Quarterly Review 2009.09

21 December 2012
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Quarterly review

July – September 2009

Extract from Brian Benfield’s Chairman’s Address to the Annual General Meeting, 27 August 2009

The Free Market Foundation was founded to promote the principles of liberty and to disseminate as widely as possible information on its nature and advantages. Its aim is to promote and foster an open society, the rule of law, personal liberty, and economic and press freedom. In short, the Foundation promotes the personal liberty and freedoms of all South Africans.

These objectives are not dissimilar to those contained in the South African Constitution, namely, to lay the foundations for a democratic and open society in which government is based on the will of the people, and every citizen is equally protected by law. Government is to advance human rights and freedoms, and to ensure the supremacy of the Constitution and the rule of law. In short, the government’s primary duty is to advance the personal liberty and freedoms of all South Africans.

Liberty and freedom are synonymous in the sense in which I use them; here they mean personal liberty – the liberty of each person to live according to their own choices, provided they do not attempt to coerce others and thus prevent them in turn from living according to their own choices. South Africa’s Constitution generally supports freedom in the sense of individual and personal liberty. Nonetheless, it also contains some “rights” that, if granted to some citizens, impose obligations on others and which therefore are inconsistent with the notion of individual rights and liberty.

Our Constitution is designed to limit government, not to facilitate it. The “supremacy of the Constitution and the rule of law” are therefore among the Founding Provisions of the Constitution. President Nelson Mandela said: “The rule of law, as I (admittedly a long retired old lawyer) understand it, refers to a structural exercise of rule as opposed to the idiosyncratic will of kings and princes. Even where the latter may express itself benevolently, the former is morally and politically superior. Where the rule of law does not apply, rulers assume entitlement to rule; the rule of law, on the other hand, places the emphasis upon structured responsibility and obligation.”

Liberty encompasses both economic freedom and civil liberties. The one cannot endure without the other. In promoting these principles of liberty, I believe that the Foundation’s extensive endeavours over the past year, as with the past three decades, have served the citizens of South Africa well.

Beware the NHI

This year has seen a propaganda blitz promoting a National Health Insurance (NHI) scheme for South Africa. It would be better by far if the state separated the funding and provision of health care so that all care is eventually privately provided and care for the needy is publicly funded. This would ensure competition, lower prices and quality health care for all.

Many countries around the world, particularly in Western Europe, have increased government control over the health sector in the hope of promoting equity and efficiency. However, the experience of many of these countries is that greater government intervention entrenches the rationing of medical technologies, and extends waiting lists and inequity. Many of these government-dominated systems also have serious problems with cost inflation.

In order to inform South African policymakers and opinion formers of the danger of undermining patient choice, the Health Policy Unit (a division of the Free Market Foundation) and International Policy Network (London) propose a media campaign beginning, as soon as the requisite funds can be raised, with the visit of three policy experts. The aim of the campaign will be to illustrate overseas examples of how good intentions by governments to improve health care have often backfired and entrenched very serious structural problems in healthcare systems. The campaign will also include an element of positive advocacy of the merits of free market healthcare reforms, such as blending health insurance with medical savings accounts. The initial visit will be followed by a half-day conference in Johannesburg and will be followed up with bi-monthly ‘fly-ins’ of relevant foreign policy experts, who will engage in press liaison, meetings with officials and speaking events. Events will be organised in Johannesburg, Pretoria and at Parliament in Cape Town.

In the interim we continue to influence public opinion and policy via our dedicated website: www.healthpolicyunit.org.

Economic Freedom of the World: 2009 Report

The annual Economic Freedom of the World report is produced by the Fraser Institute, Canada’s leading economic think tank, in co-operation with independent institutes in 75 nations and territories – including the FMF. The Report was launched worldwide on September 15. It measures the degree to which the policies and institutions of countries are supportive of economic freedom. This year’s publication ranks 141 nations representing 95% of the world’s population for 2007, the most recent year for which data are available. South Africa ranked 57th for economic freedom.

Land reform

The Land Reform Project, led by Leon Louw and Gail Daus, has made great strides with new work on urban land tenure issues (Alexandra and “Perryville”), the economic implications of the Communal Land Rights Act (CLaRA) (Eastern Cape), and the Makuleke land restitution and natural resource management in the northern part of the Kruger National Park. This work contributes to the project’s focus on tenure upgrade, emphasising how tradable title can enhance economic development in urban and rural areas.   

The Law Review Project and Free Market Foundation have a long-standing relationship with Alexandra and have used their unique understanding to launch several case studies on land tenure in urban communities there.

In light of the apartheid legacy of inferior land ownership by between 50 to 80 percent of South Africans, we have undertaken to pioneer the first ever large-scale upgrade of deeds in partnership with the “Perryville” Municipality. This project will see close to 20,000 homeowners, who lack freehold title (unambiguous legal ownership), receiving full freehold title.      

