Times LIVE recently released a message on their Facebook page calling for input on Pravin Gordhan’s proposed budget. The estimated government budget for the 2016/2017 fiscal year is sitting at R1.3 trillion, with an obvious predicted shortfall of tax revenue due to slow economic growth. Alongside the rhetoric used to announce the intended use of said budget, Gordhan has asked for input from the public on how South Africa’s government can improve the country.
The answer is simple – liberalisation of the economy, but for those unconvinced of the prosperity of economic freedom, this answer may require some justification.
Gordhan specifies 4 questions that he wants answered in relation to improvement in South Africa.
a. What are the three things that government does very well?
Corruption, cronyism and avoiding prosecution. There is very little that the South African government has to be proud of. Its biggest achievement is probably being one of the least bad governments in Africa, a comparison which is not worth even mentioning as we reside in a continent known for its civil wars and corrupt juntas.
The ANC has managed to maintain relative stability since 1994, something that it can add to its accolades, but their policies have also led to inflation, a stagnant economy, increased crime, mass unemployment and a corruption crisis. The only department that seems to do relatively well is the South African Revenue Service, which uses its efficiency to fund a bloated and inefficient administration.
b. What are the three things that government should stop doing?
Over-regulation, ideological pandering and over-spending. The SA government is notorious for allowing a combination of revolutionary rhetoric and personal agendas to get in the way of personal growth. In a misguided effort to right the wrongs of the past, policies have been instated that strangle our economy. These are manifested in our Affirmative Action policies, bias in favour of labour unions, business registration laws and a complete disregard for business and investor relations.
Pandering to communists and socialists doesn’t help, as investors and businesses are put on edge by the uncertain future of the country. Marxist economies never do well for businesses (or anyone) and the repetition of revolutionary rhetoric and the intent to “transform” the country is no doubt scaring off local and foreign investors.
With a strangled and terrified economy, the state should definitely not be spending as much as it does. Tax revenue comes from a minority of the country and spending on transient state functions doesn’t lead to easing this burden. The spending must slow down and even stop. We do not have the political clout to shoulder such a massive national debt and our tax payers do not deserve to have to hold up a swollen and inefficient government.
c. What are the three areas that government spending should be directed to?
Law-enforcement/military, the justice system and infrastructure. The state only has one legitimate function – to facilitate society in order to keep it safe. It is a referee and a stadium security guard; that is all. A safe country is a prosperous country, and that is one of the reasons South Africa is failing economically.
Our country faces a violent crime rate akin to a small war and our law enforcement is hard pressed to do anything about it. Corruption, under-funding and incompetence have led to a police force that doesn’t even pick up the phone, leaving South Africans to rely on private security contractors.
Our military is vastly underfunded and incompetent, losing engagements in Africa despite being the “most modern fighting force on the African continent”. Funding is the biggest problem for both law enforcement and the military. Funds need to be directed at proper training, while also keeping both forces separate from political machinations.
Courts need to be properly equipped to deal with the intake of caught criminals. Funding should be directed to construct and maintain new courts, train and hire employees of the court and facilitate the rule of law in South Africa. This also extends to the construction and maintaining of prisons to contain prisoners. The number of convicts can, of course, be lessened by removing bans on victimless crimes such as possession of marijuana. An efficient, independent and well-funded judiciary will mean a stronger rule of law and a safer environment for investment.
Lastly, infrastructure should be given the opportunity to be privatised, but until then, it needs to be maintained and grown accordingly to facilitate a growing economy. Well-kept roads are needed for commercial and industrial growth, and our power crisis needs to be solved in order to get back to growing our secondary sector.
All in all, the state needs to get its priorities straight and, instead of trying to hit all the targets in the range, rather focus on the one ahead of them and get a bullseye.
d. How can South Africa achieve inclusive economic growth?
Stop policies that exclusively benefit one group over the other. The sole problem with Apartheid was that it legally excluded a group of people for the most arbitrary of reasons. Affirmative Action/BEE does the exact same thing. It’s not reverse racism, it is racism. Approaching 1994, South Africans were positive that there would be an end to racial discrimination. This was because racial discrimination is rationally and morally bad whoever does it. Affirmative Action is not justice; it is discrimination that harms citizens and harms our economy.
If South Africa wants to see real progress, it needs to let go of its demons and embrace real economics, where businesses can hire and fire as they please. This will bring dignity to South Africans, while also giving businesses the confidence to grow unencumbered by politics.
An additional policy that can lead to inclusivity and economic growth is privatisation. Let private competitors step in to replace failed state functions. ESKOM should be the first parastatal to be forced to compete, as its arrogance as a monopoly (and state interference) led to its demise. SAA and other state monopolies will need to follow suit.
Don’t give exclusive rights to fail; let anyone have the opportunity to serve their fellow South African.
Hopefully Gordhan puts his partisan and ideological restraints aside and sees what South Africa needs to succeed – a free economy which disregards race and politics in favour of inclusive prosperity.