"Put up taxes or else...!" - Politicsweb, 31 July 2017

Jul 31, 2017
He is not the first person to have put forward this idea, although the rapturous reception that greeted his book when it was published in English in 2014 has given it a whole new lease of life.


By John Kane-Berman 

"Put up taxes or else the masses will rise up in revolt!"

That, in essence, is what the French economist Thomas Piketty argued in his bestselling exposé of the supposed iniquities of the capitalist system entitled Capital in the 21st Century.

He is not the first person to have put forward this idea, although the rapturous reception that greeted his book when it was published in English in 2014 has given it a whole new lease of life.

The idea that extreme inequality generates violence is widely believed and widely propagated in various countries. In South Africa, the Davis tax committee has stated that high levels of economic inequality undermine social stability. It accordingly invited comment on a proposal to impose an (additional) wealth tax as a means of tackling economic inequality.

But is it true that economic inequality leads to unrest or instability or worse? The evidence is scanty. The so-called Arab Spring that first erupted in Tunisia in 2010 was a revolt against corruption and dictatorship, rather than material inequality. The violence that has plagued the Middle East for decades has little to do with material inequality. Some of the countries that sponsor violence elsewhere are themselves extremely rich, often thanks to oil.   

Nor is there much evidence that the social instability now endemic in South Africa arises from material inequality. Not even the official National Development Plan (NDP), which was adopted nearly five years ago, made such a link. Although reducing income inequality as measured by the Gini coefficient was one of its objectives, the NDP said that the "single greatest risk to social stability" was disenchantment among youth because three million of them were not in employment, education, or training.

Few of the multitudinous press reports on social instability in this country cite material inequality as a contributing factor. Nor do the various academic studies of instability. One such study, a "civic protests barometer" for the period 2007 to 2014, said that "issues relating to municipal services and administration were cited more often as the cause of protests than all the other grievances put together". These other grievances included services rendered by other branches of government, competition for public office, and broader "socio-economic" grievances about such things as jobs and land distribution.

Poor "service delivery", corruption among local councillors, factionalism, anger over cronyism and "tenderpreneurship", fury over rapes and murders and other violent crimes, hostility towards foreigners, unemployment, broken promises to provide housing and other amenities, evictions, anger over poor schooling, late arrival of trains, police brutality and corruption, squalid living conditions, disputes over municipal boundaries, failure by local authorities to address complaints, and various employment issues are among the reasons most frequently given for localised "protests", an increasing proportion of which are turning violent. 

Nearly 16 years ago a field survey conducted for the Institute of Race Relations (IRR) found that although inequality was believed to be intensifying, unemployment was by far the greatest concern of most South Africans. This was followed by crime and violence, and then by housing and related problems. A follow-up study last year found that unemployment and "service delivery" issues – including water, electricity, roads, and lack of housing – were the next biggest grievances. Other grievances included crime, access to education, corruption and nepotism, and poverty.

"More jobs and better education" were seen by three quarters of the sample as the best way to improve their lives, with "better service delivery" accounting for almost all the remainder. 

The upshot of all this is that "material inequality" is not a major concern for ordinary people or even for those who stage one or another form of protest.

They are far more concerned about the practical realities of the real world than with abstract numbers such as the Gini coefficient. Levying additional taxes in the belief that this will reduce social instability will be a case of barking up the wrong tree.   

*John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. His memoirs, Between Two Fires - Holding the Liberal Centre in South African Politics, were published earlier this year by Jonathan Ball.

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