More spending no answer

Change Starts Now (CSN) leader Roger Jardine says SA needs “a turnaround plan that can mobilise resources on a significant scale so that these can be rapidly and safely invested to stabilise our economy and raise living standards for our people” (“Fixing the economy to drive growth, create jobs and end poverty”, February 21).

While noble, the approach The Change Charter advocates is based on incorrect assumptions and will lead SA further astray. Higher public spending, funded by higher taxes, will not result in sustainable economic growth. An Institute of Race Relations research paper issued last week and available on our website, “Slash waste, cut taxes”, shows the government became significantly worse while growing alarmingly, giving us the worst of both worlds: a large, incompetent government. Shovelling more money into the beast’s maw will not cure what ails it.

Rather than more spending, fixing SA requires inexpensive but politically tough reforms we describe in “Blueprint for Growth: Arming SA’s Pro-Growth Forces”, released last week, such as:

● Boosting investment by scrapping threats to property rights such as by expropriation without compensation, prescribed assets and National Health Insurance;

● Protecting life and property from criminals by repairing broken law-enforcement agencies;

● Easing job creation by liberalising the labour market and eliminating race-based employment rules;

● Fixing infrastructure by privatising state assets responsibly, eliminating complex, contradictory procurement rules in favour of clear value-for-money procurement, and bringing private-sector management expertise to bear; and

● Empowering South Africans effectively through economic empowerment for the disadvantaged, which lets individuals pay for schooling, healthcare and housing of their choice with state-funded vouchers, among other measures, while keeping in place the social welfare net that protects the most vulnerable from the effects of serial government failure.

CSN’s focus on “safe” reforms, such as infrastructure development, falls short of the fundamental reforms we need. The tough ones listed above are what will spark SA’s entrepreneurial spirit and attract foreign investment. We need to abandon the belief that prosperity can be achieved through redistribution.

Instead, prosperity begins where government successfully guarantees the protection of life, liberty, and property. Then we can ensure that the table around which we all sit is not only stable but capable of supporting a feast of opportunity and growth for all South Africans.

John Endres

CEO, Institute of Race Relations