More government, less prosperity

The NGP envisages a greater role for government, whereas, paradoxically, ‘the poor’ risk and often lose their lives to get away from countries where governments purport to do more for them to ones where governments do less. People flee in only one direction, from less to more free economies, from ones with a greater role for government to ones with less, and therefore with more growth and opportunity.

Americans are not trying to escape to Cuba, South Koreans do not flee to North Korea and no one from Botswana seeks refuge in Zimbabwe. Before Ghana’s dramatic pro-market reforms, people migrated from Ghana to economically freer Cote d’Ivoire. The direction of migration reversed when the latter became less free and the former embarked on the biggest pro-market shift in the world.

Africa, like South Africa, stagnated for thirty years. Africa was the only region where the average person got poorer. Now, unlike South Africa, it is enjoying the world’s highest sustained regional growth rate in keeping with rising economic freedom, civil liberties, rule of law and democracy.

Since we have become proud members of BRICS (Brazil, Russia, India, China and South Africa), we should (a) pay special attention to what the other members did to set their countries on high-growth paths, and (b) implement reforms that make us a worthy partner. The most striking characteristic of our partners is that all undertook substantial promarket reforms. India started its bold ‘reforms’ in 1992/3. China created the world’s freest economies in its Special Economic Zones, along with various ‘free ports’, ‘economic hubs’ and ‘open cities’. Brazil adopted its pro-market ‘Real Plan’ in 1994. Other “measures ... to liberalise and open the economy, have significantly boosted the country’s competitiveness fundamentals, providing a better environment for private-sector development”. It would be anomalous and counter-productive for South Africa to join BRIC countries characterised by successful market reforms, only to march resolutely in the opposite direction.

In short, what South Africa needs, and what is missing from the NGP, is recognition of the fact that all the evidence suggests that the government can do more for the people by doing less, that more government is not the solution – it is the problem.

AUTHOR Leon Louw is the Executive Director of the Free Market Foundation. This article is an excerpt from the book Jobs Jobs Jobs published by the FMF and may be published without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

FMF Policy Bulletin/ 21 February 2012

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