The Role of Government in the Creation of Poverty

South Africa has been following the precepts and rules of the Leninist-Marxist system of government since the ANC came to power, simply because the leaders of the ANC were indoctrinated in that system from an early age, and do not know any other system. The one exception to this was Nelson Mandela, who came to power as a dedicated communist, but had the good fortune to enjoy an in-depth discussion with the President of Vietnam, a country which had suffered under that system for many years, until an enlightened government came to power, and set about unwinding the evils that had been imposed on it by the unthinking rulers over man years. Mandela, an educated and thinking man, understood what he was being told, and attempted to revise the policies of his Party. Unfortunately, Mandela was an old man, and tired, and the lessons he tried to impart to his successors did not take root. That is not surprising if you understand Thabo Mbeki, a man who was capable of astonishing stupidity in the face of all the fact about HIV/AIDS (remember his famous speech that AIDS was a syndrome, and you cannot contract a disease from a syndrome? Mbeki was the man, the lauded ANC leader, who condemned hundreds of thousands of his fellow citizens to a gruesome death because he was unable to understand some simple scientific facts). Mbeki was also hungry for power, as proven by his maneuvering to avoid answering to the South African Parliament about the extensive corruption in the Arms deal of the 1990s, and there is strong evidence that he benefited personally from that deal, although a Commission of Enquiry went out of its way to ensure that the evidence proving this was never presented. Mbeki set the lowest standard for governance in South Africa, and he was ably followed in this by Jacob Zuma and his cohorts.

The Minister of Finance, who is supposedly at war with Jacob Zuma, the President, stated flatly in his 2017 Budget speech to Parliament that the average growth in GDP achieved since the ANC came to power in 1994 has been only 1%. The population has grown at a rate closer to 3%, with the result that a once-thriving economy has been brought to its knees, yet the Government has been unable or unwilling to stop the slide. That they do not know enough economic theory to understand why this is so is evidenced by the repeated attempts to bring down ‘White Monopoly Capital’, which is supposedly bleeding the country dry, to expropriate without compensation all farms (presumably White-owned) which have changed hands since the arrival of the (White) colonists in 1652, with persistent rumors that the expropriation without compensation will be extended to banks, insurance companies, mines and other forms of entrepreneurial activity. The ANC has been unable to explain how this will achieve any improvement in the lives of the ‘poorest of the poor’, a mythical sub-class of (Black) ANC voters who do not have any adequate understanding to be able to distinguish a politician’s promises from reality. There have been numerous attempts to create a spark of life in the economy, all of them doomed to fail by the lack of even a glimmering of understanding of economic reality.

The only way to succeed is to focus on the winning attributes. That means business, industry, commercial agriculture and mining, with the minimum requirements being the provision of a high-quality education, removal of the dead hand of bureaucracy from the field, cutting back dramatically on every aspect of the government that does not contribute actively to the objectives of growth and wealth creation (not the variety generated by patronage!), and allowing the creators of wealth to decide on the allocation of it.

The result will certainly be more very wealthy people - Microsoft employs more than 10 000 millionaires - but also a much greater number of people making their own way into the middle and upper-middle classes.

South Africa is proud of the fact that it pays social welfare grants to 17 000 000 people! We should be ashamed of this. At least half of those people are capable of making their own way in the world, and would be delighted to escape the trap of being charity cases. What is holding them back is the hatred of 'monopoly capital', whether White or other. An economy needs capital to function, and it needs to leave the income that will grow into the wealth that becomes capital in the hands of the people who have proven that they know how to handle it - the entrepreneurs, the businessmen, the miners, the commercial farmers and the industrialists. Taking ten billion Rands per month (the amount of tax money that is channeled to the poor in the form of social grants) from the economically active results in thousands of billions of Rands of potential investment in job-creating activities being lost.

Unfortunately, the communist theory, liberally laced with patronage profits derived from supporting the ANC, militates against any of this real-life logic being incorporated into ANC policy.