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Let’s be honest about radical transformation

Max du Preez’s thoughts on ideologies, privitisation and State intervention.

‘Radical economic transformation’ is the mantra South Africans will hear more and more as the political climate heats up and the contestation for power escalates.

All the parties and politicians exclaiming this slogan explain that this drastic action is necessary because the levels of poverty and unemployment are far too high, too few have a real stake in the economy and the inequality in society is dangerous.

No decent South African citizen can deny that this is true and that urgent action is necessary.

The only debate is what the substance of this transformation should be.

The real question we should ask the politicians is whether their agenda is an ideological one or if getting real results is the only test.

Is it more important to conform to the ideas of Karl Marx, Vladimir Lenin or Fidel Castro – or, for that matter, those of the anti-state free market fundamentalists – than to actually achieve a substantial reduction in unemployment, poverty and inequality and to empower all citizens?

Does our political leadership have the ability to defy the orthodoxies of these foreign ideologues and devise a set of pragmatic, realistic proposals that would make a real difference to the people of South Africa?

These are the questions voters who want to make up their minds who to vote for in the 2016 local elections should ask political parties. One doesn’t need to understand the intricacies of economic policies to ask: exactly how will your promises of radical economic transformation translate into a better life for me? So far those promises have delivered very little.

My impression is that those who shout loudest about radical reform – the EFF politicians – are most unlikely to venture beyond the limitations of rhetoric and symbolism. Their proposed nationalisation of banks, mines, industries and agricultural land defies all evidence of other countries’ experiences, presumes that South Africa is immune to global influences and ignores the State’s record of weak administration. The EFF’s way will undoubtedly lead to much worse poverty, inequality and unemployment.

The EFF seems to think the strategy since 1994 of making wild promises to voters that have no chance of being realised is still the way to go. Only voters blinded by anger or who are so poor they have nothing to lose would buy the recipe that says, ‘we’ll simply take from the rich whites and give it to you’.

But the ANC as a governing party no longer has these luxuries. Its promises have caught up with it.

If there is going to be radical transformation in the near future, it will be devised in Luthuli House. The evidence so far is that it has only one recipe for radical transformation: drastically increase State intervention in, and control over, the economy.

When it is talking to business or potential investors and not pontificating on the National Democratic Revolution, the ANC says it does believe in a mixed economy and does not dismiss the power and energy of the free market.

But, it says, the State has to step in where and when the private sector doesn’t serve the interests of the nation as a whole, especially the poor and vulnerable, or when strategic interests come into play.

Again, few citizens would disagree with this, at least in principle. Serving the greater good of the nation as a whole with a bias towards the marginalised is what democratic governments are meant to do.

But citizens should start pointing out instances where State intervention does exactly the opposite, where it works against the interests of the poor.

A good and topical example is the national airline, SAA. If it were a private company, it would have been wound up and sold years ago. Instead, the taxpayer has bailed it out with guarantees worth R11.5 billion since 2012 (at the expense of its competition, as Comair argued in court last week).

I don’t often agree wholeheartedly with the Free Market Foundation’s Leon Louw, but he’s correct when he says that these bailouts divert billions from the poor (who do not fly) to the rich who do – “in a bizarre orgy of welfare for the well-to-do”.

There’s no strategic value to having a national airline. None whatsoever. There’s no national interest in flying to any destination that isn’t profitable.

The only reason why the ANC is clinging to this failing State liability is because that the word ‘privatisation’ is still taboo with its dominant SACP comrades. Or does this vanity project’s possibilities of cushy jobs and/or tenders for pals also play a role?

I’m not a knee-jerk privatisation kind of person, but I do think we should take the ANC’s logic to its logical conclusion: if the State can’t serve the interests of the people as a whole, then we should ask the private sector to step in.

This rule should also be applied to other State-owned enterprises such as the SABC, Eskom, Transnet and the Post Office, although there would, in my view, be a strong argument against all-out privatisation as the strategic value argument does apply here.

Let me give another example of what would amount to real radical economic transformation. Full ownership of the millions of houses in townships owned by local councils should be transferred to the occupants and small farmers occupying traditional land should be given full title deeds to their chunk. Now this is proper empowerment.

The shortest route to radical economic transformation that can be sustained is a massive new focus on education and training. This is the key to job creation, entrepreneurship and, in fact, the restoration of dignity.

