Governments simply don’t have the ability to run an economy effectively; free markets do
15 March 2022 - 12:55
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Mineral resources & energy department economists Avuyile Xabadiya and Shonisani Manyaga seem to have a fundamental misunderstanding of the nature of the developmental state (“State needs to control key economic assets to benefit all”, March 11).
They depict it as a wondrous tool through which governments can deliberately industrialise their nations by becoming direct players in industry, and credit it for the success of the East Asian Tigers. But they fail to interrogate its relevance to the SA context, or even its efficacy overseas.
Developmental economics assumes that governments can develop an economy through taking over aspects of industry, pushing and controlling the economy, and tackling society until it moves in one direction. But is this really the way forward?
SA did have a developmental state during apartheid. It deliberately twisted and turned the economy to its whim. And it didn’t work. It created an unsustainable system where migrant labour, separate development and bloated parastatals forced people into poverty.
In East Asia, Japan and South Korea had pre-existing market institutions that thrived in spite of government dictates. Evidence shows that government intervention was redundant and may even have delayed growth.
Governments simply don’t have the ability to run an economy effectively. In SA, it can’t even do its current job properly. Eskom is a disaster. Service delivery borders on non-existent. Law enforcement is a shambles.
Further intervention in the economy will result in more corruption and even worse economic growth. What SA needs is the government to deregulate and privatise — allowing businesses to start up, conduct business, hire and fire, and figure out a sustainable and better way of growing the economy.
Repeatedly refuted 20th century ideologies won’t save us. Tried and proven wealth creation will. SA needs a free market, not a developmental state.
Nicholas Woode-Smith Cape Town
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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.
LETTER: Developmental states don’t work
Governments simply don’t have the ability to run an economy effectively; free markets do
Mineral resources & energy department economists Avuyile Xabadiya and Shonisani Manyaga seem to have a fundamental misunderstanding of the nature of the developmental state (“State needs to control key economic assets to benefit all”, March 11).
They depict it as a wondrous tool through which governments can deliberately industrialise their nations by becoming direct players in industry, and credit it for the success of the East Asian Tigers. But they fail to interrogate its relevance to the SA context, or even its efficacy overseas.
Developmental economics assumes that governments can develop an economy through taking over aspects of industry, pushing and controlling the economy, and tackling society until it moves in one direction. But is this really the way forward?
SA did have a developmental state during apartheid. It deliberately twisted and turned the economy to its whim. And it didn’t work. It created an unsustainable system where migrant labour, separate development and bloated parastatals forced people into poverty.
In East Asia, Japan and South Korea had pre-existing market institutions that thrived in spite of government dictates. Evidence shows that government intervention was redundant and may even have delayed growth.
Governments simply don’t have the ability to run an economy effectively. In SA, it can’t even do its current job properly. Eskom is a disaster. Service delivery borders on non-existent. Law enforcement is a shambles.
Further intervention in the economy will result in more corruption and even worse economic growth. What SA needs is the government to deregulate and privatise — allowing businesses to start up, conduct business, hire and fire, and figure out a sustainable and better way of growing the economy.
Repeatedly refuted 20th century ideologies won’t save us. Tried and proven wealth creation will. SA needs a free market, not a developmental state.
Nicholas Woode-Smith
Cape Town
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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