Redistributive populism or strengthening property rights? Lessons from the South

29 September 2021

The policy of expropriation without compensation, which was brought before the South African parliament in 2018, ignited a fiery national policy debate which still takes centre stage in the nation’s political discourse in 2021. In South Africa, and the Western world in general, the liberal democratic paradigm is progressively coming under scrutiny. Many of these challenges originated in a new wave of populism, of both the left and right-wing variety, gaining momentum in the West and the global South. I therefore did my Master’s thesis on the topic of redistributive populism, a strand of left-wing populism, as well as private property rights. In this piece I will be providing a brief overview of my findings.

Redistributive populism

Expropriation without compensation is a policy rooted in redistributive populism, which unites “the people” around the central goal of resource redistribution. This approach to populism, which transcends orthodox dividers and unifiers, builds electoral support around issues such as resource redistribution, poverty and inequality. The Economic Freedom Fighters (EFF) in South Africa is an example of such a redistributive populist party.

Studying the implementation of redistributive populist policies and their outcomes provides us with a better understanding of what motivates politicians to repeatedly adopt these policies and what outcomes they tend to produce. The key question is: Who will in the end be better served by these policies: the people, or the politicians?

Redistributive populism versus protecting property rights

My thesis addressed the following question: Is redistributive populism a sustainable long-term policy path for economic growth, poverty and inequality reduction, and for democratic consolidation, or is protecting and enforcing property rights a better alternative to achieve these aims? In order to find an answer, I compared four case studies: Venezuela and Zimbabwe, as examples of redistributive populist regimes under which property rights were substantially eroded; and Uruguay and Botswana, as examples where property rights were protected and enforced.

Catherine Boone’s work on this topic, describes the phenomenon of populist politicians in sub-Saharan Africa frequently utilising land as a powerful electioneering tool, as “land-centred electoral populism”. Strong state control over land rights and land allocation is used by governments to project their authority and to subjugate local authorities to the central state. This phenomenon appeared in Kenya and Côte d’Ivoire in the 1990s and in Zimbabwe since 2000.

How redistributive populism destroyed Zimbabwe and Venezuela

In Venezuela and Zimbabwe a decline in support for the incumbent party was the catalyst for increasingly radical redistributive populist platforms. Notably, the same pattern can be observed with the ANC in South Africa. The redistributive populist regimes of Venezuela and Zimbabwe initially, after they came into power, achieved improvements in poverty reduction, specifically through better access to healthcare and education, but these improvements proved to be short-lived as the trends soon stagnated and eventually regressed as a result of the fundamental populist priority of focussing on quick solutions for urgent problems, which prioritise short-term impact.

These radical redistributive populist policies paths entailed a significant erosion of property rights, increased state nationalisation, expropriation, overregulation of the economy, mismanagement and corruption. This created high-risk environments for domestic and foreign investors and produced extended periods of substantial economic contraction, capital flight, dire food and foreign exchange shortages and astronomical hyperinflation.

In Zimbabwe, redistributive populist policies caused the total collapse of a once robust agricultural sector, thereby depriving the economy of its primary source of foreign exchange, significantly increasing unemployment and sending shockwaves through multiple economic sectors.

When the Chávez and Maduro regimes in Venezuela, and the Mugabe regime in Zimbabwe, failed to deliver on their populist promises and their economies faltered, their support dwindled further, resulting in a vicious cycle of increased radicalisation of redistributive policies and suppression of the opposition in order to retain power. The cumulative result was deconsolidation of democracy in both countries in the form of a significant decline in support for democracy among the population and the erosion or elimination of liberal democratic institutions.

Protecting property rights bears fruit in Botswana and Uruguay

Uruguay and Botswana, where property rights were protected and enforced, in stark contrast achieved impressive declines in poverty levels with relatively high levels of sustained economic growth. Uruguay boasts the lowest poverty levels in Latin America and a near absence of extreme poverty on a continent plagued by both.

Botswana was one of the world’s most impoverished countries when it gained independence in 1966 and one of the most unlikely to succeed in the coming years. At the time, Botswana only had 12 kilometres of paved roads, no electricity system, no university, two secondary schools offering 5-year courses, 100 people with secondary education, and only 22 Tswana-speaking graduates from South African universities. Against these odds, Botswana became one of Africa and the modern world’s great economic growth and development success stories, boasting one of the highest sustained economic growth rates of all African countries since independence. For context, from 1965 to 2003, the average growth rate of sub-Saharan Africa was negative.

The protection of property rights in Botswana and Uruguay contributed significantly to investor-friendly economies, attracting large amounts of foreign direct investment. Venezuela and Botswana were both rich in a major commodity, but in contrast to Venezuela, where the regime nationalised the oil industry, Botswana negotiated a mutually beneficial deal with the diamond industry on the basis of respecting property rights. The diamond industry thus became the engine of their economy, with the government re-investing the split revenues to the country’s benefit. Uruguay and Botswana created a revenue stream from sustainable economic growth which their governments spent on improving infrastructure, education and healthcare, contributing to a steady decline in poverty.

Uruguay and Botswana are internationally recognised for their strong liberal democratic institutions and stable democratic records, while support for democracy in both is significantly high, as they maintain and even build their level of democratic consolidation. Both countries also demonstrate how the economic growth and consequent poverty reduction which accompany protected property rights, with the vital check on government power it provides, play a key role in nullifying the temptation for redistributive populism.

Conclusion

The cases of Venezuela and Zimbabwe illustrate how populist policies may produce short-term gains but long-term decline in economic growth, poverty reduction and democratic consolidation. Zimbabwe’s economy, democratic consolidation, poverty and healthcare became worse off than at independence in 1980, while neighbouring Botswana achieved opposite outcomes. Zimbabwe, once globally referred to as the breadbasket of Africa, has transformed into a basket case country by destroying its economy and democracy with redistributive populist policies of power politics.

Uruguay and Botswana demonstrated how protecting and enforcing property rights produce sustainable, long-term economic growth, poverty reduction and democratic stability.

Hopefully these insights can be of value in practical politics, when choices have to be made between these policies to achieve certain goals. In South Africa, where the ruling party is experiencing dwindling support and is proposing redistributive populist policies on property rights, the findings of this thesis can be of great value to caution against going down such a destructive path.

My full thesis, Redistributive Populism Versus Strengthening Property Rights: A Comparative Study Of Venezuela And Zimbabwe, and Uruguay and Botswana, is available at here.

Ernst van Zyl is a Campaign Officer at AfriForum for strategy and content. He co-presents the Podlitiek podcast, hosts the Afrikaans “In alle Ernst” podcast, and hosts a political commentary and interview channel on YouTube. Ernst usually posts on Twitter and YouTube under his pseudonym Conscious Caracal (follow him at @ConCaracal).