It is unfortunate that South African business owners and managers wake up every day wondering what new regulations will descend on them. Business owners and managers live in perpetual uncertainty, which hampers their forward planning. In addition, more and more of their time is taken up in complying with regulations, which prevent them from focusing on what they get paid for, which is to run a business. This is not a good recipe for bringing about economic growth and providing new jobs.
Legislation and regulations are pouring down on business. Members of Parliament have the mistaken idea that their success should be measured by the quantity of laws they are able to enact during their parliamentary year. As a result, the quality of our laws suffers and costs are incurred by the private sector in the form of experts hired to address bureaucratic requirements. Staff and executive time is spent on matters that produce no value for the business, customers, employees or the economy. The excessive red tape results in an incredible waste of resources, which weighs heavily on an economy which needs to absorb 8.3 million unfortunate unemployed people into the labour force.
Instead of imposing increasing burdens on the country’s citizens, Parliament should spend most of its time on reviewing all the laws that are already on the statute books. How many laws, for instance, are on the statute books that were adopted during the apartheid era and still have offensive provisions in them? How many laws are redundant, are never applied, are counter-productive, and should be repealed? Also, how many laws and regulations have costs that exceed their benefits, which can only be determined by a thorough cost-benefit analysis by qualified independent reviewers? A thorough review would be of great benefit to the people of South Africa. It could, over a period of years, save millions and even billions of rand in unnecessary costs and time spent by individual citizens, businesses, the courts, law enforcement agencies and government officials.
Our Constitution and laws establish a platform on which governance of the country is based. This platform has to be sound, otherwise governance cannot be properly carried out and citizens do not know what is legal or illegal. Even worse, the courts have to deal with huge caseloads that could be reduced if the statutes are consistent with the rule of law, which is a founding provision of our Constitution.
Nobel laureate, Friedrich Hayek, in his book The Constitution of Liberty, described the rule of law as, “general rules applicable to everyone, including government”. Major problems that were experienced in the past and are still being experienced in South Africa today are the result of a failure to apply the rule of law. If the rule of law had been applied in 1913, the Land Act would not have been possible. It would not have allowed citizens of the country to be differentiated in the laws relating to land ownership on the basis of race. If it had been applied consistently throughout the history of this country, not even apartheid could have been imposed. General rules mean rules that are equally applicable to everyone, including the politicians.
What I have said about apartheid and the rule of law naturally also applies today. The rule of law does not allow different sets of laws for different citizens. According to my understanding of the general principles, the laws must be equally applicable to everyone and section 1(c), which is a Founding Provision of the Constitution, gives the rule of law and the Constitution equal status in determining the nature of our legal system. In my view, it follows that the current race-based laws, which have replaced the pre-1994 race-based laws, are unconstitutional. Some lawyers may disagree with me but my common sense tells me that the proper application of the rule of law could never allow a lop-sided legal system that does not provide equality before the law. What we all hated most about apartheid was that the laws differentiated on the basis of colour. How can that now be different? What is it in us as individuals that allows us to say that a racial bias in the laws during apartheid was unjust but now it is just?
It is not surprising that failure to abide by the rule of law has led to many serious problems. Failure to follow general rules and sound principles has resulted in the granting of excessive discretionary powers to government officials, which creates the kind of corruption that is taking place. A bias in the laws guarantees that the economy will not function at optimum efficiency because capital and skills will not move towards the areas of the economy where they are most needed. An economy cannot function on sentiment, it has to respond to the demands of consumers, and it must be allowed to respond as efficiently as possible to those demands. Corrective action to relieve the suffering of people who were badly affected as a result of the crime of apartheid must be taken by government action through the budget and not by contraventions of our Constitution.
Given the platform that I have described, it becomes clear that proper application of the rule of law will solve many problems. Parliament would have the great and important task of refining and clarifying the laws according to sound principles and it would no longer create havoc and uncertainty by continually changing laws without good reason. The courts would be relieved of unnecessary burdens and would be able to concentrate on the real critical matters that confront them, which is to adjudicate the law according to sound and just principles. Law enforcement agencies would be able to concentrate on dealing with real criminality and not be expected to police thousands of less important matters that unnecessarily take them away from their true duties of protecting people’s lives and property from criminals. Corruption will be halted when officials do not have the discretionary powers to enrich whoever they wish, including themselves, if they can get away with it.
