Keynote address by John Kane-Berman of the South African Institute of Race Relations to the AGM of Forestry South Africa, Howick, 7th May 2015
A twelve-point plan to get the country back on track
There was once a delightful report in The Star newspaper about three armed robbers who stormed a church in Berea in Johannesburg. Two pointed their firearms at the congregation and ordered it to sit. The third went round collecting cellphones and money. A woman worshipper suddenly stood up and shouted "This can't happen in the house of God!" Others joined her in earnest prayer. This confused the robbers. One fled.
The worshippers then grabbed the second man's gun, pushed him over and laid into him. The third man, busy collecting the money and cellphones, was unarmed but they hit him too. Said one of the congregation, "I've never seen women angry like that. We beat them up and threw chairs at them. We had to do what we had to do." When the police arrived they found two injured and bleeding thugs on the floor, and arrested them. "Church robbers given an unholy thrashing," said the headline on the article. To this one can only add, "Hallelujah!"
Few crime stories have happy endings. The relevance of this one is that the women in that church did things in a fundamentally different way. So, too, getting things in this country back on track means doing things in a fundamentally different way. In technical terms, it means changing the paradigm or set of ideas according to which the country is governed.
This is a huge undertaking, but history shows that it can be done. A public holiday five weeks from now will commemorate the revolt of the schoolchildren in Soweto on 16th June 1976. I was working as a journalist and drove into the township that night to see for myself the revolution I thought was taking place. About six weeks later I addressed a mass meeting at the University of Cape Town and explained what had caused Soweto and so many other townships to explode in fury. Prime Minister John Vorster's government of course instructed the police to restore law and order at all costs.
However, as I told several thousand students on the steps of Jameson Hall, a political solution was needed. The government should stop banning and detaining black leaders and talk to them instead. It should also "release those men just a few miles from this campus on Robben Island." I looked out over the statue of Cecil Rhodes towards that island as I said this.
Release Mandela? What a crazy idea! Or so most people said. And the government took no notice. A year later it banned 17 black consciousness organisations and newspapers. But a few years later I joined the Institute and we put forward a 10-point plan. Release political prisoners, lift the bans on the ANC and the PAC and other organisations, start talking to black political leaders, repeal the pass laws - in fact just get rid of apartheid. This was the mid-1980s, when the ANC launched its campaign to make the country ungovernable. PW Botha's government imposed states of emergency. These were only a temporary expedient, we said. The country just can't go on like this. There has to be another way of doing things. We said this in public and we hammered it home at every opportunity.
Guess what? Though our proposals seemed fanciful at the time, the Government was coming to similar conclusions. A notorious security policeman admitted to me, "We talk very kragdadig, but when we are gathered around the braai at night smoking our Camels and drinking our Castles, we know we are on a road to nowhere." A man I sat with on a board set up a large multiracial school. He applied for permission to admit blacks, but it was always refused. So he stopped applying for permission and admitted black pupils anyway. The education authorities told him this caused them a problem.
He said to them, "Why don't you just pretend we don't exist? In return I will send you a confidential report about the progress we are making. Wouldn't you find it useful to know whether or not multiracial schooling works?" Later I discovered that the top education minister told him he thought the school was "great" - but "don't quote me", he said. I also discovered that the leadership of the Broederbond knew all about it. It was not too long before the Government decided that some of its own schools should be desegregated, and so we had the launch of the model C schools.
One day in the midst of all the violence in the mid-1980s I got a phone call from a senior official. Could he come and see me? His minister wanted to know what was behind all the dissatisfaction among blacks. But has your minister not appointed a commission of enquiry to give him all the answers, I asked. Yes, he replied, but my minister knows the commission will tell him what he wants to hear whereas your Institute will tell him the truth. So we talked for three hours.
I told him the truth about his government's policies: forced removals, pass arrests, deaths in detention, and all the other horrors about which we had done so much research. The result was an invitation to repeat this to a special cabinet committee. It was clear that they knew their policies were failing and that they wanted a way out. One of the seven ministers present was Louis Le Grange, minister of law and order, whose policemen were busy trying to quell disturbances in Alexandra township. I told him that their behaviour often made things worse, not better. He later thanked me for being straight with him.
