South Africa - Forever at the Crossroads

South Africa has a history of great promise, forever postponed by wrong turnings and false starts. Even the most ardent supporters of apartheid must today wonder what possessed them. How did they conclude that it was right, just, or even a good thing, to prevent the majority of this country’s people from participating fully and unhindered in the national economy?

People who supported apartheid were not unprincipled. They were mostly ardent and conservative, even ultra-conservative, protestants. Yet for decades their leaders persuaded them to support policies of separation and exclusion based solely on racial selection. Their heads however, did not rest easy at night because they knew deep within themselves that they were perpetrating an abiding wrong. It must have been a relief for many when the courageous among them, first tentatively and then with increasing vigour, started to speak out against the race-based policies of the day.

Apartheid did not end because of the threat of force or of external sanctions. It ended primarily because Afrikaners realised it was wrong. It ended because new leaders had the courage to admit the error of their ways and offered to subject themselves to a new, democratic order in a properly open society.

What people often forget is that policies of oppression do not harm only those whom they intend to exclude. They inevitably harm the oppressors themselves, with many unintended victims besides. Towards the end, for more than a quarter of a century, South Africa had a steadily shrinking economy precisely and only because of those policies. The reason was simple: an economy does not grow when significant numbers of its citizens are prevented from producing at their optimal levels. Conversely, an economy grows best when all citizens are free to produce enough to pay taxes, plus more than sufficient for their own needs. The surplus so generated constitutes savings, and saving provides the capital that is the essential mainspring of investment and economic growth. It is as simple as that.

Economically, apartheid was disastrous for everyone, including the people who kept voting for it. Moreover, the policy of National Socialism that the apartheid government implemented added significantly to the harm that was being done. Economies function best when all citizens are free to enter into voluntary exchanges with each other; where they are free to use their disparate talents to best advantage to provide goods and services for their fellow citizens; where governments do not attempt to dictate to them, as the apartheid government did, prescribing to them in the finest detail what they should and should not do. National Socialism is a system that inter alia creates an illusion that entrepreneurs own their own businesses, yet dominates the way they function.

In socialist and communist economies, the state owns and controls property and the means of production. The apartheid government owned and controlled the ‘commanding heights’ of the economy, including the railways, the airline, the postal service, electricity supply, telecommunications, steel production and even holiday resorts! It made a point of owning and controlling the land on which black South Africans lived and the houses in which they lived, just as the Soviet Union did with its citizens.

After 1994, there were a few halcyon years when it appeared that South Africa might stop being forever at the crossroads; when finally its citizens would enjoy the freedom they so richly deserved after so many years of government domination and suppression. Those were golden days indeed, especially for black South Africans. They no longer suffered the yoke of exclusion, prevented by myriad laws from competing with their fellow citizens. Now, everyone believed, there would be true freedom. However, many people were of the view that there had to be some form of corrective action to attempt, in some way, to right the wrongs of the past.

Members of the Free Market Foundation knew then that the country was at yet another crossroad. How could corrective action be taken without burdening the people with endless new forms of racial selection, once again scarring the soul of the nation into perpetuity?

Various proposals by the Foundation were collected together in a booklet entitled From Poverty to Property. In the booklet it was pointed out that under the socialist apartheid government the state had collected a massive quantity of assets: huge tracts of land, valuable urban properties, and large state and para-statal industries. It was proposed that these assets should be used to give the people, especially the poorest, a once-off ‘democracy dividend’. Give these assets to the people. Exclude the wealthy by a means test.

Give every landless person a rural agricultural plot of at least five hectares or an urban building plot, free of charge. Give ownership of the state industries to the people. Sell all state buildings, with the exception perhaps of Parliament and the Union Buildings. Hire back the required office space, and add the proceeds of the sale to the ‘democracy dividend’. Then abandon race classification. Allow the people of South Africa to taste true freedom and peaceful co-existence for the first time in their history and be free of the claustrophobic and ultimately catastrophic effects of government imposed racial discrimination.

Reviewing the proposal seven years on, I believe it still has real merit. It is not too late. The poor had high expectations and have been bitterly disappointed. A dramatic transfer of assets to them would remove that bitterness and have immediate immeasurable benefits for them and the country as a whole.

Why not put this proposal to the test by a referendum? It could be tied to the removal from the Constitution of ‘the exception to the non-discrimination section’. Let us see whether this proposal has the approval of the majority of the people. If they make the decision I predict, South Africa will at last be free to move from the crossroads onto the high road to peace, prosperity and justice for all in a truly non-racial society.

Author: Dr BC Benfield is the Chairman of the Free Market Foundation and this is his Chairman’s Address to the Annual General Meeting of the Foundation on 31 August 2006. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author's and are not necessarily shared by the members of the Free Market Foundation.

FMF Feature Article/ 31 August 2006