Bubbling 'fire pot' a costly mess - Weekend Argus

13 October 2018 - A badly prepared policy huo guo bubbles away. It draws on a few decontextualised and desiccated ideas, mismatches them with others, and reaches a stodgy, incoherent conclusion. It makes for policy indigestion – but if this is where our policy makers are determined to go, it’s a lethal brew we might all have to eat.

Terence Corrigan

Much of the public conversation on land reform takes me back to the years I spent in Asia, and to a restaurant in Central Taipei that occasionally I patronised.

Its speciality was huo guo (火鍋), or ‘fire pot’. Each table was equipped with a hotplate on which bubbled a pot of broth in which patrons would cook their own meals with ingredients chosen from an impressively stocked buffet: slices of meat, chunks of seafood, fresh vegetables, mushrooms, tofu, dumplings, a variety of noodles and a mouth-watering array of spices and condiments.

The trick was finding the right combination. Some tastes and textures just don’t go together. More than once I had an unappetising, incoherent – not to mention very expensive – mess before me. This applies to arguments, too.

Since the beginning of the year, proponents of the ruling party’s drive to introduce Expropriation without Compensation (EWC) have been pointing to historical precedents to justify it. And with such ideologically compatible examples as Venezuela and Communist China not being encouraging (Venezuela is in comprehensive meltdown, and China’s agrarian revolution contributed to perhaps the largest famine in human history), there has been a quixotic attempt to hold up South Korea and Taiwan – countries widely recognised as having got land reform right – as evidence of the miracles that EWC can bring about. These are countries that not only grew rapidly to affluence, but did so in a manner that benefited their populations broadly. Extraordinary growth coupled with remarkable development.

ANC National Executive Committee member Dr David Masondo, for example, recently pushed this idea in a piece published in the party’s journal Umrabulo (the original is not accessible due to website issues, but an edited version was published by News24, here): ‘Unlike Zimbabwe, Namibia and South Africa in the early phases of their political independence, countries such as South Korea and Taiwan embarked on non-market mechanisms, including expropriation of land either without compensation or below the market value to increase agricultural production and economic development through industrialisation.’

Aggressive land reform, pushed by government and employing EWC would, by implication, promise to do similar things for South Africa.

This is a huo gou approach: a little of this, and a little of that, and a large quantity of the secret ingredient. It also profoundly misunderstands what took place in these countries.

It is true that land reform programmes in these countries were undertaken with the heavy hand of the state to back them up. The state was willing to – and did – intrude into existing patterns of ownership. But EWC was not a significant part of this, and was generally limited to properties abandoned by Japanese owners after the Second World War. The more important and transformative element of these land reform programmes – the redistribution of landholdings owned by landlords to the tenant farmers who worked them – was performed on a compensatory basis. True enough, this was not typically done at market value (and in South Korea beneficiaries were required to pay for the plots they came to own, a rather unappreciated aspect), but it is dishonest to suggest it as a precedent for the policy that the ANC and government is suggesting.

Indeed, the intention of South Korea’s land reform initiative was precisely to build and bolster property rights and capitalism. As analysts Jung Jay Joh, Young - Pyo Kim and Youngsun Koh wrote in a review published by the Korea Development Institute: ‘The constitution that established the Republic of Korea in 1948 guaranteed private land ownership and proclaimed the adoption of a capitalist economic system. Unlike the North, which employed a policy of land confiscation and the redistribution of land, agrarian reform in the South was carried out with compensation paid to landowners. The reform had considerable impact in promoting the capitalist system and economic development in the South in the 1960s and afterwards. The reform helped the South nurture a capitalist society by giving property rights to farmers unlike those in the North, where collective farms were the norm. The guarantee of private farmland ownership created the conditions for the guarantee of private property rights in other forms of economic activities.’

It is worth noting that this stands in contrast to extant policy in South Africa, where the approach is not to transfer ownership to beneficiaries (at least through the redistribution process), but to retain land as state property. The state becomes the new landlord, land reform beneficiaries its tenants.

Land reform in South Korea occurred under a particular set of domestic circumstances. In the 1940s and 1950s, it was still a predominantly agrarian society: land reform involved transferring land as an asset to those who were actively farming it, and removing a rentier class (some of whom then moved on to more profitable pursuits in the country’s growing industries). In South Africa, land reform has been phrased in an idiom of historical and distributional justice. At issue – at least if the pronouncements of prominent politicians are to be taken as a gauge – is the ownership of commercial farms. Yet these are not operated on a rentier basis, and constitute a critical part of the agricultural supply chain, supplying foodstuffs, inputs to industry and critical foreign exchange earnings. A move on the farming sector is likely to be severely disruptive to the economy as a whole.

Ironically, a closer analogy to the situation in South Korea prior to its land reform programme is the large tracts held under traditional authority. Yet assurances have been given to traditional leaders that their lands will not be affected by the current policy drive.

If any credence is to be given to President Cyril Ramaphosa’s assurance that the process under way will expand property rights, it will require a fundamental change in current policy, and a reversal on some of the promises made.

For his part, Dr Masondo suggests that the country’s ‘land should be transferred to the people as a whole and the state should act as a custodian’. He is by no means alone in this. But this – as with so much in the current approach to land reform and the lurch towards EWC – flatly contradicts what the supposed exemplars actually did.

So, a badly prepared policy huo guo bubbles away. It draws on a few decontextualised and desiccated ideas, mismatches them with others, and reaches a stodgy, incoherent conclusion. It makes for policy indigestion – but if this is where our policy makers are determined to go, it’s a lethal brew we might all have to eat.

Terence Corrigan is a project manager at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823 (SMSes cost R1, Ts and Cs apply).