YONELA DIKO: Mbeki must let the opinions on land go
In September 2013, Thomas Piketty, widely regarded as a rockstar economist and author ofNew York Times bestseller Capital in the Twenty-First Century, delivered the 13th Nelson Mandela Lecture at the University of Johannesburg's Soweto Campus. The core of his lecture was that Inequality has never been solved by economic development. Deliberate and ambitious reforms and even violent shocks to the established economic order have always been necessary.
Piketty used his native France and Europe as examples of his claims. Europe's inequality reduction was as a result of violence rather than market forces. World War 1, the Great Depression, World War Two, welfare state policies, new fiscal policies and progressive taxation were forced on the elites because the alternative was full expropriation to cover the costs of the war.
Piketty’s point was that South Africa, like the rest of the world will not solve the problem of inequality, a problem that is corrosive with a potential to cause instability and conflict, through market forces and voluntary market transactions. He was clear that as desirable as economic growth is, foreign investments and development, employment, they would not be able to solve inequality. Piketty lamented the high inequality in South Africa, which was one of the highest in the world, 25 years into the new democracy, particularly because inequality was rising and was now more than it was 25 years earlier.
Piketty of course understands that wealth generally rises higher than income. Those with historic wealth will always get richer irrespective of how much income new entries earn. In South Africa, those with historic wealth are almost exclusively white.
Piketty also noted the attempts by the government to deal with this historical racial inequality and was clear that black economic empowerment (BEE) has had little success because it was based on voluntary market transactions, particularly land reform. The elite have never accepted state Intervention or ambitious land reforms or even high tax increases until they had no choice. He was specific that South Africa needed a much more ambitious land reform programme to address inequality.
INEQUALITY IN SOUTH AFRICA
Inequality in South Africa has increased, despite the economic successes of the first 15 years of our democracy. A research done by the Maphungubwe Insitution of Strategic Reflections (MINSTRA), presented by MINSTRA Head Joel Netshitenzhe in Helsinki Finland, the research found that although poverty had decreased in South Africa, cut by half between 2001 and 2011, Inequality had actually increased, both between races and among races.
The poor were benefiting from social welfare policies and the rich were benefiting from business friendly government policies. There was however no racial breakthrough on inequality as those with historical wealth were the ones able to participate fully in the economy and enjoy the benefits of growth.
This characterises the years of the Mbeki Presidency and the so-called 1996 class project; market-friendly policies, privatisation, South Africa Inc, ASGISA, resources left to the most productive people, trickledown economics that never really trickled down, where the rich were getting richer, the poor were lifted out of poverty through taxing the rich and the gap between the rich and poor was ever widening.
As it was then, so it is now, that Mbeki offers no solution to this racial inequality but somehow presents the ANC as having made a historic commitment to govern over the affairs of the elite. The African National Congress (ANC) must coddle and massage these interests, protect them because out of these will come economic development and employment.
In 2017, at the Nasrec Conference, the ANC finally realised that racial equality will not happen on its own accord, the party would have to be deliberate and intentional, with a clear policy and targets, and everything begins with land reform. ANC adopted Land Expropriation without Compensation as its policy at then in order to finally deal with racial disparities in landownership that has the black majority outside looking in, landless, dispossessed and without a critical economic tool to help them participate better in the marketplace.
A year later, in September 2018, Mbeki released a 30-page pamphlet where he was effectively arguing that Land expropriation without compensation was inconsistent with the ANC’s non-racial character. Effectively, ANC’s Non-racialism is a race-blindness and a race-denialism that sees no racial inequality, no lack of social justice, that the transition into the new dispensation has not been seating unequally on the back of blacks, so that all that Non-racialism should mean and must mean is guaranteed comfort of the white race.
A few days ago, Mbeki released another document, this time championing the worn out and tired argument that land expropriation is a threat to foreign direct investments and all the niceties that come with it.
Mbeki is, of course, championing the much discredited trickledown economics of post-WWII, from which the Sussex Mbeki was baptised. The Washington Consensus of the post-Berlin Wall and 90s heavily influenced the ANC government as it transitioned to market based policies, so that if we leave the elite with all the wealth, out of their productivity and genius, they might push down enough crumbs to us in jobs, welfare and taxes for us to have some modicum of a functioning economy. Effectively, don’t rock the boat with a revolution and ambitious reforms that will temper with the elite and their investments, for our lives depend on them.
Mbeki however is equally being hypocritical because when he was president, despite market and business friendly policies, despite a lacklustre land reform programme that favoured the seller, investors always found a reason to not invest as they should in our country, whatever policies we embarked on. On 10 September 2004, Mbeki chastised then-Anglo American CEO Tony Trahar for claiming there remained a persistent political risk in South Africa hence Anglo embarked on a London Stock Exchange listing.
Mbeki had also lambasted Sasol for bad mouthing BEE as a potential business risk. Unlike then, Mbeki rejected the idea of BEE being a possible threat to Investors. Every other day business found something on the government as reasons they were not investing, and when you follow these reasons they drift away into an infinite regress. The reasons for not investing are everywhere and nowhere. Mbeki’s fear of land expropriation without compensation is a mute point because investors don’t need land expropriation not to invest.
BENEFITS OF LAND EXPROPRIATION
Mbeki may well belong to a generation that learnt to accept that as long as white people are alright, all is alright with the world. Black people are not lambs that were slain for white people’s sins to be forgiven and to let them keep their unjustified enrichment and Land ownership.
As South Africans, we will not lose sight of the fact that Land expropriation, which will result in widespread ownership of land and property, has clear benefits.
Firstly, research has shown that where there is high level of property ownership there are also high levels of educational outcomes. It has also shown that crime levels are also low. This is because property owners participate in their communities, in community safety programmes and other local projects. Property owners are also healthier, with less mental health and live more fulfilled lives.
Most importantly, land expropriation will solve the problem of unused land which robs us of much economic activity.
Concentration of land ownership in the hands of the few robs all of us of the genius of many.
Yonela Diko is the former spokesperson to the Minister of Human Settlements, Water and Sanitation. You can follow him on Twitter: @yonela_diko