The unintended consequences of the policies have compounded poverty and inequality in SA
13 January 2025 - 05:00
byGreg Becker
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Rather than creating broad-based upliftment targeted at the most disadvantaged, BEE has resulted in a concentration of wealth among a different elite, the writer says. Picture: 123RF
John Rawls is widely regarded as one of the most influential political philosophers of the 20th century. His seminal book, A Theory of Justice, published in 1971, introduced the difference principle and the veil of ignorance.
The difference principle argues that society can justifiably introduce rules that treat people unequally if the rules lead to the upliftment of the least well-off members of society. He argued that this arrangement was superior to a pure meritocracy, emphasising that societal structures must elevate the disadvantaged, not merely provide a system where the privileged are able to prosper.
The veil of ignorance can be thought of as a process by which a group can collectively develop rules that are in the best interests of all in society, the rationale being that if people are asked to develop rules while being ignorant of their position in society, they are likely to come up with rules that will uplift the most disadvantaged by redistributing some of the spoils accruing to the privileged.
In real world experiments where the veil of ignorance has been tested, participants representing a diverse society have repeatedly advocated for economic policies that prioritise fairness, finding that most people are in favour of progressive taxation (where the rich pay more) and where the funds collected are used to fund things like a safety net for all and universal access to education, to ensure everyone has opportunities.
Many have also been in favour of minimum wages, universal healthcare and a certain level of basic income that allows all to afford a minimum standard of living, something akin to a universal basic income, with a caveat that this needs to be balanced, ensuring that the tax collection system does not deter productive, taxpaying workers.
Rawls acknowledges that historical injustices can create systemic inequalities and that this may warrant corrective policies, but that these must help the most in need.
[BEE] policies have contributed to an exodus of skilled professionals and entrepreneurs who feel excluded from the economy, fuelling the brain drain and emigration.
SA’s BEE policies, introduced in the 1990s, were intended to redress the historical inequities left by apartheid by redistributing wealth and opportunities to previously disadvantaged South Africans through employment equity quotas, preferential procurement opportunities and mandated black ownership of businesses.
Critics argue that while BEE’s intentions in theory align with Rawls’ focus on uplifting the disadvantaged, its implementation over the past three decades has often fallen short of these ideals. Rather than creating broad-based upliftment targeted at the most disadvantaged, BEE has resulted in a concentration of wealth among a different elite. This is exemplified by the previous ANC government’s stated goal to create 100 black industrialists through preferential treatment and state assistance, with most disadvantaged South Africans being excluded. This violates Rawls’ difference principle, which demands that policies benefit the least advantaged rather than a select few.
With many beneficiaries of BEE having been involved in its formulation, the cynical may accuse the authors of BEE of being in front of a veil of indifference that was used to keep the downtrodden out of sight and out of mind, rather than behind a veil of ignorance where they would be among the unskilled and unemployed poor.
The social justice veneer covering BEE policies is being worn thin by persistent wealth concentration, economic stagnation and inequality.
Many involved in the formulation of the BEE rules were the big winners, exemplified by President Cyril Ramaphosa, who stepped out of politics from 1996-2012 and was able to build a nest egg measured in billions. Smuts Ngonyama gave the game away when he famously said: “I did not struggle to be poor.”
Unfortunately, BEE has not been a zero-sum game of racial redistribution from one group of privileged to another. The unintended (and predicted) economic consequences of BEE policies have further compounded poverty and inequality in SA. The policies have contributed to an exodus of skilled professionals and entrepreneurs who feel excluded from the economy, fuelling the brain drain and emigration. In addition, foreign investors view SA’s regulatory landscape as being costly, uncertain and burdensome, discouraging investment. With reduced investment and fewer new job opportunities, BEE policies help to entrench our high unemployment rates and high levels of poverty.
The social justice veneer covering BEE policies is being worn thin by persistent wealth concentration, economic stagnation and inequality. The case has been made that BEE has led to reparations for apartheid being paid to a few politically connected individuals instead of the most in need, flouting Rawls’ difference principle.
