Knowledge is the new black.
17 April 2014 06:36 (South Africa)
Opinionista Ivo Vegter

How the ANC can make everyone happy

  • Ivo Vegter
The bad news about government failures, inefficiency and corruption keeps piling up. Pity the ANC, caught between a constituency that feels betrayed and an opposition that crows with righteous criticism. Here's a way out.

Readers familiar with my columns will recognise in them a strong libertarian bent, shaped by the theories of economists such as Ludwig von Mises, Friedrich Hayek and Henry Hazlitt.

The principle that government should be limited to protecting life and property, is rooted firstly in a normative belief that individual liberty – the right to one's person and the fruit of one's labour – is a moral right.

It also has a more utilitarian basis, in the empirical observation that efficiency results when multiple agencies, be they individuals or organised groups, compete in parallel to supply what consumers demand, each motivated by the profit that would result from success. By contrast, a single agency, be it a dictator or a democratic government, can only guess what citizens really want, because it is not guided by actual consumer choices. It can only try out solutions one after the other, risking the public's money while doing so, instead of risking private capital on multiple solutions at the same time. In the unlikely event that it does hit upon a solution that appears to work, it lacks the pressure of competition to improve the quality or reduce the price of what is supplied. In any case, it is not geared to provide for the varied wants and needs of different groups within society.

The market is certainly not perfect, but it is almost always better than government. It takes a rare best-case scenario for government to even approach the efficiency of what free people can produce for each other. Even in such rare cases, government lacks a built-in motive to aggregate available information to produce the best possible set of products and services given the scarce resources available to society.

Government services are often not even adequate, which is a reasonable expectation if one is a voter or a taxpayer or both. The evidence for this is piling up in South Africa.

Although it is the single-biggest spending item in the government's annual budget at R165 billion, South Africa's education system is in dire straits. Reportedly, a quarter of this huge budget just goes missing: nobody knows just how it is spent. Meanwhile, pass rates are getting worse every year. Universities have turned to expensive bridging courses to prepare students for a tertiary education that passes international muster. Companies are investing fortunes in training new employees for even basic jobs. A 15-year experiment in outcomes-based education, which failed even in rich, well-resourced countries, has been scrapped. In its wake, the government left millions of children who escaped Bantu Education only to be condemned to another lost generation of innumerate and illiterate youth. Most people who can afford it – including the government officials responsible for our education system – send their children to private schools.

Our water supply is in terminal decline, after decades of neglect and a failure to plan for growth. The pipes in most cities are old and crumbling, and water sources across the country are polluted and over-exploited. Our electricity supply is in crisis mode. Our health services are a disaster. Policing is riddled with corruption and inefficiency; most crimes against property are reported only for insurance purposes. South African Airways is an expensive boondoggle that benefits only its management and competes better private alternatives out of the sky with predatory pricing. Fifa, to whom our government sold the right to exploit us so the country could appear grand in the eyes of the world, isn't even paying its debts. Alexkor, the government-owned mining company, is a failure. The SABC is an embarrassment. Motorists are frequently subjected to random searches by armed government officials, but find that they cannot even get appointments for licence tests.

The worst thing for the ANC is that the government is not just defending itself against political opposition. It isn't just dodging allegations of corruption or inefficiency by shutting down investigative units prepared to tackle the powerful without fear or favour. It isn't just fighting against a critical media by proposing regulation to blunt its teeth. No, the ANC government also faces regular protests over service delivery from its own constituency – protests that all too often turn into riots of vandalism and xenophobic hatred.

When even your own voters turns against you, and you retain electoral support solely because of your legacy as the party of liberation, you have a problem. You are losing whatever legitimacy you once might have had.

Yet with alarming frequency, we hear another announcement of a new government project designed to improve the lives of the people, or coddle an industrial special-interest group. Government stubbornly clings to the dream of establishing a modern welfare state, despite the fact that even the rich countries of Europe cannot afford theirs. With monotonous regularity, we hear of yet another statutory oversight or auditing body to address what its predecessors failed to achieve.

I'd like to make a modest proposal, and it doesn't involve eating children.

Get the basics right. Do little, but do it well. This will satisfy the people of South Africa, who expect to get a better deal from the ANC than they got from the Apartheid oppressors. This will blunt the criticism of the political opposition. It will even pacify those who, in the words of Henry David Thoreau, believe that government never furthered any enterprise but by the alacrity with which it got out of the way.

There are some free-market advocates who would argue that if you oppose government, you should welcome government inefficiency. Not only would it support your economic argument, but it means government is less likely to infringe on your freedoms. While that may be true, the reality is that it means higher taxes, more waste, more corruption, and larger numbers of angry citizens. And no, they won't vote for your pet free-market party (or even the official opposition) as a consequence. They'll just riot and threaten lives and property, including yours.

No, welcoming government inefficiency is like welcoming the death of babies because it demonstrates the folly of government-provided healthcare services. In theory, you might have a perfectly good point, but in civilised company, it goes down like a lead balloon.

I'd like to propose the opposite: small, efficient government.

The ruling party should start by identifying a set of essential services that is as small as possible. If they can be limited to what economists call "technical public goods" – those few services that cannot easily be provided to one without providing them to another, and whose consumption by one does not materially impact on its availability to another – so much the better.

Then, instead of turning each service into a grand, world-leading project with bells, whistles, a fancy logo and a thousand opportunities for corruption, reduce it to its basic elements.

Take those elements, and execute them well. Do not begin new projects until those are delivered and run smoothly. Forget fancy notions involving airlines, or telecommunications, or mining, or banking, or sport, or agriculture, or health insurance, or manufacturing. Stick to the most basic services needed to protect lives, establish property rights, enforce contracts, and provide a light-touch legal framework within which all South Africans are free to engage in productive business and to trade with each other and with the world.

Meanwhile, leave the private sector – both the formal and informal economies – free to provide services that the government does not or cannot deliver. You'll be surprised how much can emerge from a productive society if its people give up on the expectation that government should (and will, one day) provide it for free. When people aren't burdened to distraction by taxes or the red tape of byzantine bureaucracy, all sorts of companies and charities leap at opportunies to fulfil the needs and wants of society.

True, a small, efficient government is desirable in its own right from an economic point of view. It leaves a society more free and better able to build a prosperous, sustainable future for all. If the history of others is not enough to convince the "developmental state" advocates of this elementary truth, then our own future will have to do so.

However, a small, efficient government is also far more likely to convince the ruling party's own constituents that it is doing a good job. And that, surely, is in the best interests not only of the ANC as a whole, but also of leaders who find themselves challenged by rival factions in the party or the alliance.

If the ANC achieves this, I will have to live with the additional burden of arguing against the principle of government service delivery, when everyone who disagrees can point smugly to a government that actually does a great job delivering the essentials of a dignified life for all. I will do so, gladly.

  • Ivo Vegter
IvoVegterBW

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He approaches issues from the perspective of individual liberty and free markets. He grew up in the deep south of Johannesburg, and learnt his politics reading the Weekly Mail and Vrye Weekblad at Wits University during the early years of the country's transition to democracy. He recently left the city for the lower cost of living of Knysna, where he continues to write about everything under the sun. He is always right.

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