The country’s economic junk status is a direct result of policy intransigence. Current government decisions appear to be based on a lack of consideration for the lessons of history. Economies are fragile; persistent adverse policy-making breaks down an economy, reduces productive investment and economic activity, and causes untold harm to citizens.
It is time for a policy about-turn, one that places the interests of the people above the narrow interests of politicians at the helm of the government and their rent-seeking bedfellows.
Policies to bring about dramatic positive changes would include:
• Abandoning all race-based legislation and regulations that cause racial tensions, slow economic growth, and increase — not reduce — the plight of the poor.
• Giving the country’s poor, on a means-tested basis, ownership shares in all state-owned enterprises inherited from the apartheid government as was done successfully in the Czech Republic.
• Giving full and unrestricted ownership of the municipal houses they rightfully live in to the occupants, and give traditional communities (as communities) title, with full ownership and management control, over the land that is rightfully theirs. This double-edged measure alone would be a catalyst for economic self-empowerment on an unprecedented scale.
• Adapting labour legislation to those who have been unemployed for six months or more, to voluntarily enter into any contracts they wish with employers, especially owners of micro-enterprises.
• Removing all red tape that imposes unnecessary costs on entrepreneurs and prevents them from providing goods and services to consumers in the most efficient and effective manner. When this is done, the consequence will be a proliferation of businesses, especially in the labour intensive small-and medium-sized enterprises sector.
These proposals would directly target the poor, free them from poverty in a manner that enhances economic growth and allow the economy to function optimally. In considering the proposed changes, it would be useful if government were to take note of world economic history. The Industrial Revolution in Britain, which changed the world forever, was set in motion by specific policy changes.
The graph below, published by HumanProgress.org and based on the work of the late Professor Angus Maddison, shows how per capita GDP in the world only started to rise rapidly from the late 17th century. Until just more than two centuries ago, most people on earth lived in poverty and misery.
During the last decades of the 18th and the first of the 19th century, Britain underwent a major transformation. These changes were to positively influence events in the rest of the world, including SA, and result in higher incomes and improved living conditions for the average person that would have been inconceivable in previous centuries.
It is generally understood that one of the most important changes was mass production, made possible by the introduction of machinery. The "educational revolution" that accompanied the Industrial Revolution, which made the English highly literate and numerate and enhanced their technical skills, is less well-known. Technical developments made some jobs redundant but many more were created, in the same way that telephones replaced speaking tubes and computers replaced hand-written books of account.
In 1951, 37% of England’s economically active population, more than 6-million people, were classified as skilled artisans; a further 30% were white-collar workers, a substantial increase on earlier times.
The Industrial Revolution is often misrepresented as an era of increased hardship for workers. The truth is that the people who left farms and domestic employment to work in the factories did so to improve their incomes as well as their working and living conditions. Similarly, the ongoing urbanisation in SA is motivated by a search for better long-term opportunities for families than are to be found on farms and in rural areas.
Change in SA has to consist of transforming conditions for people who have missed out on becoming literate and numerate; to make it possible for them to learn skills that will enable them to earn a living for themselves and their families, and not be reliant on others for their well-being.
If the proposals given above were adopted, SA would experience its own "economic revolution", a positive transformation that has everyone in the country working towards higher economic growth and a better life for themselves and everyone else. To live and let live, with equality before the law for everyone, is the way to foster co-operation across-the-board and improve the lives of all in the country.
• Temba Nolutshungu is a director of the Free Market Foundation
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