Land expropriation is not a silver bullet (quick fix) for poverty alleviation - Biznews

19 December 2019 - From 1994 onwards, South Africa with its many economic, innovative, and institutional strengths could easily have joined other developing nations in making the Great Escape from poverty. Instead, ever more NDR interventions have incrementally crippled the country’s capacity for growth to the point where GDP per capita has been shrinking for the past five years. Add the enactment of the EWC Bill in 2020, as the ANC plans, and the country’s prospects of achieving the Great Escape will retreat still further.

Anthea Jeffery

“The government will never pass a law which people have raised rational points against,” pledged Nathi Mthethwa, minister sports, arts, and culture in November 2019. That pledge needs to be printed out in crimson letters a metre high and attached to every parliamentary committee room and legislative chamber in Parliament so that MPs can always have this ‘writing on the wall’ readily available to them.

Mr Mthethwa was talking about the Copyright Amendment Bill of 2018, whose ‘fair use’ entitlements will greatly undermine the royalty rights of authors and others. But his pledge should apply with equal force to other damaging bills soon to come before Parliament – and especially to the Draft Constitution 18th Amendment Bill of 2019.

This Bill is, of course, the one that aims to change the property clause (Section 25) in the Bill of Rights so as to authorise ‘expropriation without compensation’ (EWC). In blunter and more accurate terms, what the EWC Bill seeks to allow is the uncompensated nationalisation of any or all land, together with the improvements on it.

The government has long claimed that EWC will successfully transfer the land to ‘the people’. But all the land taken by the state will be kept in its ownership or custodianship, while black South Africans (and all others) will be barred from individual title.

The government has also long claimed that the rapid land reform made possible by EWC is the key to ending poverty among the black majority. Yet the EWC approach is entirely at odds with the formula used elsewhere in the world to achieve what Professor Steven Pinker in Enlightenment Now: The Case for Reason, Science, Humanism, and Progress describes as the ‘Great Escape’ from poverty. This Great Escape began in Britain and the Netherlands in the 1820s and was then mirrored in many other countries.

One of the most striking graphs in Professor Pinker’s book shows GDP per capita across the globe trundling along at very low levels from 1600 to about 1820, when a sudden lift began in Britain, in particular. What prompted that lift? In highly simplified terms, three elements were especially important.

The first was the technological innovation that drove the industrial revolution, increased farm production, introduced piped water, developed the steam engine, and countered disease.

The second key element was ‘the development of institutions that lubricated the exchange of goods, services, and ideas’, as Professor Pinker writes. Particularly important was the evolution of ‘open economies, in which anyone could sell anything to anyone, and their transactions were protected by the rule of law, property rights, enforceable contracts, and institutions like banks, corporations, and government agencies that ran by fiduciary duties rather than personal connections’.

The third vital element was a change in values – particularly a widespread endorsement of what economic historian Deirdre McCloskey calls ‘bourgeois virtue’. As Professor Pinker explains, ‘aristocratic, religious, and martial cultures had always looked down on commerce as tawdry and venal. But in 18th century England and the Netherlands, commerce came to be seen as moral and uplifting’.

Once Britain and the Netherlands had embarked on their ‘Great Escape’ from poverty, the same phenomenon soon became evident in the Germanic states, in the Nordic countries, and in British colonies in Australia, New Zealand, Canada and the United States. Other European countries soon followed suit, while the latter half of the 20th century witnessed further ‘Great Escapes’ in South Korea, Taiwan, Singapore, Chile, China, and India.

Notes Professor Pinker: ‘Since 1995, 30 of the world’s 109 developing countries, including countries as diverse as Bangladesh, El Salvador, Ethiopia, Georgia, Mongolia, Panama, Rwanda, Uzbekistan, and Vietnam, have enjoyed economic growth rates that amount to a doubling of income every 18 years. Another 40 countries have had rates that would double income every 35 years, which is comparable to the historical growth rate of the United States.’ By 2008, he adds, the entire world population, some 6.7 billion people, had ‘an average income equivalent to that of Western Europe in 1964’.