Once we have the platform of sound laws, we have a Parliament that is taking great care that every Bill presented to it is consistent with the rule of law, and the entire country is working according to this sound platform, another great truth needs to be driven home, which is that the only money that government has is what it takes from citizens in taxes, or what it borrows against taxes that have to be paid in the future. Government has no other source of money. So when someone says government should pay for this or that, what they are actually saying is that the citizens as taxpayers must pay for it. Some people will say that this is correct, those who can afford it must pay. They forget that the pensioners, the poor families, children spending their pocket money, all pay taxes. Their contributions might make up a small fraction of the taxes paid, but to them that little makes a considerable difference to their lives.
The point I want to make is that all moneys taken from taxpayers should be handled with great care. Government has a duty to ensure that there is no waste and that it does not create unnecessary burdens for future generations by borrowing money that has to be paid off by our children and grandchildren in years to come. In fact, budgets should be balanced in the way that Trevor Manuel demonstrated it can be done. I am not going to list instances of huge amounts of waste of which you are all aware. Let me name some that you may not have considered. Think about the millions and even billions of rand that have been spent by government in not accepting the lowest tenders put forward by the most efficient contractors for carrying out those tenders. Think also of the millions of extra rand spent by government in attempting to carry out work for which it is not equipped. Think also of the high salaries being paid to government officials, higher than the salaries of the employees in the private sector, which pays the taxes out of which those salaries are paid.
I want to now discuss an issue that troubles me greatly, which is the 8.3 million unemployed people in this country. What is it about this tragic situation that makes good people shut their minds to the problem? My question is: “Why is it that so many people are unemployed when there is so much to be done in this country?” I have no doubt that under different circumstances, private entrepreneurs would find work for everyone who wants to work. The reason people don’t get jobs, is that the labour laws have imposed risks and costs on potential employers that they cannot afford to carry. If we remove these unnecessary risks and costs much more employment will happen.
Let me make it absolutely crystal clear what I am talking about:
Am I in favour of what is described as slave labour? No!
Am I against what is described as decent jobs? No!
Am I in favour of creating conditions that will lead to rapid economic growth? Yes!
Do we need rapid economic growth to absorb all of our 8,3 million unemployed brothers and sisters into the labour force? Yes!
Can we increase labour absorption even if we don’t have high economic growth? Yes!
How? By removing the barriers to employment!
How? By changing the laws to allow the unemployed to decide for themselves what they think is a decent job?
Will the views of unemployed people about what is a decent job be different to yours or mine? Probably!
Should they be able to take jobs that we think are not decent and we would be inclined to urge them not to accept? Yes, it is their decision and not ours!
Is that not a callous and inhumane approach to take? No! It is callous and inhumane to take away their decision-making power over their lives by adopting laws, such as minimum wage laws, that remove every opportunity they might otherwise have had.
Would I misuse the situation and treat people badly? No! And you would not do so either.
What would be the difference? The difference would be that you and I would not end up in the CCMA for giving a jobless person a chance by paying them an agreed rate for their work. The difference would be that our unemployed brothers and sisters would have hope, the dignity of having a job and the ability to put bread on the table for their families.
Finally, I have been talking about the rule of law and the proper functioning of the courts and the law enforcement agencies. At the same time, you know that I am a strong supporter of capitalism, free markets, and economic freedom. You need to know that there is no inconsistency in my views. The rule of law is an essential part of capitalism and free markets. Check the most economically free countries in the world and you will find that the rule of law is central to the way they function. It is also no accident that those countries, such as Hong Kong, Singapore, New Zealand, Switzerland, Mauritius, UAE, Canada and Australia, have among the highest per capita incomes and consistently high growth rates in the world.
You might ask how I can include Hong Kong on my list when there seems to be serious trouble there. Look at what is happening and you will find that the people are protesting about China’s interference in the judicial system, and they are calling for true democracy that allows them to choose their own candidates and vote in their own government. It is about the rule of law and adding political freedom to their economic freedom.
South Africa can join those economically free nations. All we have to do is start by properly implementing the rule of law. Ensure that everyone, employer and employee, trade union member and unemployed person, the wealthy and the poor, all the members of our rainbow nation, have equality before the law. Once this is in place, peace and prosperity will be ours.
We all owe it to the legacy of the first democratically elected president of this new nation, Mr Nelson Mandela, who wanted us to be the Rainbow Nation. The Rainbow Nation concept that captured and won the hearts and minds of the world.
Author: Herman Mashaba, former Chairman of the FMF. His address to the USB annual award certificate ceremony on 8 December 2014 deserves to be read by all South Africans.