Government is itself to blame for the precarious position in which South Africa finds itself economically. Therefore, it would be unwise for us to then identify government as the solution that those who are economically disempowered have been waiting for. If we bestow government with more power, particularly the power to force the internet and data service industry to provide ‘free data’, then we can expect the economic malaise we find ourselves in to be exacerbated.
Everyone is agreed that it is necessary for most, if not all people, to have access to a stable internet connection. These days, being connected is not only vital for economic purposes, but also for the development of the human personality through social and cultural engagement.
But as Leon Louw, CEO of the Free Market Foundation often emphasises, the whole discipline of economics can be summed up in nine words: There ain't no such thing as a free lunch (TANSTAAFL). It speaks for itself. Even when something is billed as being 'free', somewhere, someone is paying for it.
In the case of data, someone is paying for the hardware and software infrastructure and the salaries of engineers and developers. The telecoms giants and internet service providers of South Africa have forked out billions of rands to pay for both over the last 20 years. They do this willingly, but on the assumption that there will be a return on investment.
If we eliminate the return on investment - profits - we eliminate the incentive to innovate and create. We will then be entirely dependent on political will and the stale, almost non-existent creativity that exists in halls of government agencies.
It is a great shame that so many South Africans are unable to provide a stable, high-speed internet connection or data supply for themselves. But the reason for this should be clear.
Government has spent at least the last decade burdening the economy with invasive policies, excessive taxes, and destructive regulations. The costs associated with these burdens are all borne by consumers in the end, with those in the lower income bracket being hit the hardest. Savings have been sapped dry and jobs are no longer being created because few entrepreneurs have confidence in the policy environment. The anti-entrepreneurship, anti-growth posture adopted by government has meant rising prices and human capital flight.
Creating unmeetable expectations - that free data will be provided - in this environment is thus doubly unfair and dangerous.
It is unfair because the people who believe these expectations will be met start putting all their eggs in government's basket. For instance, since expropriation without compensation became a talking point, the affordable housing market has taken a knock because many South Africans believe they will simply be given land to live and work on, for free, by government. In so doing they undermine their own interests and needlessly crush a necessary, emerging industry.
It is also particularly dangerous when social activists succeed in getting government officials to rhetorically commit to free data. When government starts promising things but fails to deliver, the ground is prepared for social unrest.
It is incumbent on government to create a policy environment friendly to innovation, job and wealth creation, and economic growth. This inevitably means adopting policies that respect economic freedom and abandon dirigiste economic planning. In so doing, government would undo years of destructive interference in the market and enable millions of poor South Africans to become prosperous, data-consuming participants in a first-rate economy.This article was first published on City Press on 20 August 2020.