This article was first published by Business Day on 21 June 2023
State is not the knight in shining armour it portrays itself to be
Ideas, concretised into policy to which the various political parties subscribe, have consequences. This may seem akin to stating that the sky is blue, but it must be heard and understood. Ideas beget policies, and policies have consequences. It is time South Africans fully actualised themselves to this reality.
Following the democratic elections of 1994, SA has been an interesting example of majoritarian democracy in action. Even though there has been no change in power since 1994 nationally, no-one would say SA is undemocratic. Far from it. The governing party being voted into power for three consecutive general elections is a sign of democracy in action.
Since the advent of the democratic order South Africans have had a choice in the type of policies that govern their lives. Even though the constitution was never democratically voted on in the form of a referendum — as I believe should have been the case — South Africans can still influence constitutional drafting by choosing representatives in the legislature, who will then argue for their chosen amendments.
This choice over policy, and determining who goes to parliament and the Union Buildings and on what grounds, is an extremely important phenomenon. Take the policy of welfare in the form of cash pay-outs, which was introduced by the current governing party.
This policy has undoubtedly been popular. Poor people are given money to spend on whatever they wish. That expenditure then feeds into the growth of other industries, which receive the spending money of the welfare recipient. Everyone wins, says the welfare proponent, only noticing the “seen”, and not the “unseen”, as Frederic Bastiat would say.
Firstly, the unseen is economic. The money must come from somewhere in the economy, through taxes. That money, which is taken from a productive sector of the economy that generated wealth for society, is now transferred to an individual who will simply spend it.
Some would say the expenditure is capital-generating, shown by the multiplier effect. The retort would be that the implication of state intervention necessitating capital creation is wrong. So, if capital creation is possible without the state, it cannot be that it becomes contingent on the state, through taxing and doling out cash payments or otherwise.
Another unseen consequence is one of incentives, at a collective level. I would not go as far to say that receiving free money eliminates the incentive for people to seek employment or their own capital generating activity, but it’s safe to say it does have some effect.
At the level of consciousness, freebies create an expectation of problems being solved without those involved doing anything. They must merely breathe and exist, and they are given free things for which others exerted themselves.
In SA one of the consequences of the policy of deliberate social welfare is a class of millions of people who feel entitled to the results of the productive activity of others. From millions of households that do not want to pay for their services, to the near universal thinking that government must provide everything, from houses to schools right down to food.
A culture of entitlement is pervasive in SA. The policies of the governing party have always been economically interventionist. It is all about the degree of intervention that creates the problems we see. Although the tenure of former presidents such as Thabo Mbeki saw the highest economic growth the country has experienced after 1994, it also saw the introduction of the cash payouts and their expansion.
From the Reconstruction and Development Programme (RDP) to the Growth, Employment and Redistribution (Gear) policy, or even radical economic transformation (RET), the state is always seen as the primary player in the creation of wealth. The state, equated with the governing party, is always the knight in shining armour for “poor blacks”.
But let's be honest about what has caused the problems the country faces. It is the policies implemented by the party the majority of the population has elected on multiple occasions.
The choices made by voters at the polls have resulted in more than half of young South Africans being unemployed, low economic growth due to a strangled and villainised private sector, as well as core infrastructure breakdowns stalling the delivery of — or downright leading to a shutdown of — critical services such as water and electricity.
The problems we face in SA are of our own making, and the solutions lie with us too. We must change how we see the state. It is not the knight in shining armour that it portrays itself to be. We must encourage free enterprise and remove inhibitions to free the market. We must change those who administer the state or make them change their policies.
All this must be done if we are ever to get off the road to economic serfdom.