Treat­ing tax­pay­ers’ money with re­spect

The ANC is not, as many sug­gest, led by Marx­ist-style lead­ers. In­stead, the gov­ern­ing party is an­chored in the type of demo­cratic so­cial­ism found in Scan­di­na­vian coun­tries. But with one ma­jor dif­fer­ence.

Finweek English Edition - - Contents - By Andile Ntingi Andile Ntingi

fierce crit­ics of the ANC’s eco­nomic poli­cies at­tach many la­bels to the rul­ing party - one of the most en­dur­ing ones be­ing that the ANC is led by com­mu­nist Marx­ists. This de­scrip­tion of the ANC is, how­ever, mis­placed and is prob­a­bly best suited to the EFF, a party un­wa­ver­ing in its be­lief that farms, mines, and banks must be placed un­der state own­er­ship and wealth gen­er­ated by these as­sets be re­dis­tributed to the poor.

But the ev­i­dence sug­gests that the ANC is not a com­mu­nist Marx­ist or­gan­i­sa­tion: rather, it is a party an­chored in demo­cratic so­cial­ism, sim­i­lar to that found in Scan­di­na­vian coun­tries like Den­mark and Swe­den, where one finds ex­ten­sive wel­fare sys­tems ex­ist­ing along­side free-mar­ket cap­i­tal­ism.

In South Africa, we have a rul­ing ANC run­ning a wel­fare sys­tem. Yet the econ­omy is dom­i­nated by the pri­vate sec­tor, which gen­er­ates the bulk of the wealth that is taxed to fund gov­ern­ment so­cial grants, ed­u­ca­tion, health­care, and hous­ing for the poor.

In this re­gard, the ANC and the Scan­di­na­vians are sim­i­lar, be­cause they don’t be­lieve in state-planned economies (as the Chi­nese, Rus­sians, and the Cubans did in the 1950s, 1960s, and 1970s).

Dur­ing his fa­mous three-hour Rivo­nia Trial speech, made from the dock on 20 April 1964 be­fore he was con­victed and sen­tenced to life im­pris­on­ment for his role in op­pos­ing apartheid, Nel­son Man­dela de­nied that he was a com­mu­nist. He gave a de­scrip­tion of his po­lit­i­cal ide­ol­ogy, which re­sem­bles demo­cratic so­cial­ism (although he did not de­scribe it as such).

“I have de­nied that I am a com­mu­nist, and I think that in the cir­cum­stances I am obliged to state ex­actly what my po­lit­i­cal be­liefs are. […] To­day I am at­tracted by the idea of a class­less so­ci­ety, an at­trac­tion which springs in part from Marx­ist read­ing and, in part, from my ad­mi­ra­tion of the struc­ture and or­gan­i­sa­tion of early African so­ci­eties in this coun­try. The land, then the main means of pro­duc­tion, be­longed to the tribe. There were no rich or poor and there was no ex­ploita­tion,” said Man­dela.

He then con­tin­ued: “From my read­ing of Marx­ist lit­er­a­ture and from con­ver­sa­tions with Marx­ists, I have gained the im­pres­sion that com­mu­nists re­gard the par­lia­men­tary sys­tem of the West as un­demo­cratic and re­ac­tionary. But, on the con­trary, I am an ad­mirer of such a sys­tem.”

In the 25 years since com­ing to power, the ANC has never pur­sued the na­tion­al­i­sa­tion of farms, mines, and banks. In­stead, it has presided over the pri­vati­sa­tion of state-owned en­ter­prises (SOEs), par­tic­u­larly un­der the ad­min­is­tra­tions of Nel­son Man­dela and Thabo Mbeki. This in­cludes, for ex­am­ple, the par­tial pri­vati­sa­tion of the Air­ports Com­pany South Africa in 1998, the sale of 30% of Telkom in 1996, and 75% of the Ko­mati­land For­est in 2004.

Pri­vati­sa­tion was an in­te­gral part of the Growth, Em­ploy­ment and Re­dis­tri­bu­tion (Gear) macro-eco­nomic pol­icy, which was a busi­ness-friendly pol­icy that stim­u­lated growth over the course of its im­ple­men­ta­tion be­tween 1996 and 2006.

Un­der the lead­er­ship of Pres­i­dent Cyril Ramaphosa, pri­vati­sa­tion is back on the ta­ble fol­low­ing wide­spread cor­rup­tion un­der the watch of for­mer Pres­i­dent Ja­cob Zuma, which has left many SOEs fi­nan­cially crip­pled and in need of cap­i­tal in­jec­tions.

The gov­ern­ment does not have the money to keep on bankrolling SOEs that are de­lib­er­ately mis­man­aged for the ben­e­fit of politi­cians. Ramaphosa re­alises that the SOEs must be re­struc­tured and par­tially pri­va­tised in or­der to bring in pri­vate in­vest­ment as well as the man­age­rial ex­per­tise lack­ing in SOEs (es­pe­cially af­ter mer­i­toc­racy was sac­ri­ficed by cor­rupt ex­ec­u­tives).

The par­tial sur­ren­der of SOE as­sets to pri­vate hands will, of course, re­quire the tight­en­ing gov­er­nance sys­tems, the col­lapse of which al­lowed for mas­sive cor­rup­tion in the pro­cure­ment of goods, ser­vices and in­fras­truc­ture at SOEs like Transnet, Eskom, the SABC and Denel. Even the R50bn eco­nomic stim­u­lus pack­age an­nounced by Ramaphosa re­cently is de­signed to bring in pri­vate sec­tor in­vest­ment and is there­fore ex­tremely busi­ness-friendly. Ramaphosa is quite clear that the South African econ­omy can be lifted out of a tech­ni­cal re­ces­sion by car­ry­ing out pol­icy re­forms that stim­u­late pri­vate in­vest­ment (rather than im­ple­ment­ing un­nec­es­sary state in­ter­ven­tion).

Clean gov­er­nance

In 2002, a se­nior ANC of­fi­cial told this writer that he ad­mired the Scan­di­na­vian model of clean gov­er­nance and “tak­ing good care of its own peo­ple”.

As Dan­ish Prime Min­is­ter Lars Løkke Ras­mussen told stu­dents at Har­vard Univer­sity in Oc­to­ber 2015, Den­mark was, con­trary to com­mon be­lief, not a so­cial­ist planned econ­omy. In­stead, it was a mar­ket econ­omy with an ex­panded wel­fare model pro­vid­ing free uni­ver­sal health­care cov­er­age for its cit­i­zens, free ed­u­ca­tion, and ben­e­fits for the un­em­ployed, sick, and dis­abled.

“So, what is the catch, you might ask. The most ob­vi­ous one, of course, is the high taxes. The top in­come tax in Den­mark is al­most 60%,” Ras­mussen ex­plained.

“In to­tal, Dan­ish taxes come to al­most half of our na­tional in­come com­pared to around 25% in the United States. Quite a sub­stan­tial dif­fer­ence.”

Per­haps, fi­nally, we should point to that very im­por­tant dif­fer­ence be­tween the so­cial democrats of South Africa and those of Scan­di­na­vian coun­tries: The Scan­di­na­vians treat tax­pay­ers’ money with re­spect while the politi­cians and of­fi­cials of this coun­try are prone to wast­ing or abus­ing it in­stead of pro­vid­ing qual­ity so­cial ser­vices to its peo­ple. ■ ed­i­to­rial@fin­week.co.za is the chief ex­ec­u­tive and co-founder of GetBiz, an e-pro­cure­ment and ten­der no­ti­fi­ca­tion ser­vice.

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