Business Day column: State’s transformation ideas are really blatantly anti-transformation

23 June 2016
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RACIAL equality through "transformation" is obviously a bad idea. That is why policy makers concoct ingenious stratagems to ensure it never happens. Virtually every new and proposed measure retards black advancement.

"Surely not", you might protest, "the government wants transformation. It enforces "black economic empowerment", racist employment quotas and draconian expropriation laws to achieve it."

The transformation drumbeat conceals more than it reveals. That measures are never overtly anti-black does not sanitise them. Apartheid made the average black person poorer and less qualified than the average white. To that extent, measures victimising poor and unqualified people are anti-transformation. If all businesses were white, laws prohibiting entry would be anti-black. If low-income consumers are black, forcing prices up is anti-black.

Of course, things are never that perfectly black and white. That fact, combined with slick rhetoric, disguises the anti-transformation nature of discriminatory policies. Proposed liquor policy, for instance, envisages the prohibition of liquor sales in unzoned (i.e. black) areas. The obvious effect will be promotion of white-owned businesses in "white" areas.

The proposed prohibition of liquor advertising will make it impossible for black-owned business to enter the industry. Reducing the number of both new and geographically accessible outlets victimises poor (mostly black) people disproportionately. An age restriction of 21 years would reduce business and job opportunities for black people.

Virtually every recent and proposed measure is similarly anti-transformation. The Financial Services Board boasted to Parliament that it outlawed 15,000 enterprises, most of which were black-owned and served black beneficiaries. Its "market conduct" controls will make it virtually impossible for emerging black-owned enterprises to compete with established enterprises.

The list goes on. By increasing credit-provider costs and risks, the National Credit Act diverts wealth from low-income black people. The Consumer Protection Act forces consumers to buy benefits that increase prices, which affects poor people disproportionately. Peasant farmers used to buying ploughs, pumps or "bakkies" for, say, R5,000 must now buy a prohibitively costly warranties for R50,000 or whatever.

Consumer "rights" force consumers to buy costly "protection", such as a "cooling-off period". The technology and staffing needed to honour such "rights" favours large sophisticated outlets at the expense of small and emerging competitors.

The proposed prohibition of smoking in private places (fraudulently called "public" places) and within 10m of entrances will drive black smokers from "black townships" into the arms of retailers in opulent areas with large properties and open spaces. Obnoxious packaging fraudulently called "plain" will expose poor people to obnoxious pictures of rotting body parts. Rich people will put cigarettes in trendy cases and pack holders.

Under labour policy, white unemployment is roughly what it was in 1994, whereas most black youth have never been employed. Although the worst apartheid law, the 1923 Natives Land Act, was repealed nominally, land discrimination lives on.

Black people still do not own their land unambiguously. They do not even become owners of "redistributed" land. "Beneficiaries" become tenant farmers. The government owns most housing in "black" urban areas. Nominally titled land is constrained by a "pre-emptive" clause, the effect of which is to place "beneficiaries" under house arrest — if they are not found where officials want them to be, they lose their homes.

A propaganda tsunami creates the impression that tobacco and liquor advertising prohibition will reduce consumption. But independent research finds no such causal link. Prohibition shields established businesses from newcomers. It is a fatal blow to all marginal activities advertising supports: marginal jobs, newspapers, radio, sport, entertainment and education.

The Cabinet decided a year ago to subject all new measures to socioeconomic impact assessments. If they are serious about transformation, they should start by identifying and repealing or relaxing all measures with anti-transformation effects. They should devote their next parliamentary session to legislation by repeal.

• Louw is executive director of the Free Market Foundation

This article was first published in Business Day on 17 June 2016



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