Radical Prosperity: Townships as Seeds for a Bright South African Future

We need to compensate the descendants of people who had their property expropriated during apartheid and the period just before it, but that surely can’t be the whole story. There is an opportunity cost associated with not being allowed to own land and take certain...

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We need to compensate the descendants of people who had their property expropriated during apartheid and the period just before it, but that surely can’t be the whole story.

There is an opportunity cost associated with not being allowed to own land and take certain jobs or live in certain areas. This is impossible to quantify, and we might be tempted to try a stupid solution like government’s BEE/AA programs, welfare (including a universal basic income), and government’s land reform process.

Surely, there must be a market solution to the problem that doesn’t assume government is competent in allocating resources.

The township is one of the most iconic legacies of apartheid; a symbol of poverty and the engineered separation between races. They are also places where millions of people enjoy some of the happiest moments of their lives, me included.

So what if we could deal with this problem of compensating for opportunity costs by focusing on the township? What if this could be done through government doing less and not more: Spending less, regulating less and not taking away more liberty from their usual scapegoats.

A possible solution might be turning townships into special economic zones, where regulations are cut to the bone, taxes on businesses based there are at the lowest possible level and basically everything is done to create a favourable environment for starting and growing businesses. Land tenure for people living in the townships and their businesses would need to be titled and secure before this is implemented, of course.

The really good thing about this is that it would draw investment to the townships at a rate higher than other parts of the country such that in a single generation the townships might catch up to the rest of South Africa. We would see even richer Sandtons, Rosebanks, etc., springing up from the townships. The people living there would rapidly move into the middle class and a lot of them would become millionaires and billionaires.

The government has to commit fully to this, however. There can be no half measures. Some of the regulations they could do away with (or exempt townships from) could include legal tender laws as expressed in the Reserve Bank Act of 1989, allowing people in the townships to use alternative currencies, such as Bitcoin, for transactions.

The people moving into the townships (the benefits would apply to companies located in the townships regardless of who owns them: Win-win) would bring with them an increased demand for township property, meaning that people who own township plots could soon find themselves being overnight millionaires. New banks that have their head offices in these townships could even be exempt from the normal approval processes for new banks, meaning they could be founded faster and for a much lower cost (doing away with the non-existent need for a state bank, people can start their own and without having to deal with the conditions currently imposed by the state).

With no labour regulations in our townships, there would be no need for a government industrialisation plan or possibly even a beneficiation strategy for the minerals we produce, because we could process them in the townships.

Now, one of the problems might be the prevalence of crime, but I hope that the increased opportunity for prosperity would do away with that. It won’t do so immediately, and might not ever – who knows?

These reforms would benefit township entrepreneurs most of all, but big business would also benefit because they would now have an outlet for making their investments without having to deal with government trying to thwart them at every step.

Of course, with all these benefits, we would need to make some sacrifices.

These reforms would mean government is potentially receiving much less revenue as businesses moved from current CBDs to the new township tax havens. Government would have to be willing to make deep cuts to the welfare system as it is now, depending on the amount of taxes they take in. That’s why I think we can only implement these reforms after paying off government’s current sovereign debt.

We don’t have to do anything overnight is what I’m trying to say.

The reforms could be phased in by implementing them in two or three of the larger townships as a pilot project and gradually extending it to the rest of the country in phases depending on the feedback we get from the experiment.

I was born and raised in a township, and nothing would break my heart more than if they are still associated with poverty when my time to leave this Earth comes. I would like to believe that poverty is not destiny for the people I grew up with. Let’s give these proposals a shot.

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  1. Harald Sitta Reply

    Special economic zones i ‘preach’ since years … but look >. politicians will NEVER understand the concept of spontaneous order. and will always prefer ‘solutions’ which will make a lot of voters their clients and dependent on them.

  2. Mpiyakhe Dhlamini Reply

    If it was all the blacks fault, why was apartheid job,land etc. reservation needed? Why didn’t they just leave the socialist natives to bicker among themselves?

    1. James Groenewald Reply

      As per Carl Jung, thinking is hard, that’s why most people judge. Fault and excuse are words associated with judgement, while reason and cause are associated with thinking.
      I’m questioning the current political discourse, which has been/still is too much judging and not enough thinking.
      If the reason for poverty in South Africa is solely Apartheid, it implies that the solution lies in the political realm. But the SACP/ANC have had untrammeled political power for more than twenty years, and there is no end in sight to the problems – they have just got worse.
      Therefor the causes aren’t necessarily political, but technical in nature, and it follows that the solutions must therefor be technical as opposed to political.
      The Nats did a technical analysis in the early 1980’s and what they discovered led them to abandon Apartheid. They faced up to reality then, and as the causes and reasons for their change of direction have just got worse over the last 30 years, so should the present political class face reality now and change direction.

    2. Mpiyakhe Dhlamini Reply

      Obviously apartheid is not the only reason for the continued poverty of black people, otherwise I wouldn’t be suggesting we solve the problem through strengthening property rights and a laissez-faire approach to the economy. If you’ve seen my other articles you would understand exactly where I stand on this

  3. Mpiyakhe Dhlamini Reply

    According to you, there was no Fagan commission and no opposition to apartheid by liberals.

  4. Mpiyakhe Dhlamini Reply

    A final point, as a non-collectivist, I don’t blame white people for anything, people are not automatically participants in the decisions made by people who have the same skin colour as them. Something you seem not to agree in as evidenced by your apparent belief in a “white collective” that engineered it’s own economic progress and a “black collective” that rejected economic progress.

    1. James Groenewald Reply

      Of course the “white collective…engineered [their] own economic progress”. My question is what did the “black collective” do?
      The “black collective” were always in the majority, and their population growth outstripped the “white collective” by multiples, yet they seemed powerless throughout most of the twentieth century? Why?
      Why could the Afrikaners, whose properties and economy had been completely demolished by the Boer war, recover to the extent that they gained the economic upper hand over the English in ± 50 years, while the “black collective” did not?
      It is time to apply critical thinking to our present narrative, without fearing where the conclusions may lead.
      My angle is this: in his book, “The Clash of Civilizations and the Remaking of World Order,” Samuel Huntington’s thesis is that ideologically-based conflict would be displaced by civilization-based conflicts. Isn’t that the case now in South Africa?
      Up to now the South African situation has been subject to a Marxist based analysis, but Marx only applies to countries with homogenous cultures and levels of industrial development, which was never the case in South Africa.
      What we have is a cultural divide that just happens to fall along a racial divide.

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