“Quis custodiet ipsos custodes?” is a Latin phrase used by the Roman poet Juvenal, which can be translated to mean “who will protect us from our protectors?” This warning comes to us from 2000 years ago to alert citizens to the serious dangers they face when those they have appointed to protect their lives and property become takers rather than protectors.
The South African government has embarked on a perilous route to property confiscation. No matter what reasons are given, the proposal amounts to an attempt to legalise theft. Should the courts be unable or unwilling to protect you, if your government is intent on stealing your property, you have no one to whom you can turn. This does not refer to property that was stolen by past governments, in which case restitution must be made. This refers to the taking of property by government from owners where no evidence acceptable to the courts can be produced that the current owner is in possession of stolen property.
There has been a long history in South Africa of race-based property deprivation. In 1913, all black people (black, Indian and coloured, to use the much-hated apartheid race classifications, most of whom did not have the vote) were summarily deprived of their property by legislation, an act of “legalised” theft perpetrated by the white-dominated Parliament. This situation persisted for 78 years, until in 1991 the 1913 land Act was repealed by Parliament, which was still white-dominated. This was part of a reform process set in motion by President FW de Klerk in February 1990.
In March 1992, a whites-only referendum was held to establish whether the majority of whites were in favour of the continuation of negotiations with the Nelson Mandela-led African National Congress for the establishment of a non-racial democratic constitution based on universal adult franchise. In the referendum, in which 85% of eligible voters cast their vote, 68.7% voted for a negotiated settlement. This majority decision by the white voters meant that they approved of majority rule with all that implied. It was a decision that arguably avoided a civil war in the country.
There is no doubt that if property is taken from South Africans once again based on the race of the owners there will be costly repercussions for the country. Actions of government are now measured and reported on in highly-respected international publications, one of which is the Economic Freedom of the World (EFW) annual report published by Canada’s Fraser Institute together with more than eighty co-publishing think tanks and associates based in countries around the world.
It is unwise of governments to ignore the country ratings in EFW established and collated from evidence obtained from sources such as the World Bank, World Economic Forum and the International Monetary Fund. Respect for and protection of private property rights are important factors in determining the level of economic freedom in a country. South Africa’s EFW world ranking has declined from 46th to 95th in the world since 2000. Such ranking declines portend economic declines, and correctly foretold the current stagnation of the SA economy. Making property rights less secure will reduce the country’s ranking even further and make it more difficult for the economy to grow.
Milton Friedman came up with the idea of measuring levels of economic freedom to make cross-country comparisons and challenged think tanks to come up with methods of measurement. Michael Walker, CEO of the Fraser Institute, picked up on the challenge. In the foreword to the first edition of EFW published in 1996, Friedman described the complexity faced by Walker and his advisers, “Freedom is a big word, and economic freedom not much smaller. To talk about economic freedom is easy; to measure it, to make fine distinctions, assign numbers to its attributes, and combine them into one overall magnitude—that is a very different and much more difficult task, as we found when we started on this quest.”
On the value of freedom, Friedman had this to say, “For many of us, freedom—economic, political, civil—is an end in itself, not a means to other ends—it is what makes life worthwhile. We would prefer to live in a free country even if it did not provide us and our fellow citizens with a higher standard of life than an alternative regime. I believe that free societies have arisen and persisted only because economic freedom is so much more productive economically than other methods of controlling economic activity.”
The first edition of EFW revealed that the South African economy was not functioning very well. The Reserve Bank was printing excessive quantities of money, M1 having increased by 16.1% in 1987 and by 31.8% in 1988.
The inflation rates in the years up to democracy were 1987 16.1%, 1988 12.8%, 1989 14.7%, 1990 14.4%, 1991 15.3%, 1992 13.9%, 1993 9.7% and 1994 9.0%. The average shrinking rate (the opposite of growth rate) was 1980 to1990 -1.0% and 1985 to1994 -1.4%. It was Trevor Manuel, through careful management, who straightened out the country’s finances, even reporting a budget surplus in one of the years under his management.
If the government is looking for ways to dig the economy out of its current economic hole, it should deliberately set out to improve the country’s EFW ranking. To improve the ranking some options available to the government are:
- Cut back on government spending and reduce its role in the economy;
- Cut tax rates, preferably by introducing a low flat tax;
- Abolish foreign exchange controls;
- Remove regulatory trade barriers, including non-tariff barriers;
- Reduce labour regulation; and
- Remove regulatory and bureaucracy costs imposed on business.
Above all, if South Africa is to be a free and prosperous country, ditch the idea of taking property without compensation! The cost in loss of international and local confidence in the trustworthiness and reliability of the government will far exceed any short-term political gain that might be achieved by such a short-sighted manoeuvre. Give the citizens of South Africa the assurance that they will not have to seek elsewhere for their protection!
Eustace Davie is a Director at the Free Market Foundation