Are we paying enough?

As the full economic impact of last week’s British referendum result unfolds, why do the decisions of a few elected people affect the world so much? Why do humans allow so many of their basic liberties to be determined by people so far removed from their lives? And can we do something about it? Well, perhaps you can, by ensuring the financial value you bring to your community is positive and that you do not spend unearned wealth.

We do this by not overpaying for inferior products or services and more importantly, not underpaying for them either.

Many years ago, these words stuck with me: “It is unwise to pay too much, but it is worse to pay too little. When you pay too much, you lose some money – that is all. But when you pay too little you sometimes lose everything, because the thing you bought is incapable of doing what you bought it to do. When you pay too little, it is wise to add something for the risk you are taking. And if you do that, you will have enough money to pay for something better.”

Whether it is for goods, services or work done, the invisible hand of the market and free-enterprise works as should.

It is a rational way for determining the value of products and for the work we do. Poor quality products cost less, or are not available because there is little demand for them. And people who perform well and work diligently are rewarded, whilst those who perform poorly are penalised. That is the theory at least - but it only works in a society which promotes and respects economic liberty. Whilst South Africa scores highly on civil liberty (basic social and human rights), it scores very badly on economic liberties - the freedom to trade with the minimum amount of government and criminal interference.

The lawful theft and redistribution of assets promoted by two of South Africa’s more popular political parties is often confused with legitimate economic freedom. South Africa also scores poorly on economic freedom because of it laws which create monopolies, cronyism and “statutory theft” (which is a more authentic term for income taxation).

Unfortunately in a global economy, monopolies and state control of key industries, legitimate personal choices and your livelihood leads to lower levels of competitiveness, higher costs and loss of confidence in the economy of a country.

Imagine if South Africa enjoyed proper economic liberty. Which legitimate products or services would cost less with deregulation and true economic freedom?

Here are a few examples: 1) Fuel would cost about R7 per litre (as at June 2016). 2) Rail freight transport and port costs (South Africa’s are amongst the highest in the world) would reduce delivered prices of anything from foodstuffs and construction products to electronic items by up to 30 percent. 3) An imported second- hand passenger car from Japan would be 30 to 60 percent cheaper than the equivalent locally available model. In these few examples, a combination of lawful monopoly practices, cross-subsidisation, duties, levies, local content requirements and protected employment raises costs and reduces choice for consumers.

And what should we be paying more for? State (taxpayer sponsored) healthcare and education top the list. Did you know that only about onethird of the cost of taxpayerfunded universities is paid by the student or their sponsor? Together with piped drinking water, refuse collection, public bus and rail transport, all of these services are substantially funded by taxation or borrowing from other people or countries.

The reason a multiple heart-bypass operation at a state hospital costs many patients less than the cost of a hamburger or that the equivalent South African degree costs five times more at the University of Hong Kong is due to levying all sorts of costs and obligations on South Africans who receive no direct benefit from what they sponsor and have little choice in how their appropriated funds are spent.

A grocery store that charges customers double than the store next to it will not remain in business for long. Conversely, there is no such thing as a free lunch – it’s simply not sustainable.

And whoever believes in a right to the fruits of another’s labour should check their values, because they are simply paying too little. We all need to pay our way and take absolute responsibility for ourselves and the children we may be privileged to birth. If we don’t, someone sometime will come and take your lunch away, along with what may be left of your other personal freedoms.

• Ron Weissenberg is a Grahamstown resident who started his first (unsuccessful) business at the age of 7. Ron sits on the Boards of various companies and is a recognised orator on entrepreneurship, economics, commercial law

and governance.