Feature Article: It’s better to nationalise fashion and chewing gum

It is important to take the nationalisation debate as seriously as the debate about whether the earth is flat and rivers run uphill. Nationalisation is where people who don’t produce wealth confiscate wealth from those who do and ensure productive assets become unproductive.

Calls for nationalisation baffle informed people who know that when things are in the hands of the state, they’re in a hell of a state. They are especially baffled when nationalisers say they "care about the poor" yet ignore that the poor are better off in countries with less nationalisation. The poor migrate in one direction only: from countries with more nationalisation to ones with less.

Proponents of nationalisation display three forms of perfectly rational behaviour: misinformation, self-interest and sadomasochism. Some are decent people who do care about the poor. They just don’t know enough history or economics to see through the seductive shibboleths that private enterprise "places profits above people" and "accumulates capital at labour’s expense". The second group is motivated by selfish interests and expects to join the state feeding frenzy with its patronage, privilege, power, status and corruption. It’s inspired by having seen protagonists of "statism" rewarded with benefits from the bureaucratic empires they create.

Then we have those who seem undeterred that nationalisation tends to coincide with pain inflicted on society. They are either nationalisation sadists or nationalisation masochists. We must assume that informed people know that nationalised enterprises impose high costs and poor performance and are aware of the parlous state of nationalised education, health, roads, mining, housing, welfare, policing, electricity, water, post, telephones, broadcasting, aviation, mining and services.

Producers and suppliers are blamed for rare private sector shortages, but when the government fails, consumers are blamed for consuming too much. They are implored to consume less of everything supplied by the government: use less electricity and water, catch buses or organise car pools instead of using public roads, make land-line calls at night, fight crime and pay for licences to fund nationalised broadcasting. It’s like De Beers or Pick n Pay begging people to buy fewer diamonds and groceries. Eskom rewards people for not buying what it sells and wants fines imposed on its best consumers.

Given the catastrophic performance of what is in state hands, perhaps nationalisers dream of a fantasy world in which politically appointed CEOs of nationalised mines, banks, retail stores and airlines get paid millions for losing millions, as with South African Airways and Eskom. Or a world in which shopping malls have potholes, shortages and inconvenient hours and where schools have teachers who don’t teach and can’t be fired. Maybe they dream of private security and hospitals being as disastrous as national policing and government hospitals.

When minerals were nationalised, investment, production, employment, exports, productivity and foreign-exchange earnings fell. Do nationalisers want to nationalise mines so they can be run as inefficiently as government hospitals, post offices, railways and schools? Since we’ve driven our great mining houses offshore or out of business, most mine shares are now foreign-owned. Do they relish the idea of paying billions to foreigners, only to convert efficient enterprises into incompetent bureaucracies? Or do they want to steal what’s not theirs, and turn us into one of the world’s pariah and failed states? Maybe it’s unfair to suggest such perverse motives; maybe all they want is a country in which rivers run uphill.

Nationalise only what is unimportant, not housing, education, food, health and electricity, which should be privatised or outsourced. Give the nationalised assets inherited from the apartheid regime directly to its victims as compensation. Die-hard nationalisers can keep what is of less national importance, such as broadcasting, state theatres, beaches and wilderness areas, and nationalise luxuries such as fashion, sport, hairdressing, entertainment and chewing gum.

Source: This article was first published in Business Day on 10 October 2012. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

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