While additional arrests of rhino poachers have been made in South Africa since the post last week, our poor cartoon rhino is still struggling to lobby Julius Malema for his support. For those of you that didn’t know, rhinos are modestly intelligent creatures so Wonkie decided to take its cue from one when considering today’s subject for discussion.
Wonkie thanks special guest columnist, Mzansi Economistress for her contribution below and look forward to reading your comments:
In Kliptown, 55 years ago, it was declared that the people shall share in the country’s wealth. The Freedom Charter is a beautiful document. It is essentially the sacred text that inspires our democratic aspirations. Like all such texts, it’s not always meant to be taken literally. The ANC, under the Mandela and Mbeki administrations had made peace with this reality and had forsaken the idea of nationalisation. The people shall govern; but the people shall govern pragmatically. As Marshall, the eminent economist, put it over a hundred years ago:
“Every new extension of Governmental work in branches of production which need ceaseless creation and initiative is to be regarded as prima facie anti-social, because it retards the growth of that knowledge and those ideas which are incomparably the most important form of collective wealth.”
For whatever reason, sense has gone out the window. Perhaps this is indeed a bail-out all dressed up as national interest. The rise of the state in countries massively hit by the financial crisis has also provided some breathing space for nationalisation – government ownership has become fashionable again. Even if we were to assume that this was a proposal made with the best intentions, it would still fail on the merits. There is always this temptation, especially in societies facing immense challenges such as poverty and inequality, to imagine that with the right policy design, public ownership can be an improvement over private ownership. But history has been generous to us in providing much evidence to the contrary.
Governments are, in reality not simply concerned with maximising social welfare; politics, patronage and corruption often get in the way. Of course, there are exceptions. Countries in the East, such as Singapore and South Korea come to mind, not so much for nationalising their key industries, but for having significant state involvement in the economy. There is just one inconvenient thing about the East Asian model – these governments insist on running their civil service as a meritocracy and in most instances, aspiring government employees have to take stringent exams in order to qualify for professional public sector employment. Compare that with the recruitment practices of our state-owned enterprises! Exams, ne?
The truly discouraging thing about this current nationalisation debate is the failure of imagination that it betrays. We seem to have lost that innovative spirit that we tentatively displayed not so long ago. Yes, we have challenges that need to be addressed urgently. But to run back to the old slogans is short-sighted. Fact is, the Mining Charter was an interesting approach to the country’s development needs. It brought together transformation, socio-economic development and the profit motive without resorting to extremes. It even had provisions for diversification away from mining in the form of the beneficiation pillar, where mines were to trade-off BEE ownership with commitments to develop new industries to add value to raw materials before exporting them. But it was not to be.
The Mining Charter was hijacked by those obsessed with narrow ownership. This was enabled by entrenched ‘white’ interests in the industry that were not interested in the intricacies of broad-based development. Those in favour of nationalisation can now turn around to argue that this policy will allow the industry to fund social investment where the industry and the Charter failed. Instead of improving on a workable solution that allows capitalists, government and communities to play their proper roles in society, economic suicide is advocated. Fortunately, at least at the NGC in Durban, the overwhelming majority of ANC delegates did not fall for this. We live in hope.
– Mzansi Economistress
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