In die nuus

ANC totalitarianism will ruin the economy and create mass unemployment

Wednesday, November 4th, 2015

By Russell Lamberti, Chief Strategist: ETM Analytics

By numerous key measures South Africa’s economy is failing miserably. Inflation-adjusted GDP per capita has been falling since 2013 and has remained stagnant since 2007. This contrasts with the previous 8-year period from 1999–2007 in which per capita real GDP increased by 26%.

Electricity production has fallen by 10% since the 2011 highs and is now at the same levels as it was at in 2003. Manufacturing output is the same in 2015 as it was in 2005, as is construction activity. Road and rail freight tonnage has stagnated since 2011 and is down 6% since 2014.

And worst of all, South Africa’s official unemployment rate remains extremely high at 25,5%. The Solidarity-ETM Labour Market Index has been in a prolonged slump, having been above 50,0 for only 3 out of 31 quarters since December 2007.

According to the World Bank, South Africa’s inflation-adjusted dollar-denominated GDP per capita stagnated from 2008 to 2014. Over that period the same measure for Chile was up 17%, Malaysia 18%, Columbia 19%, and Botswana and Mauritius 21%.

The reason for South Africa’s poor performance lies in an insidious encroachment of over-regulation and state control that manifests in a deterioration of economic freedom. Rather than unleashing the creativity of the private sector, the incumbent party, the ANC, sees the state entirely as its own domain and the levers of policy as tools in a grand social engineering agenda. This has left hugely important areas of the economy crippled, and as a result has damaged business and consumer confidence, deterred private sector investment, and seen to a renewed flight of skills from South Africa to abroad.

At the opening of the ANC NGC Conference on 9 October 2015, state president Jacob Zuma said things that can only be seen as a candid and chilling admission of his party’s key objectives. Speaking of the Tripartite Alliance, Zuma said the following [own emphasis]:

“The South African Communist Party, SACP, is the vanguard party of the working class, with the objective of advancing a socialist revolution, to create socialism with a dictatorship of the proletariat. That’s what really is the objective, aimed at creating a communist society underpinned by a classless society. That’s the objective of the South African Communist Party. Our [the ANC and its Alliance Partners] objectives are facing the same direction. That’s why we are partners on the route.”

“COSATU is a progressive trade union federation whose core objective is to fight for and defend the rights of workers and to protect workers from the super exploitation of the capitalist class. That is COSATU. That’s its objective. That’s what it must work for very hard to achieve, to make sure that the conditions of the workers at the factory floor are conducive. But we come together, these three [Tripartite Alliance], because there’s something that is common to all of us…”

Zuma then looked ahead to a communist utopia:

“When we reach our destination of prosperity, the conditions of the workers will be fine.”

He then asserted his party’s claim on totalitarian rule:

“…we should know that we are powerful. We have got powerful allies. We are in every corner of this country. We carry the future of this country, with powerful allies. There’s nothing that must defeat us. There’s nothing that can stop us, in reality.”

Opposition parties know they will never take power here; not in the foreseeable future, even towards the end. So the movement forward – how fast we reach the destination is in our hands, because opposition is not there.” 

And then the president took another swipe at the wealth-creators:

“Unemployment is a capitalistic phenomenon. You cannot have a situation [under capitalism] where there is everybody working…but we have worked on the laws to be also in favour of the working people…”

In just 10 minutes of his two hour address, the president displayed everything that is wrong with state policy: a totalitarian desire for complete state control of the economy and a wish to hamper wealth creators and business owners. This is a fundamentally antagonistic and regressive stance, not to mention economically perilous.

In this we can see no desire for liberty and letting free agents reach mutually beneficial solutions in the market place. Zuma went on to pledge that, rather than reducing the state’s role in the economy after such abject failures as Eskom, SAA, and so on, his government would look to strengthen and broaden the state’s role in the economy.

As long as this is the case, South Africa is guaranteed to experience more economic stagnation and decline in the years ahead.

If the South African state pursues a path to totalitarian socialism, South Africa’s economy is doomed. Instead South Africa needs to follow the example of its successful peers and establish firm protection for property rights and let wealth-creators freely decide where and how to deploy capital and who to hire on mutually acceptable terms.





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