South Africa: A New Assault on Economic Liberty - The Library of Economics and Liberty

1 January 2019 - The poor have remained poor not because of market-friendly macroeconomic reforms under Nelson Mandela, but because of the constant threats against them.

Garreth Bloor
Despite deeply worrying headlines, South Africa is among the best positioned developing countries able to achieve an economic boom according. Its freedom champions require the same international solidarity they received in the fight against apartheid.

South Africa has hit the headlines in recent weeks amidst a deeply contentious motion to remove property rights, again; this time almost twenty-five years after apartheid. White farmers are the target, according to proponents of Expropriation without Compensation.  The picture is far more complex.

The recent developments and wider debate take place in a county where discourse includes issues of race and the historical dispossession of land, claims of alleged (or imminent) white genocide and ongoing grinding poverty for the majority of black South Africans.

Part of getting to the truth means considering the extremes of the global alt-right andradical left within South Africa, who have had outsized influence on many platforms. Both are obsessed with race and collectivism taken to dangerous extremes, in contrast to individual liberty.

In breaking down the issues, proponents of liberty and markets can play a key role in determining South Africa’s future for the better. Many did in the transition to a property-respecting Constitutional Democracy, albeit one that has had the specter of hard leftist ideology as an ever-present force – the reason why the democratic ‘miracle’ was never followed by an economic one.

From Apartheid to the Present

The legacy of apartheid as well as its repressiveness is hard to overstate. Over two decades into democracy, millions remain excluded from the economy. The hard-left paints a picture of free markets as the cause, but exclusion is the core issue. While the iconic statesman Nelson Mandela accepted the importance of markets and property rights during negotiations to democracy, opponents within the ruling African National Congress and the ANC breakaway party (the so-called Economic Freedom Fighters) are pushing for a roll-back.

The poor have remained poor not because of market-friendly macroeconomic reforms under Nelson Mandela, but because of the constant threats against them, alongside major economic distortions at the micro level, where –  as pointed out previously – the influence of the left has been stronger. The result is the failure to adopt the requisite labour and educational reforms that have paved the way for greater prosperity in other emerging markets, where growth rates of above 5% are achieved. South Africa’s economy, by contrast, has contracted this year.

Expropriation without Compensation (EWC)

One of the central misunderstandings about EWC is that it does not propose taking land from whites alone. It removes property rights for all South Africans. Leon Louw, Executive Director at the Free Market Foundation of Southern Africa, argues that poor black South Africans will suffer most from this major assault on property rights.

His fellow long-time activist Temba Nolutshungu leads a program to restore property ownership to those dispossessed under apartheid. Nolutshungu says state companies inherited from the previous regime should be privatized, and the state should grant formal ownership of property to the millions of South Africans who still remain tenants on government land – including land inherited from the apartheid state, which had confiscated it from private black owners.

Both Louw and Nolutshungu played a role in negotiations to democracy, and successfully included property rights in the Constitution. Earlier this month they brought together leaders from Venezuela and across Africa to share their insights into the disastrous consequences that befall nations which take the path proposed by the South African government today.

Public Opinion

Despite government rhetoric claiming a dire demand for land, surveys have found only 1% of black respondents (down from 2% in 2015) say that ‘more land reform’ is the ‘best way to improve lives’.

“By contrast, 73% of black South Africans saw ‘more jobs and better education’ as the ‘best way’ for them to get ahead,” according to a report on the 2017 survey.

In community workshops within South Africa’s formerly marginalised black townships, entrepreneurs who gather to discuss issues affecting doing business call for massive liberal reforms – including privatization, greater consumer choice and steps to ensure ease of doing business. I have worked with rising voices like Unathi Kwaza, an eager supporter of reforms that would easily catapult South Africa into the top ten most economically free countries.

It’s the economy, stupid!

Given public opinion today (and a tradition of fighting for direct ownership and open markets in South Africa), why does the debate persist? The Institute of Race Relations (IRR) argues it is a proxy. In a battered economy, the promise of ‘land = prosperity’ has become a holdout to millions who remain excluded from the economy and desperate for any opportunity at betterment.

With the perspective of graduate studies on related issues in the field of Rhetoric, I would argue the equation has surely been one of the greatest rhetorical coups pulled off by a political party. The notion has been aided by the relatively new President positioning himself as a business-minded reformer – somehow able to implement Expropriation without Compensation without derailing the economy.

Ramaphosa replaced an unpopular Zuma in February this year through an internal ANC changing of the guard, breathing new life into the ANC and the value of the currency at the same time (it has since dropped 27% in value).

A second reason why the rhetoric coup has been critical for opponents of liberty is that it involves ‘bringing home’ the ANC-breakaway party, the Economic Freedom Fighters (EFF). The EFF has used Expropriation without Compensation to garner around 13% support of public opinion, currently the highest it has ever polled. As the ANC faces waning political prospects, down from over 60% a few months ago – discussion of an ANC-EFF merger is underway, even if officially denied. It gives the EFF leadership bargaining power for positions they could not acquire when originally within the ANC prior to breaking away.

Thus, for Mandela-styled moderates within the ANC who want to implement urgently required reforms, even assuming the President himself is among them, the task is extremely difficult if not impossible in the short term, given the political constraints.

Garreth Bloor is Vice President for Transatlantic Affairs at the Institute of Race Relations (IRR).