In highly simplified terms, five key factors explain why so many poor countries succeeded in escaping poverty from about 1980 onwards. The first is the decline of communism, with its emphasis on ‘collectivisation, centralised control, government monopolies, and suffocating permit bureaucracies’. The move to more open economies, accompanied by market efficiencies and incentives for production, began with Deng Xiaoping’s shift towards capitalism in China, the collapse of communism in the Soviet Union and Eastern Europe, and the liberalisation of economies in India, Brazil, Vietnam, and elsewhere.

The second factor was better leadership, marked by a decline in authoritarian rule and the spread of democracy. The third was the end of the Cold War, which helped bring an end to civil wars in many developing countries. The fourth vital factor was ‘globalisation’ – described by Professor Pinker as ‘the explosion in trade made possible by container ships and jet airplanes and by the liberalisation of tariffs and other barriers to investment and trade’. This not only expanded markets but also helped spread technology, know-how, and best practices in agriculture, business, and public health.

The fifth, and perhaps the most important factor, was science and technology. As a result, ‘an hour of labour can buy more food, health, education, clothing, building materials and small necessities and luxuries than it used to’. The spread of smart phones (to about half the adults in the world) has also brought enormous benefits, especially to people in countries without roads, landlines, postal services, or banks. In Professor Pinker’s words, smart phones ‘allow people to transfer money, order supplies, track the weather and markets, find day labour, get advice on health and farming practices, even obtain a primary education’.

South Africa has benefited substantially from these factors and particularly from the last four: the end of the Cold War (which encouraged the National Party to embark on negotiations for a ‘new’ South Africa), the introduction of a multiparty democracy, increased global trade and investment, and a host of new technologies. Its key weakness, however, is that the ruling ANC and its dominant SACP ally have never accepted the first of these factors – the decline of communism. Nor have they ever accepted that socialism in the Soviet Union and its satellite states was a cruel and abject failure.

Instead, the ANC remains deeply wedded to a Soviet-inspired national democratic revolution (NDR), which it first formally endorsed in 1969 and to which it has recommitted itself at each of its five-yearly national conferences. The overall objective of the NDR, absurd though it sounds in the 21st century, is to take South Africa by slow and incremental steps from a capitalist system to a socialist future.

A particularly vital NDR aim, as expressed by the ANC at its Stellenbosch national conference in 2002, is to ‘eliminate’ all existing property relations. This is essential to weaken the established middle class (the strongest NDR opponent), deepen dependency on the government, and achieve state ownership and control over land and other key means of production.

The EWC Bill thus has nothing to do with ending poverty. Nor could it hope to do so when it flies in the face of the global factors making for Great Escapes from destitution. On the contrary, it is NDR ideology – and the NDR determination to eliminate property rights – that drives the EWC Bill and nothing else.

From 1994 onwards, South Africa with its many economic, innovative, and institutional strengths could easily have joined other developing nations in making the Great Escape from poverty. Instead, ever more NDR interventions have incrementally crippled the country’s capacity for growth to the point where GDP per capita has been shrinking for the past five years. Add the enactment of the EWC Bill in 2020, as the ANC plans, and the country’s prospects of achieving the Great Escape will retreat still further.

Professor Pinker’s clarion call is for all countries to embrace ‘reason, science, and humanism’ as essential foundations for progress. South Africa, however, under the ANC’s determined pursuit of the NDR, is shifting ever further away from that ideal.

But if the ANC were at least to embrace Mr Mthethwa’s test, that in itself would be enough to eliminate the EWC Bill. A host of rational arguments have already been made against the EWC demand. That ought to mean, as the minister says, that ‘the government will never pass’ the EWC bill into law.

IRR head of policy research Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 11 books, including People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE.

If you like what you have just read, become a Friend of the IRR if you aren’t already one by SMSing your name to 32823 or clicking here. Each SMS costs R1.’ Terms & Conditions Apply.

https://www.biznews.com/thought-leaders/2019/12/19/land-expropriation-not-quick-fix-poverty

© 2018 South African Institute of Race Relations
CMS Website by Juizi

Terms & Conditions | Privacy Policy | Accuracy Guarantee | Sponsors & Donors