A Jarring Error: Mistaking Expropriation for Land Reform - Rational Standard

7 February 2019 - After a year of headline debate, the two most basic mistakes - conflating EWC with all other kinds of land reform so that you’re either for all kinds or none, and imagining all or most black people support the revanchist race nationalist policy of EWC – has become typical.

Gabriel Crouse

Stephen Grootes’ recent article, ‘How expropriation could work without destroying the economy’, is exemplary. Grootes is a diligent, honest and well-respected senior of the mediascape. And yet, when it comes to land reform, he lets his usual high standards drop sub-terra.

Grootes is critical of the ANC’s land manifesto, writing that it “smacks of the typical ANC approach of trying to appease all parts of society” including the scary, corrupt and race nationalist parts. And yet, this is exactly the mistake that Grootes makes himself. Here’s how.

Peruvian economist Hernando de Soto’s work on spreading formal private land-ownership to unlock “dead capital” by title deeds is profound. It might be the most blatantly obvious example of something whose entry into South African common knowledge would boost utility that is kept back by those who find the truth inconvenient. But Grootes is a champion of De Soto’s insight and Peru’s success, concluding triumphantly that title deeds are key to building private wealth if only we would put it in the lock and twist.

Grootes refers to economist Azar Jammine on both the benefits of titling and the costs of talking up expropriation without compensation (EWC), which, to quote him, “in one fell swoop destroyed whatever hope there was of a surge in capital investment that might resurrect sustainable economic growth”.

So far, so courageously right.

But then Grootes writes that “it is not a fait accompli that EWC has to be negative for the economy”. The per capita shrinkage called New Dawn 2018 is over, so, yes, by his own lights, the fait is exactly accompli. Putting that technicality aside, how does Grootes envisage turning EWC into anything but an investment handbrake?

He gives no clue. Either he could not find the space to make the case for EWC as a boost to foreign direct investment and our credit rating, or perhaps he could not find the case between here and Heaven.

Grootes does say that Jammine’s “words” about “vast wealth-creation” through title deed-based land reform should “comfort those who see the debate as entirely negative”. The asymmetrical thing about debating economic suicide is that those who are for it can scare away investors just with words. But the comfort South Africa’s 18 million living on state-owned land are looking for is not to be found in words. They are looking for wealth, which words destroy much easier than create.

Grootes surely knows this much: EWC and title deeds are in opposition politically. He himself notes EWC’s foremost sponsor, Julius Malema, is also and by no coincidence the foremost critic of title deeds.

They are in practical opposition, too. A title deed is a promise by the government to protect your ownership of land from arbitrary deprivation. EWC is an amendment to section 25 of the Constitution that protects against arbitrary deprivation. In other words, EWC is an erosion of the title deed’s promise and thereby of its value.

So how does Grootes pull the trick of arguing EWC could be good for the economy?

He shows how non-EWC De Sotoan land reform could be good for the economy and casually pretends they’re the same thing. You could say conflating EWC with its antithesis, title deed reform, is a convenient mistake if one aimed to please both opponents of EWC and its supporters.

Grootes makes another key nonsensical assertion, namely that the “majority” support EWC. He adds that the majority could be irrational, which is an excellent observation that more timid analysts would fear to note. And yet the majority are right on this one. In the build up to Nasrec 2017, eNCA polling showed that the overwhelming majority of ANC voters were against “Radical Economic Transformation” (of which EWC was the most radical plank) and were also against Nkosazana Dlamini-Zuma, whom Grootes rightly describes as the pro-EWC candidate of that election.

Sadly, that vast majority seems to have eroded partly under the acid promise of something for nothing and the arsenic promise of race revanchism at the tail end of the dirt-cycle. This is South Africa’s longest economic negative cycle since WWII. But even under duress, the majority has not flipped, as Grootes claims.

The Institute of Race Relations’ demographically representative polls found that EWC has less than a one-in-three support ratio among all voters and likewise among all ANC voters. But Grootes blindly (and uncharacteristically) submits to know the mind of the people or at least the majority. He does so, take note, in a way that happens to please those Gucci EWC supporters who like the idea that even if they’re wrong at least they’re common.

When you take a magnet to a laptop screen, the picture fades to incoherence. Take the land issue to a leading pundit’s mind and the same happens. After a year of headline debate, the two most basic mistakes:

i) Conflating EWC with all other kinds of land reform so that you’re either for all kinds or none, and

ii) Imagining all or most black people support the revanchist race nationalist policy of EWC – has become typical.

Even Stephen Grootes typifies this to the pleasure of all but anyone who stops for a moment to think. If one is to stop for a moment, think on the rate at which title deeds have spread in the last year versus the rate at which EWC has been marching into law.

* Gabriel Crouse is an Associate at the Institute of Race Relations (IRR), a liberal think tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

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