Bigger Government Won’t Eliminate Corruption

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In his latest address to South Africa, President Cyril Ramaphosa talked a big game about stepping up the fight against corruption. We have heard speech after speech, and have been presented with plan after plan, that the government will fight against, and definitely intends to eliminate, corruption. But the President and others can deliver all the speeches they like, and establish anti-corruption unit after unit, to their hearts’ content — the size and role of the South African state, that has been growing year after year, mean the opportunities for looting and corruption keep growing.

Corruption is a necessary feature of communism, the philosophy that places the collective and the state above the individual, and communism acts as the guiding light for the ruling African National Congress. Because communism requires that the state control all facets of the economy, it follows that progressively more state intervention and interference is considered legitimate.

To decree on the ‘best’ allocation of resources, the state must be able to decide who can own what, who can build where, who can trade with whom, who can invest where, and who can receive contracts with the government. It needs as much control as possible. With that control comes the power to decide who wins and who loses. Where businesses would compete — and succeed and fail on their own merit — in a free market, when the government controls large sections of the economy and society, those in power can decide, based on their own arbitrary standards, which businesses and companies ‘deserve’ lucrative state contracts.

The COVID-19 pandemic represented an urgent threat to South Africans’ health and their very lives. The South African government assumed the role of protector and leader, suspending economic freedoms and civil liberties under the supposed goal of buying the country time to prepare for a flood of cases. Large sections of civil society supported the government’s chosen path, and millionaires and large corporates donated to the Solidarity Fund, with the aim of assisting smaller businesses and entrepreneurs from not going under. But as tends to be the case in South Africa, when the government establishes something, there are suspicions of corruption and looting. It turns out that, once again, bigger government necessarily entails corrupt tenders and deals.

As detailed in the 26 July edition of the Sunday Times, the Special Investigating Unit (SIU) (the unit the President talked about in his latest address) is already investigating cases of companies and individuals who are believed to have benefited from questionable COVID-19 tenders. At the centre of the investigation are deals involving emergency purchases of personal protective equipment (PPE) — believed to be worth more than R2.2 billion. Ninety companies that received deals from the Gauteng health department are under the spotlight in this regard, and in KwaZulu-Natal irregular contracts are believed to amount to over R30 million. We will read and hear about more such questionable contracts in the coming months. The government provided yet another massive opportunity for corruption, and the effects will not ‘disappoint’ in that regard.

When the only path for profit-making open to a company is where it is forced to work through the government, those with more resources can grease the wheels to ensure their services and goods win the contract. And when their service or product does not live up to the expected standard of quality, it can again paper over the cracks. Indeed, through giving politicians and bureaucrats preferential treatment and discounts, the company can further ensure that the government will hide any deficiencies and shortcomings.

The relationship, a parasitic one at best, is indicative of a desire to not face competitive market forces, and to rely on government force and fraud to stay ‘ahead.’ Bigger government — and large, concentrated pools of resources — are highly attractive for those in society who don’t want to compete in an open manner, and who want to use government favours and barriers to kill off their own competition, once they have curried enough political favour.

For as long as the government assumes the role of enlightened decider, and South Africans support it, we will continue to bear witness to large-scale corruption and looting. The only cure for endemic corruption is to severely restrict the size and role of the state. The more control it has, the greater the incentive for questionable contracts and preferential treatment. Limited government, and a competitive free market, are necessary ingredients if a society wants to limit the opportunities (widespread consequences) of government corruption.