Three proposals to #SaveTheEconomy
19 July 2021
Last week, the Institute of Race Relations launched a campaign to #SaveTheEconomy. Through its Racism Is NOT The Problem initiative, the IRR sent letters to politicians and the CEOs of banks to obtain their backing in reviving the economy.
The lacklustre response to date is a clear indication that while leading politicians and businesspeople may wax lyrical about saving the economy, they are not willing to take the action that is required to achieve that.
Perhaps it is because they are not sure what to do. Our proposal to #SaveTheEconomy, however, is simple and practical. It is made up of three parts that would help to reignite the economy. Since state finances are under strain, we formulated solutions that require no additional money to be spent. They do, however, require political will – and would have enormous positive consequences if implemented.
The proposals are the following:
Protect property rights
End all race-based policies
Implement Economic Empowerment for the Disadvantaged
The first element, the protection of property rights, is fundamental to any functioning economy. A stable and growing economy cannot be achieved in the absence of secure property rights; yet the current push to implement Expropriation Without Compensation (EWC) poses a grave threat to precisely those property rights.
Without secure property rights, individuals have no incentive to invest and build growing businesses – which are needed if unemployment and poverty are to be reduced by any significant margin. The current drives to interfere with property rights, ranging from EWC and so-called ‘custodianship’ proposals to plans to nationalise the entire health system, must be abandoned.
The second element is to scrap the use of race in government policies entirely, including abolishing policies such as Black Economic Empowerment (BEE), employment equity and preferential procurement. These policies have done great harm to our economy. They have created a breeding ground for nepotism, corruption and tenderpreneurs to rob South African taxpayers of their hard-earned money, while also preventing the truly disadvantaged from accessing opportunities for economic progress and dissuading business from committing to the investments we so desperately need.
This brings us to the third and final component: instead of race-based policies, South Africa must implement an effective, non-racial empowerment policy. Our proposal, Economic Empowerment for the Disadvantaged (EED), would give businesses an incentive to grow and create jobs, while also empowering those South Africans who most need it and putting an end to the perpetual enrichment of a greedy elite.
The EED policy proposal pursues a two-pronged approach. The first is that it rewards companies not for achieving racial quotas, but for doing the things that will actually grow the economy and create jobs. For example, under EED companies would be rewarded for the investments they make, the profits they generate, the jobs they sustain or create, the goods and services they buy from other suppliers, the innovation they help foster, and the contributions they make to tax revenues, export earnings, and foreign currency inflows. These are by far the most important contributions to upward mobility that the private sector can make.
The second prong of the EED proposal is a means-based voucher system that would put tax money directly into citizens’ hands to buy the education, health and housing services they choose. The mechanism for doing this would be tax-funded vouchers that the recipients could spend with any supplier of their choice.
As a result, much opportunity for malfeasance would be curtailed as decision-making power would be taken out of the hands of bureaucrats and placed into the hands of individuals. Citizens could spend their money wherever they could get the most bang for their buck, feeding the good schools, hospitals and housing providers with funds while starving of money the sub-par suppliers who do not deliver.
This would rapidly improve the lives of citizens as well as boost the economy. Similar voucher systems have been implemented in other countries with positive results. They allow citizens to take back control from politicians and make their own decisions regarding the education of their children, their housing, and their healthcare.
These three proposals can reverse the downward trajectory South Africa is currently stuck in so that we may again see our economy growing as it did in the early 2000s, when our government pursued pragmatic policies. There is no need to reinvent the wheel. The policies required to #SaveTheEconomy exist and they have been tried and tested. The only element missing is for politicians and CEOs to stop talking about saving the economy, and to start actually doing it.
Said Dr John Endres, CEO-elect of the IRR: “The failure of South Africa’s ailing governing party, the ANC, to implement policies that uplift the poor and get the economy growing, found their expression in last week’s death and destruction. It is not just to avoid a repeat that we need a decisive change in course – human decency demands it.”
If you would like to add your voice to our campaign and help us #SaveTheEconomy you can do so here.
If you would like to find out more about the RNTP movement, click this link.
To read more about Economic Empowerment for the Disadvantaged (EED), click here.
Issued by Gabriel Crouse, IRR Head of Campaigns and Director of the Racism Is NOT The Problem initiative, 19 July 2021
