Beware the funding decisions of government, the youth will pay

23 June 2020
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In the final quarter of 2019, South Africa's youth unemployment rate was 58.10%. In terms of average age in the population, we have followed the general trend across Africa.

The youthful component of African societies is growing fast.

But on Youth Day 2020, South Africa's youth should reject the current trajectory forced upon them by the government: The path of intrusive state controls over their lives, their decisions, and most crucially, over their future potential for success.

When we hear talk of "structural reform" nowadays, we should assess the measure by the standard of whether the particular reform will make it easier for South Africans to pursue their entrepreneurial desires and achieve their personal aims.

The government makes endless promises about what it will do for South Africans; such a view shows that many in government think the youth are incapable of owning true economic freedom, of being entrepreneurs, of innovating, and building good lives for themselves.

Meaningful economic freedom is not an abstract concept. It is about the everyday decisions we can make. It is about the people in our communities having the freedom to trade with one another, and it is about our freedom to do work that we find meaningful and gives us material and spiritual reward.

Those choices and rewards are unique to each of us and are not for any politician or bureaucrat to determine on our behalf. The economic freedom that South Africans need to pursue our potential can never be "given" in a roundabout way through more controls imposed upon us. If the circle of choices and options in life are being increasingly restricted, we can be sure things are trending in the wrong direction.

At the end of March this year, Finance Minister Tito Mboweni told the Sunday Times that South Africa may approach the International Monetary Fund (IMF) and World Bank for assistance. At the time of writing, rumours of such an approach have gained more steam.

We must understand that the mere thought of approaching international bodies for assistance is solid evidence of the failed socialist policies of this government; policies that significantly hindered any chance this country had of attaining meaningful economic growth. The Covid-19 coronavirus pandemic has merely served to highlight the structural damage that was done to the economy over many decades.

New jobseekers are prevented from entering the market by draconian labour laws and high barriers to employment. Unions serve to protect only the interests of their members. To do so, they use their influence in government and agitate for minimum wages to be imposed across the board, thereby protecting their employed members from having to compete with new job entrants.

It is usually only the large companies that can handle such impositions. For millions of entrepreneurs and small businesses, these policies either make it very difficult for them to employ others, or in some cases even drive them out of existence.

We will never see real job creation while the labour environment is one of government intervention and control.

Young people in South Africa, and indeed young people across the African continent, deserve a chance to learn, to improve, to think, to adapt, to create, to trade, and to innovate. For them to have a real chance at success, they deserve to have their economic freedom protected. This means the government must no longer assume that it can make their life decisions for them.

If the proposal for prescribed assets becomes law, everyone's future pensions will be up for grabs to fund ever-failing state projects. It is not just the accumulated pensions of the country's current older generation that will be subject to seizure; once the state takes control over where people should invest their life's earnings, governments of the future will extend their seizure of people's savings to the point where saving becomes futile and the burden on taxpayers intolerable.

Before one agrees with a government proposal for a new state plan or project, always keep in mind that projects need to be funded.

That "funding" can only happen through government spending, for which tax revenue is required. However, just as when you spend more than you earn and encounter financial difficulty, so too the government's budget needs to be carefully balanced.

According to CEIC Data, South Africa’s government debt "accounted for 62.2% of the country's nominal GDP in December 2019".

At some point, debt needs to be financed and paid up. When a government spends and borrows more, it hands on the paying of that borrowing to future generations. The usually "simple" act of paying the interest on such debt is becoming increasingly difficult. The more the government spends now, the more we - and moreover, our children - will have to pay that debt in the future. The income they earn through work will be more heavily taxed, and they will have less available to invest and spend on themselves and their families.

The decisions taken by the government now are already restricting the amount of economic freedom the youth will have in the future.

As occupiers of the important "office of the citizen" in a constitutional democracy, it is incumbent on us to put a stop to this madness. If not for our sake, then for the sake of future generations.

This article was first published on City Press on 15 June 2020

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