Land expropriation without compensation: Lessons from Venezuela paint dire future

A few years ago, the US Central Intelligence Agency declassified a document from the 1980s that recorded some of the jokes the Soviet Union citizens made among themselves during the communist reign of terror.

One of these jokes was: “A man walks into a shop. He asks the clerk, ‘You don’t have any meat?’ The clerk says: ‘No, here we don’t have any fish. The shop that doesn’t have any meat is across the street’.”

The insight that citizens of the Soviet Union had, which Western intellectuals who praised the Union of Soviet Socialist Republics and continue to praise communism do not have, is that in economies where there is a great deal of central planning, shortages of goods and services are inevitable.

In a free market, on the other hand, prices are formed from a confluence of market signals.

If a certain resource is scarce, it is more expensive. If it is abundant, it is cheaper.

Only economies that are buttressed by strong security for private property and a healthy respect for free enterprise can mostly avoid shortages, and even inefficient surpluses.

While the Covid-19 coronavirus lockdowns have made shortages a reality all over the world, a country that had been experiencing widespread shortages for years already is Venezuela.

Andrés Guevara, a Venezuelan jurist, recently wrote to South African readers that the misery in his country was caused by two key events: expropriation without compensation and state control of Venezuela’s abundant natural resources.

The communist regime of Hugo Chávez expropriated millions of hectares of agricultural land – all in the name of social justice and redistribution – only for that land to never reach its intended beneficiaries.

The seized land remained, and remains, in the hands of the state or its cronies, under the dictatorial presidency of Nicolás Maduro, who President Cyril Ramaphosa recently congratulated for starting his second term in office.

In Venezuela toilet paper is scarce, citizens in one of the most oil rich countries in the world cannot refuel their cars and food is scarce.

Millions have fled, nine out of 10 do not have money for sustenance, and six out of 10 are at least 11kg lighter in bodyweight since the shortages began.

All this was the case before Covid-19 became the defining topic of this year. I shudder to think what miseries Venezuelans are experiencing today.

Our Parliament, in the meantime, has announced that it will re-establish the committee responsible for drafting an amendment to section 25 of the Constitution.

This amendment will empower government to seize private property without being required to pay compensation.

Expropriation without compensation is back on the agenda.

No serious economic thinker or intellectual has argued how expropriation without compensation could, in any way, be economically beneficial.

All arguments in favour of this boneheaded policy fundamentally concern restitution of dispossessed land as a matter of justice.

What these anti-property rights crusaders omit to mention, of course, is that restitution has been a feature of South African law, not only since the enactment of the Restitution of Land Rights Act in 1994, but for centuries, as part of the rei vindicatio civil action.

The socialist apartheid regime, itself opposed to property rights, also paid no attention to this reality.

Everyone, from the Free Market Foundation to land rights activists, from Plaas to AfriForum, agree that restitution is an imperative.

Claimants must be able to approach the courts or another suitable institution and reclaim specific property that was taken from themselves or their ancestors.

The apartheid regime kept records of all its land seizures, and this can be an invaluable aid in ensuring that justice is done.

Those who favour expropriation without compensation only commit themselves to restitution rhetorically.

But they are not committed to restitution in reality.

What they do want is a situation, like in Venezuela, where the South African government holds onto the land so that it may dish it out to political allies.

A landed citizenry is a threat to any regime that seeks to possess absolute power.

Knowing what we do about the nature of central planning and how it played out in the Soviet Union and Venezuela, for Parliament to again be re-engaging the process to amend the Constitution seems like something right out of a Steve Carell political comedy.

The fact that Parliament is being serious, however, is serious.

Even hinting at the idea that property could be taken without government being required to pay for it, is damaging to any economy.

That we are at such an advanced stage of pushing for expropriation without compensation is a disaster in the making.

We should not be complacent. The normal, level-headed thing to do is assume expropriation without compensation cannot possibly be on the cards anymore.

But we do not live in a normal society with level-headed leaders.

We must therefore appreciate the reality that the looters and wrecking-balls that occupy high government office in South Africa are not yet finished with their plans to destroy the economy.

Their lucid colleagues appear powerless to stop them.

It is up to us, as citizens, to remind government that we insist on secure property rights, and that expropriation without compensation must be taken off the table forever.

This article was First published on City Press on 2 July 2020

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