes one look deeply into the sense of the phrases “well meaning” and “unintended consequences”.
From 1999 to 2009 he was Governor of the Reserve Bank of South Africa; from 2018 to 2021 Minister of Finance. In both of these offices he was prudent and competent, helping the ANC in its greatest accomplishment, ensuring sound money and financial responsibility. (Well, more-or-less sound money; the Rand was 3.5 to the US dollar in 1994 and 15 in 2021, a much better record than that of, say, Zimbabwe.) It was as Minister of Labour, from 1994 to 1999, that he did his destructive work, passing the job-destroying, economy-wrecking Labour Relations Act in 1995 and Basic Conditions of Employment Act in 1997, and then the racist, job-destroying Employment Equity Act in 1998.
Our real rate of unemployment (including those who have given up looking for work) is now 43%. One result of this is that 27% of our young children are permanently stunted by lack of food, meaning that their brains have been irreparably damaged. Mboweni bears high responsibility for this human tragedy – although almost all senior ANC, EFF, and Communist Party politicians believe in the same vicious job-destroying labour laws and minimum wages.
Mboweni’s labour laws make it so difficult, expensive and dangerous for businesses to employ workers that they employ fewer than they would have done without the laws, or they even shut down their business altogether. If employers know it is next to impossible to fire lazy, incompetent or dishonest employees, they don’t hire anyone. If a businesswoman knows she will be spending a lot of time at CCMA offices rather than producing goods for the people, she will be less likely to put her money into her business. (She might decide instead to put her money into SA Retail Bonds, which pay 5% above inflation.) Budding little businesses that could have been started up by poor black people never start up. Our unemployment rate is not only much higher than comparable emerging economies but off their scale altogether.
Shut out
The overwhelming consequence of these laws is to shut poor people out of the formal economy. Was this also the intention of the law makers? What, in fact, was their intention? To improve the lives of workers? To prevent workers getting jobs? To get more “decent work”? To protect richer workers against poorer workers? To punish employers? To feel a warm glow inside? To win the approval of peers? To be politically expedient? To advance their political careers?
We are often told that such a policy or such a law or such a person is “well-meaning” even if their actions cause harm. We are also told about “unintended consequences”: this is when an act or policy that is hoped to have good consequences actually has bad consequences. In fact “unintended consequences” are usually “completely expected consequences”.
Burdensome rent acts that give tenants the right not to pay rent, not to pay for any damage they might cause and the right to stay in the premises as long as they like have the “unintended consequence” of reducing the number of houses to rent – as anybody would have predicted. These well-meaning acts have the effect of making life worse for those who do not own their own houses, and of increasing homelessness. But are they really well-meaning? Is their intention really to protect tenants, or is it to punish landlords?
We are told that the intention of the Basic Conditions of Employment Act was “establishing the minimum standards for employment conditions and playing a vital role in protecting the rights and interests of workers.” It set minimum standards all right, and they shut the poor out of employment. It only protected the rights and interests of rich workers with jobs, and not those of the poor and the unemployed, who have suffered because of it. Was Mboweni, a decent man according to everybody who knew him, well-meaning when he passed this act, wanting only to improve the lives of working people, or was he actually vindictive, wanting to punish businesspeople?
Bargaining councils
The dreadful Bargaining Councils, with their coercive powers over non-participants, are quite naked in their aim of shutting the poor out of the economy. In each sector of the economy, a group of rich businessmen (usually white) sit down with fat cat trade union leaders and prescribe very high conditions of employment for whole sector, which budding small businessmen (usually black) cannot meet.
Under Section 32 of the Labour Relations Act, this rich man’s cartel then orders the Minister of Labour to extend these conditions over the whole sector including poor businessmen. The result is more unemployment and more poverty. In this case, though, neither the rich businessmen nor the rich trade union leaders are even pretending to be well-meaning. They couldn’t give a damn about the poor. They just want to fight to keep the privileges of the rich. When labour leaders speak about the “hard-earned rights” of workers, they mean the hard-earned right of rich workers to make poor workers starve.
The minimum wage gives further thought to “well-meaning” and “unintended consequences”. It now stands at about R4,780 a month (R27,58 an hour). This compares with the average income in Sub-Saharan Africa of R1,120 a month. No jobless man or woman is allowed to accept a salary of less than this even if he or she would starve to death without it, however desperately she or he wants it. “No”, say the well-meaning supporters of the minimum wage, “we feel that it is better for you to die of starvation than to accept a job that we rich, well-meaning people think is too low for you.” The unintended consequence of the minimum wages is higher unemployment and more hunger.
But if a minimum wage of R4,780 a month is well-meaning, why not have a minimum wage of R1 million a month? That’s even more well-meaning; in fact it is 209 times as well-meaning. Then the unintended consequence would be over 90% unemployment.
Zwelinzima Vavi, the trade union leader, was interviewed on Mboweni shortly after his death. Vavi was once general secretary of COSATU and is now general secretary of the SA Federation of Trade Unions (SAFTU). His most famous moment came in April 2010 when the Mail and Guardian revealed that his wife, Noluthando Vavi, was “being paid R60,000 a month to market financial products to union members”. (That’s about R120,000 a month in today’s money.) The M&G told us “And the company she acts for is so anxious to keep the deal secret that it offered the Mail & Guardian a bribe of R120,000 to suppress the story.” The Vavis had bought a mansion in Morningside in Johannesburg in 2008 for R2 million. No doubt he considers himself a working-class hero. His remarks about Mboweni were revealing.
Liked personally
Vavi said he liked Mboweni personally. He condemned him for the good work he did as head of the reserve bank and minister of finance, and praised him for the bad work he did as minister of employment. He loved the job-destroying labour laws and praised the coercive closed shops. He emphasised a hatred for business and capitalism over any concern for workers.
He was horrified at our sky-high unemployment and seemed in a vague although very angry way to blame everyone for it except those who had passed the laws that had caused it. He seemed to feel that if you threatened business people enough and showed how much you loathed them and wished them ill they would be forced to employ a lot more workers. Mind you, most of the ANC elite feels the same way: “Why don’t you invest more in South Africa, you exploiting, racist, imperialist, white monopoly capitalist bastards!”
When a bad law does harm, the ANC’s instincts are to make it worse. So expect a higher minimum wage and even higher levels of unemployment and more malnutrition. Expropriation without compensation of our farms might come next from the well-meaning ANC, with the unexpected consequence of much more expensive food and more starvation. Then perhaps the NHI, with the unexpected consequence of the collapse of all our hospitals and the exodus of our medical professionals. More and more well-meaning disaster.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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