This experience taught me a fourfold lesson on dealing with damaging policies: figure out what is driving them, devise compelling alternatives, make sure everybody knows about them, and, above all, don't pussyfoot. You may surprise even yourself at the impact you have. South Africa's problems of the past could not be fixed by tweaking a few bad policies. The same is true of our current problems. We need a fundamentally different approach.
But first we need to understand why things are going wrong. Ostensibly the government is committed to the Constitution and the National Development Plan (NDP) adopted at the Mangaung conference of the ANC in December 2012. But there is another agenda. This is based on Lenin's theory of imperialism as adapted for South Africa's supposed "colonialism of a special type". Called the National Democratic Revolution (NDR), it was adopted by the ANC and the South African Communist Party (SACP) in the 1960s. Since then, it has been regularly reaffirmed, most recently at the same conference in Mangaung as adopted the NDP.
This revolutionary agenda has four key components:
1. deployment of loyal party cadres or apparatchiks to capture all centres of power
2. the use of affirmative action to make all institutions demographically representative
3. redistribution of whites' assets because they are the ill-gotten gains of colonialism, and
4. winning the battle of ideas against "neo-liberalism" and "ultra-leftism"
Many people profess themselves "baffled" that the government is not implementing the NDP. The reason is that it is too busy with the NDR. Few commentators in the media talk about the NDR, but you need only to draw up a list of legislation already enacted or in the pipeline to realise how far it is being put into practice. Western diplomats in Pretoria scratch their heads at the anti-Western focus of our foreign policy, but if they paid a bit more attention to the ideological origins of that policy they might be a little less confused.
Further implementation of the NDR risks further undermining the economy, our trade and investment relationships, and in due course democracy. Having been doing risk analysis for nearly 90 years, the Institute is convinced that these risks can be countered only by replacing the NDR with something fundamentally different. That is where our 12-point plan comes in.
Top of the list? Go for growth. Not as one among other objectives, but as the overriding priority. Faster growth, and only faster growth, offers hope to our eight million unemployed. Instead of growth averaging the current 2% to 3% a year, we need to get closer to 7% or 8%. The two countries that have seen the greatest reduction in the numbers of people in poverty in the last two decades - almost a billion people between them - are China and India. Both grew at around 8%, thanks largely to economic liberalisation.
The second of our set of policies is radical reform of labour law: compulsory strike ballots, bans on secondary strikes and picketing, suing unions if they destroy property, and jailing strikers who assault so-called "scab" labour. Unions have become too powerful and too prone to violence - in the last 15 years more than 150 people have been killed in strike violence (excluding those shot at Marikana). Thanks in part to all the restrictions on our labour market, unemployment among male born frees of working age is running at 67% and among their female equivalents at 75%. The most extensive violations of human rights in South Africa are all the laws that stop poor people from earning money. They must be priced into jobs.
Number three reform is education. Four fifths - 80% - of our schools just don't work. There is growing demand among black parents and children for places in suburban schools. Part of the solution is privatisation. South Africa has 3 000 - 4 000 private, or independent, schools. We need more. So: auction off as many government schools as possible to the private sector. We already have two listed companies running schools as businesses. Why aren't any of the big empowerment companies doing the same? Township schools could also be sold to the non-profit sector: NGOs, chambers of commerce, churches, trusts, even trade unions. Communities could thereby take more responsibility for the education of their children.
Another component of education reform would be to give each child a voucher to buy education from whatever school he and his parents chose. The voucher would be worth the same as current per capita state spending on schooling - about R12 200 per pupil per year. Some private schools charge less than this. Competition among schools for voucher-bearing pupil-customers would force up standards.
Fourth on our list is health. The same principle would apply – the state pays for health care, but the private sector takes over provision thereof. Failing public hospitals could be auctioned off to private hospital groups. Patients would be armed with vouchers enabling them to buy basic health services - such as screening and testing - from private providers. State-funded medical insurance would then pay for necessary hospitalisation or specialised treatment.