Twenty-one years after our liberation, we still have hundreds of mud schools and schools without laboratories, libraries, computers and sports facilities. There are still tens of thousands of young people with huge potential who can’t afford tertiary education.

We are told we don’t have the resources to fix that. We do. We simply need to redirect the billions wasted and misspent elsewhere.

Transformation of the economy that simply means more State intervention and control will only benefit a small political elite and will have disastrous consequences for economic growth. The workers, the unemployed and the poor will be the biggest losers.


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its never going to happen – ie the anc making any real decisions. they will let things drag on until events outside their control take over – exactly like the xenophobia. for years people had been warning about the impact of having illegals taking jobs away from locals. for years nothing happened – then all hell broke loose. it will be the same way with every other issue looming.

Nice article; the real question is how many voters still belief the EFF rhetoric. My concern is that there are enough of them to make the EFF a real force in the coming years, leading to an acceleration of the country’s destruction.

The ANC is so asleep behind the wheel, they still view fracking the Karroo as “a game changer” for the economy. Brent Crude needs to go above $100 per barrel for this to work. In the mean time we as a country are sitting on a gold mine in the form of underutilized capital locked up in tribal land. Can you imagine the positive effect on the economy of rural arias if people can use their property as collateral at the bank? The ANC are purposefully keeping voters in poverty in order keep the tribal leaders on their side.

“… Only voters blinded by anger or who are so poor they have nothing to lose would buy the recipe…” that’s about 30 – 50% of registered voters in SA. So maybe not such a dumb strategy. More and South African’s are realizing that nothing is going to change for them in their life time and they really have nothing to lose. They no longer believe in all the false promises they have been fed over the past 20 years, a very dangerous situation.

Agree mostly , but the problem with education is not the lack of facilities. Its the management of schools.

It is impossible until it is done! interesting result at the SRC elections at fort hare university DA winning with 52% ANC and friends coming in a 32% Where was the radical Eff – no where.
It would be really interesting for the Eff to win a municipality at 2016- just to see how it would manage it

Most university students are not dumb, unfortunately graduates and students make less than 5% of voters.

“The shortest route to radical economic transformation that can be sustained is a massive new focus on education and training. This is the key to job creation, entrepreneurship and, in fact, the restoration of dignity.”

No, it’s not.

The shortest route is to remove the restrictive labour and tax legislation so that small businesses can hire and fire at will. Then use government funds to institute interest free loans via the commercial banks to approved entrepreneurs whose skills would supplant the closed technical training colleges.

The education system is flawed beyond short-term redemption and could only recover over decades of intensive re-training of administrators and teachers. This should be allocated to private sector consultants, but the blow-back from the teacher unions would need to be managed by a diplomat with the skills of god knows who but what actually is going to happen is that SA will dither along in the usual morass of cronyism and corruption for the foreseeable future.

Out of the 54 dysfunctional African states in chaos, what makes you think, Max, that SA should be any different?

Now THAT’S being honest.

For the end result of ‘Radical economic transformation’ look no further than Eskom, SAA, our municipalities, SABC, Post Office, SA’s education and health care systems, etc. etc

It is very expensive for any government to pursue leftist policies. For example we have 16 million people on
government grants and are with North Korea, the only countries in the world where the government provides free
RDP housing to people. When will the government realise that its desire to control everything from electricity
production to SA Airways is very, very expensive and we don’t have the tax base for it. But that is the African
paradigm – government is the father who must take care of all the children. But the problem in SA is that the
kids never grow up and start to contribute. Instead they run around at Cosatu house and call each other “Comrade”
and think that countries like Venezuela and Cuba and are places to admire and emulate.

To a small extent, education is being privatised. Look no further than Curro, which is opening new schools at a fair clip. They’re not alone.

The reason for propping up the SAA is very simple: ANC officials and parliamentarians are flying SAA with complimentary Gold and Platinum cards, upgrades, VIP treatment and lounges, VIP vehicles carting their overweight behinds to the planes and back to and from the tarmac etc etc They will never give up this privileged treatment and settle for ordinary commercial passenger treatment. Just check whose bums are filling the business class seats and lounges of SAA…

Moneyweb, if you desire the truth about radical transformation, try publishing 5 Leon Louw articles for every one by Mr du Preez…. who will use Leon Louw’s pragmatism to give substance to his one….

End of comments.





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