Can a liberal government eliminate South Africa’s wealth disparities?

Rejoice Ngwenya is the founder and Executive Director of the Coalition for Market and Liberal Solutions (COMALISO) in Zimbabwe, and a contributing author for the Free Market Foundation. COMALISO works for a Zimbabwe that respects the free market, property rights and constitutionalism. 

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Can a liberal government eliminate South Africa’s wealth disparities?

For us liberals, it matters little who makes a million dollars every other day, or how the world’s most endowed billionaires spend their wealth. As long as legitimate effort is exerted in an environment of free market competition; where entrepreneurship is recognised and rewarded on the basis of good business ethics and hard honest work. We only become concerned where this wealth is a sum aggregate of dicey connections with governments or an oligarchy that profits from state benevolence. In our world, the liberal one that is, we glorify innovation and extol creative enterprise that thrives on free market competition where everyone has equal opportunity. 
Nonetheless, it would be a misnomer to portray liberals as egocentrics who despise or simply choose to ignore poverty. Wealth creation is a fundamental extension of our ideological values. Thus, where poverty is prevalent – for whatever reason – any right-thinking liberal has to sit up and worry. It is not only unfortunate but a lie that liberals are insensitive capitalist who prey upon poor people. ‘Pro poor’ is not a synonym of socialism or communism, no. It simply refers to a policy environment that recognises existence of poverty, and strategises how to reverse this negative trend for the good of both individuals and humanity.
Therefore, even when the World Inequality Ranking by Country 2022 report quotes the World Inequality Lab Report that isolates Europe as one of the most unequal regions in the world, I would agree with the same source that ‘accuses’ South Africa of being one of the most income inequality countries in the word. A mere 10% of the population control a whopping 66% of the country’s wealth, which is in itself a crisis that even a liberal government would struggle to reconcile. Of course, the Gini coefficient is the most commonly used disparity metric that ‘looks at the distribution of a nation’s income or wealth, where 0 represents complete equality and 100 total inequalities’. However, it matters not which index or formula is applied – even the Palma Ratio - South Africa always takes the honours for most disparities in income, consumption and wealth, access to affordable healthcare and education, or quality of life especially for women. Ironically, this is a country classified as an upper middle-income country boasting one of the highest GDPs on the continent.
I do not want to agonise too much on how my neighbour – almost thirty years after disposing the tyranny of Apartheid – still finds itself stuck in this wealth disparity conundrum. Depending on which ideological prism one looks through, the reasons are as numerous as economic and philosophy text books. My interest, as a practicing Zimbabwean liberal, is to hazard how, if that country had to be run by a liberal government in 2024, it would drastically improve, if not altogether eliminate its unsightly wealth disparity rankings.
The millions of Zimbabweans who either reside or aspire to work in South Africa consider that country comparatively rich and ‘organised’. I will therefore use two milestones to drive this narrative of liberal effectiveness. First, Zimbabweans look at South African national governance as a perfect example of how liberal constitutional democracy is applied. In other words, constitutionalism, rule of law, respect of private property rights, independent institutions that promote free, and fair elections are a good head start from our perspective. However, as we now know, it does not matter how many ‘Sandtons’ we can have, there could be no trickle-down effect of wealth to Khayelitsha and Alexander if a government does not institute policies that eliminate the ugly phenomenon of disparity. We liberals glorify the principle of equal opportunity, however good governance means being able to take the government to account – as in the Zondo Commission. Yet when nothing is done about the report, those that control the levers of political power, influence and wealth creation can only drift further from the rest of the population. And so, if the Zondo Commission report were to be placed in the hands of a liberal government, the State would not only recover all looted funds, but also every culprit would be behind bars by now. Not only that, there would be new and transparent policies to ensure state resources are deployed equally to all citizens.
Yet when I listen to Zimbabwean and South African ‘social democracts’, they insist disparities cannot be corrected if ‘historical structural deformities’ of that country’s economy remain unattended. This argument boils down to the fact that the ruling party African National Congress ANC – via Nelson Mandela – dismally failed to ‘equalise’ these ‘Apartheid type’ anomalies. Top of the pile is the ownership of mines, farms and industries.
This is the second milestone from a Zimbabwean perspective: how an effective liberal government ‘transfers’ wealth equally to every citizen who matters. I am a brave, eccentric liberal who can take on this challenge! Writing from personal experience, we know that late President Robert Mugabe attempted a wholesale transfer of ‘land wealth’ to millions of Zimbabwe through a crude ‘smash and grab’ policy he termed Fast Track Land Reform (FTLR). The implications of violating property rights have grave economic consequences, but also negatively affect global political relations with the free world. At best, expropriation with compensation gives aggrieved citizens an opportunity to re-invest capital elsewhere. From a Zimbabwean perspective at least, a seemingly liberal South African 2024 government would desist from politicising or criminalising private property ownership. There must be a fund set aside to build the capacity of only those with an interest in farming, mining and manufacturing. Financial institutions and banks can then request government to underwrite this fund while other institutions are put in place for skills training. This accommodative model would not disrupt the country’s economic, political and social ecosystem.
One thing that I, as a black, African liberal knows too well is that equal opportunity is more important than equality. Moreso, whilst colonialists did a lot of damage in wealth disparities, I would prefer a government that puts in place policies to encourage productivity at household level, startups, incubations and SMEs driven by free market competition in order to create more disposable incomes. I would ‘impose’ a tax system that completely excludes low-income earners but ensure corporate and property taxes are low enough to attract investment and high enough to sustain a small, efficient government, based on merit rather than nationalist credentials. And so, yes. A liberal government should be able to deal with South Africa’s wealth inequalities.

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