It is not too late to course correct and to step back from the aspects of our current BEE regulations that are not in line with social justice orthodoxy. This may even help the poor and prove to be a vote winner, as the black industrialist vote remains negligible.
• Becker, a retired actuary and recently qualified maths teacher, is founder of MyTutor.chat.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
GREG BECKER: Is BEE effective social justice?
The unintended consequences of the policies have compounded poverty and inequality in SA
John Rawls is widely regarded as one of the most influential political philosophers of the 20th century. His seminal book, A Theory of Justice, published in 1971, introduced the difference principle and the veil of ignorance.
The difference principle argues that society can justifiably introduce rules that treat people unequally if the rules lead to the upliftment of the least well-off members of society. He argued that this arrangement was superior to a pure meritocracy, emphasising that societal structures must elevate the disadvantaged, not merely provide a system where the privileged are able to prosper.
The veil of ignorance can be thought of as a process by which a group can collectively develop rules that are in the best interests of all in society, the rationale being that if people are asked to develop rules while being ignorant of their position in society, they are likely to come up with rules that will uplift the most disadvantaged by redistributing some of the spoils accruing to the privileged.
In real world experiments where the veil of ignorance has been tested, participants representing a diverse society have repeatedly advocated for economic policies that prioritise fairness, finding that most people are in favour of progressive taxation (where the rich pay more) and where the funds collected are used to fund things like a safety net for all and universal access to education, to ensure everyone has opportunities.
Many have also been in favour of minimum wages, universal healthcare and a certain level of basic income that allows all to afford a minimum standard of living, something akin to a universal basic income, with a caveat that this needs to be balanced, ensuring that the tax collection system does not deter productive, taxpaying workers.
Rawls acknowledges that historical injustices can create systemic inequalities and that this may warrant corrective policies, but that these must help the most in need.
SA’s BEE policies, introduced in the 1990s, were intended to redress the historical inequities left by apartheid by redistributing wealth and opportunities to previously disadvantaged South Africans through employment equity quotas, preferential procurement opportunities and mandated black ownership of businesses.
Critics argue that while BEE’s intentions in theory align with Rawls’ focus on uplifting the disadvantaged, its implementation over the past three decades has often fallen short of these ideals. Rather than creating broad-based upliftment targeted at the most disadvantaged, BEE has resulted in a concentration of wealth among a different elite. This is exemplified by the previous ANC government’s stated goal to create 100 black industrialists through preferential treatment and state assistance, with most disadvantaged South Africans being excluded. This violates Rawls’ difference principle, which demands that policies benefit the least advantaged rather than a select few.
With many beneficiaries of BEE having been involved in its formulation, the cynical may accuse the authors of BEE of being in front of a veil of indifference that was used to keep the downtrodden out of sight and out of mind, rather than behind a veil of ignorance where they would be among the unskilled and unemployed poor.
Many involved in the formulation of the BEE rules were the big winners, exemplified by President Cyril Ramaphosa, who stepped out of politics from 1996-2012 and was able to build a nest egg measured in billions. Smuts Ngonyama gave the game away when he famously said: “I did not struggle to be poor.”
Unfortunately, BEE has not been a zero-sum game of racial redistribution from one group of privileged to another. The unintended (and predicted) economic consequences of BEE policies have further compounded poverty and inequality in SA. The policies have contributed to an exodus of skilled professionals and entrepreneurs who feel excluded from the economy, fuelling the brain drain and emigration. In addition, foreign investors view SA’s regulatory landscape as being costly, uncertain and burdensome, discouraging investment. With reduced investment and fewer new job opportunities, BEE policies help to entrench our high unemployment rates and high levels of poverty.
The social justice veneer covering BEE policies is being worn thin by persistent wealth concentration, economic stagnation and inequality. The case has been made that BEE has led to reparations for apartheid being paid to a few politically connected individuals instead of the most in need, flouting Rawls’ difference principle.
It is not too late to course correct and to step back from the aspects of our current BEE regulations that are not in line with social justice orthodoxy. This may even help the poor and prove to be a vote winner, as the black industrialist vote remains negligible.
• Becker, a retired actuary and recently qualified maths teacher, is founder of MyTutor.chat.
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