A greater role for the private sector in both education and health care brings us to the fifth item on our list: privatisation of our state-owned companies. Start with South African Airways. Put it up for auction, preferably tomorrow. Do the same with all other companies when there is no compelling reason to retain state ownership. Auction off the Eskom power stations. Sell the airports. China privatised with great success. Before Margaret Thatcher privatised them, British nationalised industries were costing taxpayers £50 billion a month in subsidies. After she privatised them they paid £60 billion a month in taxes.
Number six on our list is deregulation. If we want to unleash the energies and drive of the private sector we have to unshackle it. South Africa has very low levels of entrepreneurship: only 35% of us are able to discern entrepreneurial opportunities, against 70% in various other sub-Saharan countries. So: cut the excessive red tape that inhibits entrepreneurship.
Seven is greater trade liberalisation. Free trade means greater prosperity. Global competition means lower prices and therefore better-off consumers everywhere.
Number eight is redesign of land policy. Scrap all targets and ceilings. Arable land is too scarce to be put in jeopardy. Stop talking about land reform. Talk instead about agricultural entrepreneurship, which requires much more than land alone. People already farming on a small scale could be helped to expand. The same could apply to aspirant farmers or growers.
Also requiring redesign are our policies supposedly targeting the disadvantaged. This is ninth on our list. State interventions to assist the disadvantaged should focus not on previous, racially defined, disadvantage but on current disadvantage, defined by objective economic, colour-blind, criteria. Overwhelmingly this is unemployment, poverty, ignorance, and disease, all of which can be dealt with via the remedies I've already described.
There is no need for race to play any further role. Social grants are already colour blind. Empowering the poor with education and health vouchers would be colour blind too. Removal of race from procurement would lower costs, improve competition, and speed up infrastructure provision. Replacing employment equity with colour-blind hiring and promotion policies would revitalise the public service.
Number ten on our list is the professionalisation of the public service. No more cadre deployment, or political appointments, or affirmative action. Choose only on merit. There would also have to be accountability, including dismissal for poor performance and prosecution for malfeasance.
Accountability must apply to Parliament too. This is eleventh. Cut the National Assembly from 400 to 200 members. The National Council of Provinces would be replaced by a 200-member chamber elected on a constituency system. This would give us the best of both worlds: accountability to constituencies, plus adequate representation for minority parties.
Number twelve? Decentralisation. Devolve power to the lowest appropriate level of government. Cities and provinces should compete for investment. This would reduce corruption and encourage deregulation. The government wants to involve communities in local policing. Fine: let them elect their station commander, give him a sheriff's badge and the power to hire and fire, set his performance criteria, and fire him if he doesn't measure up.
Well, that's the plan. It calls for a smaller but more efficient state, greater economic freedom, and scope for more individual initiative. When we first published it last year, some people dismissed it as pie in the sky. They said the same 30 years ago when we called for the release of Nelson Mandela and all the other reforms that subsequently came about.
And since we published our 12 points some quite interesting things have been happening. In the first place, Pravin Gordhan, the minister responsible for local government, wants to get rid of incompetent municipal officials. He won't actually be able to do this without spending the rest of his career at the CCMA. Sooner or later, the liberalisation of labour policy that forms part of our plan will have to be undertaken. Such liberalisation was talked about under Thabo Mbeki, but then pushed off the agenda by Cosatu and the SACP as they reasserted the hegemony of the National Democratic Revolution. It will have to be put back on. The disintegration of Cosatu will probably make this easier. We will also have to move towards the professionalisation of the civil service. It would make no sense to get rid of one lot of corrupt and/or incompetent officials and replace them with another. The Public Service Commission has itself been criticising both cadre deployment and affirmative action.
The second development is the talk of selling off some state assets to help Eskom - something Mr Gordhan ruled out early last year, but which now seems to be creeping back on to the agenda. Talk of selling off bits of SAA is another step towards privatisation. Some ministers are no doubt still opposed, but a weaker Cosatu may embolden those who recognise that South Africa is running out of the money to keep on bailing out failing state institutions.
Third, we have already run out of money for land reform, and the minister has for some time been questioning the 30% redistribution target. Of course, pending legislation may drastically reduce the costs of expropriation. On the other hand, perhaps we will see a shift from ideology to pragmatism necessitated by the failure of so many land reform projects. Your own annual report suggested that the reopening of the land reform window could halt the processing of existing claims because of all the new ones that have been lodged on the same land. Out of confusion and failure we may yet see a better policy emerge.
