TEMBA NOLUTSHUNGU: Socioeconomic mess can be undone at the stroke of a pen

The socioeconomic tragedy that the government’s labour legislation inflicts on South Africans seems to manifest in ways that are not easily discernible. The majority of the country’s 19-million unemployed people appear to have given up hope of ever finding a job and seem prepared to languish in misery. To many they have become a mere statistic.

That brings to mind the words of communist dictator Josef Stalin, who was responsible for the deaths of more than 20-million fellow Russians and in addition oversaw the Holodomor, or famine, from 1932 to 1933 that resulted in the deaths of about 3.9-million Ukrainians from starvation. Stalin callously stated that “The death of one man is a tragedy; the death of millions is a statistic”.

Lest it be forgotten, being unemployed exacts a devastating toll, psychologically, emotionally and spiritually. It forces people to depend on the charity of family, and in some cases of neighbours and friends. That gradually erodes self-esteem and self-respect as the afflicted consider themselves to be a liability rather than an asset to their families and society.

In other words, being unemployed at some point becomes being condemned to perpetual misery. It is noteworthy that  before she succumbed to politically correct Keynesian ideology the late economist Joan Robinson poignantly stated that “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. 

To bring the issue of unemployment in SA into sharp focus, consider the following statistics: the populations of Cape Town and Johannesburg in 2022 were 4,801,000 and 6,065,000 respectively. The number of unemployed is officially 15.6-million, though some statistics show the situation is far worse if those who have given up looking for work are included. Still, based on the official measure the number of unemployed people is about 50% more than the combined populations of SA’s two biggest cities.

Stroke of a pen

Yet at the stroke of a statutory pen this appalling situation can be reversed over a relatively brief period. The point of departure of this initiative should be the acceptance of the self-evident: that the socioeconomic mess that engulfs the country is a direct consequence of statist, dirigiste government policies fuelled by ideological underpinnings.

The following policy measures are clear to everyone who understands profoundly that the only goose that lays golden eggs is the private sector (comprising big, small and informal enterprises) as it is wholly and exclusively the creator of employment and wealth, not government, which only consumes wealth and destroys jobs while pretending to create employment at the beleaguered taxpayers’ expense.

Government should nurture the goose with policies that unleash the spirit of enterprise by bringing about a supportive policy environment, thus lowering barriers to entry and lowering the cost of doing business in the economic arena.

Any policy of expropriation of property, as contained in the Expropriation Bill, should not find its way to the statute books. Such policies, in whatever form, should be removed, never again to  be considered, let alone adopted. Empirical evidence abounds that such policies are counter-productive, precipitate capital and intellectual flight, deter domestic and foreign direct investment, and undermine economic growth.

Unaffirmative action

Racially divisive affirmative action and BEE policies must be discontinued as they have demonstrably benefited only a few politically connected black elites, some of whom have conspired with big business rent-seekers. I predicted this long before the 1994 democratic elections.

Anybody could have foreseen this by studying the futile and counter-productive affirmative action policies of the US over the course of 60 years. Where are black Americans now in comparison with other American ethnic groups? They occupy the lowest rung of the socio-economic ladder.

In SA, there seems to be a glimmer of light when it comes to this racially discriminatory policy thanks to the finance minister’s audacious exemption of state-owned enterprises from affirmative action and BEE policies. It seems to have dawned on the minister that the policy has scant regard for the economic logic of the meritocratic right person for the job principle, and market-orientated policies that are self-evidently compatible with fundamental economic principles. But what is good for the goose is good for the gander, so this principle should apply across the private sector.

Electricity generation needs to be opened to market forces by allowing any firm or individual to generate or sell excess electricity, without an artificial cap on price or profits via taxation, for a period of, say, five years or even longer. That might be enough time for firms to recoup their start-up capital costs after investing in an electricity generating plant/firm. This scenario would see households, even in such areas as Soweto or Bonteheuwel, investing in generators and selling excess capacity to neighbours on a cash or barter arrangement.

Overall, this means dismantling the Eskom monopoly or allowing it to compete on an equal and fair basis with private interests. This clearly needs to be implemented expeditiously and urgently. Energy powers the economy.

The lie of the land

With a surfeit of inhabitable land, the state should provide plots for dwelling together with legal freehold title deeds. This would be on a site and service basis for indigent families that would be identified subject to a rigorous means test. And this should be across racial lines. Government’s role would be to lay out basic infrastructure such as water reticulation and street lighting. Consistent with Peruvian economist Hernando de Soto’s Mystery of Capital, once legally titled dead property would become an economic asset, with the owners becoming part of the economy.

Given that SA is an emerging economy, it also is a labour-intensive country. That means labour policies should stimulate employment. Minimum wage laws should be discarded as they discriminate against the unskilled and inexperienced, who tend to be mostly young. Enterprises that struggle with or cannot comply with government-mandated minimum wage laws are often forced to cease operations, shut down or exercise the option of progressively investing in capital equipment as opposed to labour. A direct consequence is that the unskilled and inexperienced are the first to be retrenched and the last to be hired, if at all. No wonder unemployment keeps getting worse. 

• Nolutshungu is a director of the Free Market Foundation. He writes in his personal capacity.