NICHOLAS WOODE-SMITH: Think BIG, think unaffordable and impractical

The basic income grant (BIG) is the big new, old thing. While the idea has been toyed with since the 1990s, it’s back in full force. Advocates insist the BIG will be a cure for poverty and ensure an adequate standard of living for all South Africans.

SA’s welfare plans assist only those in dire need, but a BIG promises to assist in the redistribution of wealth across the board, giving all South Africans, regardless of need or merit, free money. Sounds pretty utopian. That’s because it is. BIG is an expensive pipe dream that will in no way solve SA’s myriad problems; if anything it will worsen them.

Welfare programmes such as social grants have helped many South Africans avoid falling into destitution, and they should be lauded for that. But welfare programmes are always difficult to evaluate. Often, governments and advocates measure the success of welfare by how many people it funds. Yet should we really be celebrating an increasing number of people becoming reliant on state handouts?

Grants aren’t sufficient for living a fulfilling and fruitful life. The goal of welfare shouldn’t be to assist as many people as possible and maintain them. Rather, it should seek to ensure that they no longer need welfare. SA’s welfare regime doesn’t accomplish this; it creates dependency on a tiny amount of money, while stringent labour regulations, low economic growth and bad state policy ensure South Africans cannot get the jobs they so badly need and desire.

A BIG won’t solve that; its unqualified redistribution of wealth only serves to shift wealth from producers to nonproducers, while allowing a bureaucrat to scrape some off the top. Welfare isn’t meant to be a substantive source of wealth; it’s supposed to be a stopgap, preventing the vulnerable from suffering or dying, but it doesn’t work as an economic stimulus. Any consumption generated by welfare means less consumption somewhere else as taxpayers tighten their belts to foot the bill.

A BIG takes the problems of welfare programmes and makes them universal. On top of that it is extortionate. We can’t fund the bare necessities in this country, so how can we afford to give every single person free cash?

BIG has gained a reputation for being a smarter form of welfare. But how smart is it to give free money to the undeserving and those not in need? Welfare, if it is to exist, should only be going to the poor; those who need it to survive: children, the elderly, the sick and the destitute. Not everyone.

SA doesn’t need more handouts; it needs more opportunities. We need people to have the ability to enter the workforce and produce wealth for themselves that will far outweigh the unsustainable welfare they gain from a BIG or other grants.

Embrace the free market

To accomplish this we need to embrace a free market. The unemployed suffer the brunt of unreasonable labour regulations and the dictates of a trade union regime that privileges its members over the unemployed.

Introducing the Free Market Foundation’s proposed Job Seeker’s Exemption Certificate, which allows an unemployed individual to voluntarily exempt themselves from national labour laws, could go a long way in helping to assuage our unemployment crisis.

Better still, abolish our draconian labour regulations entirely. Remove the minimum wage. Make it easier to hire and fire. Allow employees and employers to enter into voluntary contracts that reflect their actual individual desires and needs.

Remove racial quotas to eliminate needless and fruitless strains on businesses. Make it easier to start a business and remove the red tape. Privatise state assets and open them up to private competitors that can run them well, employing the deserving and producing more wealth. Abolish the current tender system and open it up to all private competitors.

A BIG would never be a good idea for SA. It’s prohibitively expensive, and so the only way to afford it is for the taxpaying population to expand tremendously and produce a boatload of wealth. But at that point a BIG would no longer be needed. It would just be a redundant black hole of tax money.

What SA needs is to produce more wealth, not redistributing the dwindling amount we have. To produce more wealth we need people to get jobs, start businesses and seize the opportunities provided. And to achieve all that we just need a true free market. It’s that simple.

• Woode-Smith, an author, economic historian and political analyst, is an contributing author for the Free Market Foundation. He writes in his personal capacity.