Perhaps I'm clutching at straws in mentioning these examples of change. But big changes often have small beginnings: the retreat from apartheid started with allowing limited desegregation in visiting rugby teams. Reform is often not only slow, but messy, especially when implemented with reluctance and against strong resistance. The National Party abandoned apartheid only because it had no option as that policy became more and more difficult to enforce. Many reforms were in fact forced upon the NP government. The pass laws were repealed in 1986 after millions of arrests had failed to halt black urbanisation as ordinary people voted with their feet and came to town anyway. When the black trade union movement got going in the early 1970s, the government tried to crush it with banning orders. But the workers flocked into the unions regardless. Every attempt was made to crush the black minibus taxi industry. However, in the end the minister who had threatened to close it down wound up as opening speaker and guest of honour at a huge taxi conference in the Super Bowl at Sun City. The NP also eventually gave up trying to maintain the industrial colour bar as shortages of white skills forced employers to train blacks.
In all of these cases change in the law followed change on the ground, as realities came into play and as people created new realities. Very often the law was liberalised only after attempts to tighten it up had failed. Perhaps this is what we are now seeing with our labour law. Ever-increasing restrictions and other factors have spawned a huge labour broking industry. Now the government is trying to control that. This will encourage even more outsourcing and subcontracting. Employment of foreign African workers is partly an attempt to circumvent minimum wage and other restrictions. But if the government now extends minimum wages, will it not create an incentive for even more employers to hire foreigners?
Our porous borders thus help to undermine our restrictive labour law. But our porous borders are themselves the result of weak law enforcement, which is in turn the result of the fact that our security forces are run not by professionals but by political appointees. Restrictive labour law, porous borders, and weak law enforcement have now created another pressure point for change: the anger in Africa about the violent attacks on some of their nationals last month.
This brings me to the great paradox of the last 21 years. The ANC has taken unto itself more and more power but it has become weaker, not stronger. The evidence of this is the lengthening list of state institutions that are not working properly.
The government is also pursuing contradictory policies. On the one hand it adopts a National Development Plan that looks to the private sector for another 11 million jobs. On the other it is wedded to a revolutionary plan hostile to the capitalist system: yet this is the system that generates not only jobs but also billions in tax. Without all this tax the ANC would not have been able to increase social spending from 45% of the budget to 59% and so fulfil some of its promises and stay in power. However, as Margaret Thatcher once said, the problem with socialists is that they eventually run out of other people's money.
The ANC doesn't much like business, but business is the first port of call when it gets itself into trouble. So the private sector can start flexing its muscles. Don't join Eskom's so-called "war room" without first getting an undertaking that the government will abandon cadre deployment and its affirmative action plans for Eskom. Lay down the same conditions before agreeing to help local authorities. Don't agree to join the board of a parastatal without obtaining a promise that board decisions will not be overridden by Luthuli House.
Another strategy is to exploit policy contradictions. Don't endorse the National Development Plan without asking the ANC why it also endorsed the National Democratic Revolution. Challenge the ministers in the Cabinet who recognise the importance of growth to confront those who want to tie even more red tape around the private sector. It will be the verligtes versus the verkramptes all over again. This is just the kind of fun we need in our politics!
Then take the objectives of the NDP - 5.4% annual average growth and 6% unemployment by 2030 - and spell out what needs to be done to achieve them, which is a great deal more than half-baked implementation of the half-baked ideas of the NDP itself. For a start these targets necessitate raising investment spending from 20% of GDP to 30%. To do that in turn, we need secure property rights, lower tax, liberalised labour law, better water and other infrastructure, privatisation, a decent public sector, free trade, a proper prosecution service, imprisonment for corruption, and so on - in other words many of the points in our 12-point plan. The clincher is that the government's own growth objectives cannot be achieved with its policies, so they will have to be achieved with ours. This point needs to be hammered home with the objective of generating critical mass for a change of policy.
