Illustrative Image: South African flag. | Hands. | Crack in screen. (Images: Freepik) 
As predicted several months ago, Black Economic Empowerment (BEE) is now under intense fire. This is partly because the ANC has been dramatically weakened, partly because the DA is now in government, and partly because of the Trump administration’s attacks on it.
Last week, even The Economist opined that it was time for our country to stop BEE.
On Tuesday, Deputy President Paul Mashatile said in an answer to a parliamentary question that BEE was “not discriminatory”.
While he was trying to defend BEE, he clearly missed the point. BEE is absolutely discriminatory.
That is why we have it. To reduce our racialised inequality.
But, in a comment by Professor William Gumede that has been widely quoted, BEE has cost around R1-trillion and yet most black people have not benefited from it in any substantive way (this is likely to be hugely contested).
BEE is intensely controversial. Not just because a small group of people have been made rich, but because of what it is: A deliberate attempt to empower one group of people at the expense of another group.
No matter the moral legitimacy of such an aim, in any society, to take from one group to give to another leads to huge arguments.
This is one of the reasons tax policy can be hugely controversial.
The cost of scrapping
As a starting point, it may be important to ask: if there is no BEE and no other measure of race-based redress, what would happen?
The economy would probably grow a little more quickly than it is now. Companies could simply scrap all the measures they take to qualify for BEE points.
This might make them, and their owners, richer. But there would be a huge cost.
For example, some of the big banks insure the geysers of people they grant mortgages to (this is to protect the value of the property they are lending money against). As a BEE measure, they then use a long list of black-owned suppliers to repair those geysers if they break down.
The big banks would probably find it much more efficient to use one big company to fix all these geysers.
These suppliers, usually the first in their families to own a small business, would lose out dramatically. Most would probably have to close.
The consequence of this is that all these people, and their extended families, who they support, would lose faith in the democratic project.
This would be just one example of how inequality, both racialised inequality and general inequality, would be re-entrenched.
That would lead to greater demands for political and economic change, and perhaps, more calls for some kind of radical, or even revolutionary change.
Read more: After the Bell: Why we abandon BEE at our peril
The impact test
The tools that the state has to really make a change for one group, but not for another, are essentially quite limited. And each tool would have to satisfy certain tests.
The first is, would it work? In other words, does the policy really make a substantive difference for a large number of people? This is the test that BEE arguably fails.
Another test is whether such a tool would be both legitimate and fair.
Legitimacy is absolutely vital. It means you essentially have to convince white people that they must be treated differently from black people. It seems unlikely that even Siya Kolisi and Eben Etzebeth could convince most white people to accept this.
There are alternatives to BEE, all of which have serious problems.
Government could decide to radically change the tax system and essentially try to tax white people more than black people.
One of the main arguments against that, apart from the fact that it would lead to intense debates about racial designations, is that there are obvious examples of some white people who were born into poorer homes than some black people.
That would fail the fairness test.
Read more: Diversity diverted — global headwinds force rethinking of BEE in SA
There could be other strategies.
Government could decide that our geography, still defined by apartheid in so many ways, provides a proxy for race.
Thus, as a deliberate strategy, the Basic Education Department could decide to spend more money per child in rural and township schools than on children in suburban schools.
While this might seem unfair, the argument could be that communities in suburbs can just increase the contribution they already make to the education of their children (through what are often called “Governing Body Teachers” – teachers paid by the parents, not government).
Although that would be staggeringly unfair to black parents who have made huge sacrifices to get their children into these schools, and to keep them there.
There are other problems, too.
At least one would be that we would not know whether it had been effective for a full generation. Which might defeat the purpose, which is to show that there is a measure of race-based redress that actually works.
From BEE to BIG?
There are other ways to look at this problem. They could be controversial in themselves.
It might be seen as legitimate by the vast majority of voters to remove the idea of race-based redress in favour of a different measure to help improve the lives of millions of the poorest people in our country.
So, for example, BEE could be removed at the same time a substantive Basic Income Grant (BIG) is introduced.
In other words, there would be a deal (sort of). Businesses would no longer have to comply with BEE, which would allow them to be more efficient and make more profit.
Those profits would, in turn, help to fund a BIG that would make a real difference to the lives of millions of people.
Read more: Economic growth can be stimulated in SA by affording basic income grant to poor
While there appears to be no public polling on this, it might be worth asking if the millions of people who receive the R370/month Social Relief of Distress Grant would prefer that money in their pockets to retaining the current model of BEE.
Considering that these people clearly need more help than most of those who currently benefit from BEE, there may be a compelling moral argument in this direction.
But that might be creating a false binary. And it would not satisfy the demand for race-based redress, although it would help to reduce inequality.
The attacks on BEE will not stop. But the intensity of our inequality, as racialised as it still is, demands measures to address it.
A window is now opening for a proper debate on what might be more effective. It’s vital that we grab it. DM