Business Day column: Far-reaching failures now in urgent need of radical change

31 May 2017
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President Jacob Zuma is right, we need radical economic transformation. The reason is simple. We have radical economic stagnation, economic illiteracy, unemployment, pessimism, corruption, capital and skills flight, protests, junk status and infrastructure decay.

We also have radically failed economic policies, state-owned enterprises, education and health services. We face radically false claims of racism, inequality, white monopoly capital, neocolonialism and slow change. Virtually everything is in need of radically transformative intensive care.

We need to transform radical disaster into radical prosperity. Positive transformation might rescue the ANC from the radical failure of its alliance with Cosatu and the South African Communist Party.

What we do not need is more of the same. Tweaking or intensifying existing policies will neither be radical nor transformative. We do not, for instance, need the perpetuation of apartheid dinosaurs in broadcasting, airlines, electricity, mining, postal service, black housing, healthcare, policing, education and in overregulation. Nor do we need unenterprising state enterprises wasting subsidies, guarantees and capital. Radical enrichment of elites should be replaced by the radical repeal of antimarket barriers to broad-based black economic empowerment.

Our respectable growth of about 4% that peaked at 7% in 2007, has fallen to virtually zero. At 7% growth, our wealth would have quadrupled by now.

Our early prosperity coincided with improved scores on all relevant indices: economic freedom, competitiveness, fiscal rectitude, democracy, rule of law, civil liberty, property rights and more. Ratings agencies loved us. Our radical economic crisis followed our radical decline on all indices, culminating in catastrophic junk status. We do not need more committees, commissions or projects to formulate radically transformative policies. What works is not rocket science. It is obvious. President Jacob Zuma’s call for radical economic transformation liberates us from the habit of proposing modest reforms.

Positive radical economic transformation will be achieved by the following 10-point plan:

• Impartial socioeconomic impact assessments (SEIAs) for all proposed laws and policies.

• Review of existing laws and policies subject to the zero-based assumption that they will be scrapped unless justified by SEIAs.

• Give-away, directly to all citizens equally, of shares in state-owned enterprises.

• Replacement of labour law (which causes the world’s highest sustained unemployment rate) with right-to-work law.

• Repeal or relaxation of financial sector controls, including the repeal of exchange control, abandonment of "twin peaks" regulation, liberation from the Financial Services Board juggernaut, scrapping of pointless Financial Intelligence Centre Act red tape and the like.

• Implementation of special economic zone policy.

• Diversity through unambiguous devolution of exclusive and concurrent constitutional functions to provinces and municipalities, thus ending one-size-fits-all uniformity.

• Conversion of black-held land to unambiguous freely tradable ownership.

• Returning law-making functions to the legislature and judicial functions to the judiciary.

• Reinstatement of the rule of law by replacing discretionary power with objective criteria and discriminatory policies with equality at law.

• Louw is executive director of the Free Market Foundation.

This article was first published in Business Day on 24 May 2017

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