‘We can’t do this because then the rich capitalists will take all the money.’
‘You just don’t care about the poor!’
‘But who will build the roads?’
After being on a South African university campus for awhile now, I have seen the tragic demagoguery of a vocal majority of students. I have voiced my opinions in politics lectures and seen the current student organisations on campus. Sadly, capitalism is an ideology demonised and despised as being evil, exploitative and caring very little about the poor.
I think capitalism is actually none of these. Despite this, there is a constant rhetoric among the political Left that Capitalism just doesn’t care about the poor. People turn to Socialism to try put themselves on a moral high-ground and claim to be the champions of the oppressed. This, however, could not be less true. Here I hope to show that not only do Capitalists care about the poor, but they care more about them than any statist.
One word rather synonymous with poverty is ‘unemployment’. South Africa is known to have an incredibly high rate of unemployment and unemployment naturally leads to poverty, for when one has no income, one generally has no money. Our dire state of poverty has also lead many opposition parties to base their political campaigns around job creation. The Democratic Alliance has constantly mentioned the issues of job creation and recently staged a huge march in Johannesburg for jobs. The EFF even makes the claim that they are the ‘last hope for jobs’. So that naturally leaves us with the question: how do we create jobs?
This is where I think free-market capitalism is strongest. Ultimately, if you want to say you care for the poor, you need to support some kind of way of creating more job opportunities for them so that they can earn an income.
Currently, small businesses in South Africa face huge issues with starting up, due our monstrous volume of job legislation. All the legislative ‘red tape’ for small businesses and potential entrepreneurs in South Africa simply creates yet another barrier to the poor. It discourages or makes it severely difficult for businesses to expand or even simply start up. What’s frightening is that the political Left are pushing for more business regulations.
I’ll use the minimum wage as an example to show how government regulations hurt job creation. In a free-market, the wages that employers pay their employees have to (in the greater scheme of the business) be less than the market value which that employee provides for the business – otherwise, the business would be making a loss on each employee hired.
As an example, let’s say I want to start up a lemonade stand. I can squeeze enough lemons to make ten glasses of lemonade in an hour and I make a profit of R5 on each glass of lemonade. Now let’s say that I want to hire someone to squeeze lemons for me to increase efficiency. The government requires me to pay a minimum wage of R100 an hour to my employee even though he only provides me with R50 of profit every hour. This means that I would be running the business at a loss and it would be a much better decision to simply downsize and not hire anyone.
When the government artificially forces businesses to pay their workers at a rate higher than what the workers provide for the business, the business is left with two options: rack up prices to compensate or downsize and fire workers. More often than not, the best business choice is to downsize and this leaves people jobless and many-a-time, poor.
By contrast, if we were to take out all government regulations from the private sector, the number of available job opportunities would greatly increase as businesses feel comfortable to expand and entrepreneurs decide to start up their own businesses. In addition to this, competition means that businesses end up self-regulating instead of having the government force it on them. When there are more businesses and so more competition, it becomes within the interest of an employer to pay their workers well. Because, now, workers will have more choice of where to work and so cannot be exploited. This is the freest, most fair and ultimately the only way that we will severely decrease unemployment in South Africa.
So while the leftist wants more regulations and claims to champions workers’ rights, the only rights they are championing are those of the lucky few who have managed to get a job in their regulated, business-unfriendly economy. The Left is either deluded when it comes to economics, or they simply don’t care to see what benefit a free-market would have to the poor. Until South Africa adopts a fiscally-conservative tax policy and free-market private sector, we will always have many unemployed and even more in poverty.
If you really cared about the poor then you should support an environment where they can lift themselves out of poverty. Until then, it seems that the cycle of poverty may continue indefinitely.