Columns 17.2.2016 09:00 am

Economic freedom fight error

DA city councillor for Joburg Martin Williams

DA city councillor for Joburg Martin Williams

Thanks to bargaining councils, two big guys come together and crush the small guy. This is how jobs are lost.

Did the State of the Nation Address (Sona) inspire you? Do you feel more optimistic?

If we ignore the antics of Julius Malema’s red brigade and overlook President Jacob Zuma’s stop-start way of reading what others have written for him, was there anything in Sona to provide hope?

Some say the speech content was good and all will be well because Zuma met big business leaders, who showed him the error of his ways. With Pravin Gordhan in charge of finance, the good ship SA is supposedly on a steady course.

This is wishful thinking. I disagree with the consensus that SA is on the right economic track. Just the opposite, in fact.

What exactly did the country’s top chief executives present to Zuma in their nine-point plan ahead of Sona 2016?

Something imaginative, that will make South Africa an investment destination of choice? Nope.

According to John Kane-Berman, a policy fellow at the SA Institute of Race Relations, the plan includes “cohesive narratives, over-delivery on fiscal consolidation, more effective management of state-owned enterprises, accelerated private-public partnerships, a review of how legislation is implemented, ensuring that labour law contributes to inclusive growth and setting up an anti-corruption committee”.

This is mostly nonsense, barely coherent. Kane-Berman points out two pending laws that will make investment less attractive: the Regulation of Land Holdings Bill and a new Expropriation Bill.

Both could make ownership more uncertain. Here’s the problem: government and big business jointly operate from a mind-set which is inimical to economic growth.

Small business is the key to economic growth. Worldwide, small business is the biggest creator of jobs.

Forbes magazine – a favourite of big business – has noted that “over the last 25 years, almost all private sector jobs have been created by businesses less than five years old”. Small businesses.

In his speech, Zuma paid lip service to this cause, saying the department of small business development was established to provide “targeted support to small business”.

He spoke of the “need to empower SMMEs to accelerate their growth”.

Ja, ja. The effect of government’s interventions in small business has, in fact, been to choke them. Too many laws make it more difficult for small businesses to operate.

One example is section 32 of the Labour Relations Act, which forces small businesses to accept wage agreements reached between big business and unions. Thanks to bargaining councils, two big guys come together and crush the small guy.

This is how jobs are lost, or blocked from being created.

This is how poverty and suffering are prolonged.

The real economic freedom fight should be against such laws. Set our people free. Next week, section 32 will be challenged in the North Gauteng High Court by Herman Mashaba and the Free Market Foundation.

Mashaba is the DA’s mayoral candidate in this year’s local government elections. As a DA councillor, I am obviously biased in his favour.

Yet, whatever one’s ideological approach, it would at least be interesting if a person with his passion for small business and dislike of red tape were elected to run South Africa’s biggest, richest city.

Some folk might even be optimistic. I would.

 

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