Competition Commission supposedly saves South Africans

28 September 2017
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The South African government is bent on saving defenceless South Africans yet again. Economic Development Minister Ebrahim Patel, while addressing the 11th annual competition conference, said that South Africa faced growing challenges of “economic concentration” and “social exclusion”. Far from defining the terms, the minister said the only way to solve these dire threats is for government to increase its power; in this instance, the competition authorities. 

Despite myriad government regulations and interventions in the economy (we do not have capitalism), individuals and business in South Africa try their best to trade with each other and flourish. When a person or business charges less for their goods or services, they know what they are trying to do. They know that when they charge too much, they will lose business, but if they charge too little, their business will not survive. Competition is the method by which consumers judge whether prices are ‘too high’ – businesses will inevitably close if they ask too much of consumers.

Minister Patel wants South Africa’s competition legislation to focus on the very ‘structure’ of the economy. Because he does not think South Africans are innovative enough to compete both locally and internationally, he is advocating for immoral government intervention. Immoral because no one, not even so-called enlightened government ministers, may dictate what people must do with their money and with whom they may trade – that is the realm of voluntary transactions.

Whenever a minister talks about the need for government to ‘save’ us, either from a supposed dire threat or our own idiocy, no mention is ever made of the progress that South Africans have made since the end of Apartheid. It appears that the economic progress made by black South Africans is not good enough. Perhaps the assumption is that they would not have made any headway without the machinations of government. No one will admit to this view, but it is the underlying philosophy of people who advocate for increased state power.

The South African economy has struggled to attain any notable growth over the last few years. There seems to be a reluctance to acknowledge that the state’s onerous regulations and political machinations exclude people from the economy. Big businesses become easy targets when political points are at a premium. Is there any proof that business X gained its monopoly position through fraud or force? That question is left unanswered because we have been lead to believe that ‘monopoly’ is something immoral. It is an easy tag to assign to someone we want to bring down a notch.

Whenever the government interferes in the economy, it distorts prices. Instead of just focussing on trading and trying to make a profit, businesses must spend more on compliance costs and advisors to deal with legislation, which in turn means, to keep the prices of their goods and services within a range acceptable to the consumer, they end up with less money to spend on hiring more workers or increasing wages. Businesses in South Africa are far from free. To demand that they act according to what a government official may deem ‘fair’, is ludicrous.

At what point will government, led by ministers such as Ebrahim Patel, be satisfied that the level of competition is ‘fair’? By what standard do they measure fairness? The only standard seems to be identifying the next target they may deem too big for its boots because it must have engaged in unfair practices, regardless of the lack of proof. Some may cheer the social justice line adopted by government, but they must remember that big government is always on the lookout for a new example that will uphold its policy, and, one day, that may well be big, black-owned businesses. After all, the only goal government is after is fairness.

Government is always on the warpath to stamp out competition with promises and threats in the form of the Twin Peaks legislation, the NHI, the sugar tax, regulation of Uber, etc. For government to achieve its underlying philosophy to be the centre of every South African’s life, it needs to get rid of all potential competition. And that is why every South African needs to decide whether they really want to be free, or only as free as government deems acceptable. Despite the ‘social good’ and ‘public interest’, terms which are always left undefined, we must accept that people will trade and compete, that some will succeed and grow their businesses and others will not. Those who succeed by offering us, the consumers, goods and services we need and can afford, grow in turn, and, instead of being attacked, should be praised.

Chris Hattingh is a researcher at the Free Market Foundation

This article was first published in Thegremlin.co.za on 27 September 2017


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