All this also means blowing the trumpet for economic freedom as opposed to state control. Remember that old proverb, "The economy grows only at night, when the government is asleep". The private sector has already helped the poor in this country by providing the government with the tax revenues that have enabled it to reduce poverty and inequality and deliver all sorts of services. But the country can't keep on doing this without the risk that government debt will spiral out of control once again. We must create a following wind for potential reformers among ministers by doing the homework on alternative policies. The IRR has already done this on school vouchers, on property rights, and we will soon do it on labour law reform, health vouchers, privatisation, and other items.
The chances that our ideas will soon be adopted are slim. However, it is still necessary to have them ready to replace present policies when they collapse. Milton Friedman's idea of using monetary policy to conquer inflation was laughed off when it was put forward in the 1960s. But the idea remained out there in the public domain, ready to be adopted in the 1980s when the anti-inflationary policies of the 1970s failed. In South Africa, when apartheid collapsed, we got a constitution with many liberal elements in it. A key reason is that all the homework had been done by the Institute and other liberal organisations, so these ideas were familiar right across the political spectrum, including in ANC circles. Imagine what would have happened if we'd opted out of the battle ideas and left the Marxists in possession of the field. There is now a new battle of ideas to be fought. It will need stamina and staying power.
Last week the Institute published a report on all the problems facing South Africa's first post-apartheid generation of young people, the so-called "born frees". President Jacob Zuma's office dismissed some of our ideas as "outlandish". Outlandish or not, they are now in the Presidency, and the government will have to turn to them as its own policies continue to fail.
But the wider case for economic freedom needs also to be argued on the basis of hard statistical evidence. The Free Market Foundation has grouped countries into categories from the least free economically to the most free economically. Between 1990 and 2010, the "least free" experienced growth in GDP per head at an annual average of 1.6%. The "most free" clocked up 3.6% - more than double. As a result of these different growth performances, the least free countries recorded GDP per head in 2010 of $5 200, while the most free recorded almost $38 000 - almost seven times as much. The least free showed life expectancy in 2010 at 62 years, the most free at 80. So people in the richest and fastest-growing countries live almost 20 years longer than in the poorest. Moreover, the average per capita income of the poorest 10% of the population in the least free countries was $1 200, whereas in the most free it was nearly $12 000 - almost ten times as much.
Although there is much scepticism about growth, the evidence is incontrovertible that it is the key to prosperity. And the key to growth is economic freedom. This is a message that needs to be hammered home at every opportunity until more and more people start clamouring for a shift towards growth-friendly policies. Moreover, the battle of ideas needs to be fought in public as well as in private. We are, after all, a democracy and we can exercise free speech in South Africa as freely as anyone anywhere. Free speech is not much use if it is no more than a phrase in the Constitution. It is a weapon that can, and should, be wielded.
Somebody once said one should never waste a good crisis. The recent one over attacks on foreign nationals can be exploited to promote policy change. Zwelinzima Vavi blamed the attacks on high unemployment. He should not get away with these crocodile tears without being reminded that he and other trade union leaders are a major cause of this very problem. This is a means of showing the unemployed where much of the responsibility for their plight actually lies. Also referring to the attacks on foreigners, the treasurer general of the ANC, Zweli Mkhize, said that the heart of the problem was that the economy was not growing fast enough to create jobs. This kind of comment from within the very heart of the ruling party should be publicly endorsed. But it should also be exploited to generate more support for all the reforms that are necessary to achieve the faster growth he wants.
So there you have it. Our 12-point plan as an alternative to the National Democratic Revolution and some ideas on how to promote these policies. The plan and the ideas together constitute a fundamentally different way of doing things, a new paradigm. I gave you one paradigm shift with my story at the beginning of this talk about the women in the church. I will end with another.
You may remember it from one of the Indiana Jones movies. Mr Jones finds himself in a square in some town in Algeria or Morocco. He is confronted by a man waving a cutlass round and round and moving menacingly closer and closer. Surrounded by the man's friends, there is nowhere Indiana can run to. Sitting on the very edge of your seat, you can't see how he can avoid getting his head sliced off. He then quietly pulls out a pistol and puts a bullet through the man with the cutlass. The moral of the story? Shift the paradigm. Always take a gun to a swordfight. 6th May 2015
Issued by the Institute of Race Relations, May 7 2015