Temba Nolutshungu and Laura Grube interviewed traditional leaders and government officials in the Eastern Cape to see how CLaRA, if implemented, would affect rural communities. The legislation provides for the transfer of title in communal land to the communities and for land rights to be documented and registered in the deeds registry.

As part of Enterprise Africa!, a joint project between the FMF and the Mercatus Center (USA), a study of the Makuleke land restitution story will be published shortly. The Makuleke are an example of how private property rights can create an incentive for communities to care for the natural environment. The Makuleke community was awarded property rights within the Kruger National Park and have used the land to develop ecotourism.

3rd annual intellectual property rights indaba

IPR 2009 is to be held at the Indaba Hotel on Thursday and Friday, 19 and 20 November 2009. This year we are anticipating attendance by at least 150 delegates and more media coverage than we achieved last year. The overall theme will be Innovation, Economic Growth and Job Creation – the Role of Intellectual Property Rights.

The Annual IPR Indaba is intended to increase the awareness of all South Africans of the importance of intellectual property rights in the economy and their everyday lives. Topics to be covered will include the role of IPR in economic growth, innovation, software (including the complementary role of proprietary and open source software in a modern economy), IPR from publicly funded research, pharmaceuticals, agriculture, the entertainment industry and the importance of combating piracy in order to encourage innovation and the development of new products in every field of endeavour.

Confirmed speakers include: Zivanai Chapanduka, Medical, Regulatory & Corporate Affairs Director for Eli Lilly; Barry Dwolatzky, Professor of Software Engineering at Wits University and Director of the Joburg Centre for Software Engineering; Ali Faramawy, Area Vice President, Microsoft Middle East & Africa and Vice President, Microsoft International; Douglas Lippoldt, Acting Head of the Development Division of the Trade and Agriculture Directorate at the OECD in Paris; Leon Louw, Executive Director of the Free Market Foundation and of the Law Review Project; Daniel Mashao, Chief Technology Officer of the State Information Technology Agency; Minister Naledi Pandor, Minister of Science and Technology; Mamphela Ramphele, Chairperson of the Technology Innovation Agency; McLean Sibanda, Head of the Intellectual Property Management Office at the Innovation Fund; Kitisri Sukhapinda, an Attorney Advisor in the Office of Intellectual Property Policy & Enforcement, United States Patent & Trademark Office; Jasson Urbach, economist for Africa Fighting Malaria and the Free Market Foundation and Director of the Foundation’s Health Policy Unit; Jocelyn Webster, Executive Director of AfricaBio.

To register (there are no fees) and for more information: www.iprconference.co.za.

In-house events this quarter

July 22 – Are we heading for a water crisis? with Anthony Still, ex-CEO of Johannesburg Water.

August 19 & September 16 – Cape Town / Joburg launches of Fixing famine: How technology and incentives can help feed Africa with Jasson Urbach, FMF economist and Director of the Health Policy Unit.

August 27 – launch of Paying for Intervention! How Statutory Intervention Harms South African Health Care with Jasson Urbach, FMF economist and Director of the Health Policy Unit. 

Please diarise October 21 for Vivian Atud’s launch of ‘BAM’ our Black Advancement Monitor.

Please diarise November 11 for Dawie Roodt’s presentation on taxation.

Invitations to follow in due course.

Variation on a theme…

In 2003 the FMF initiated fundraising/network luncheons to which members and potential members are invited and at which Leon Louw gives a presentation and answers questions. In his presentation, Leon explores strategies of how South Africa could achieve sustained economic growth, describes the Foundation’s priorities and role in influencing national policy, and explains why governments, not free markets, are the cause of the current global crisis. The luncheons are held either at the Foundation’s offices in Sandton, or are hosted by our members (such as Wyeth, Merrill Lynch, Citi, JSE Limited, FirstRand and Boehringer Ingelheim) – for which we thank them. To date 39 luncheons have been held.

In September we hosted a finger luncheon for 30 or so young executives at which we introduced tomorrow’s leaders to the Foundation’s economic philosophy. We plan to host these important functions bi-annually from 2010. 

Speeches this quarter

Leon Louw

IBM (two occasions) on Global outlooks and the challenge of change.

The Generic Medicines Congress (two papers) on Free market principles: Applicability to the healthcare sector & The impact of the regulatory and legislative environment on access to healthcare.

Investec on Land reform and low-income housing.

Alexander Forbes on The global crisis explained. (Feedback: “Truly brilliant, and highly knowledgeable in his subject! By far, one of the best speakers we have invited to speak at our forum.”)

Gordon Institute of Business Science (GIBS) on Entrepreneurship in low-income markets – job creation opportunities.

Boehringer Ingelheim on The global financial crisis: The outlook for South Africa.

Terry Markman

Mail & Guardian Critical Thinking Forum on Market forces or government policy – who is driving SA’s energy efficiency agenda?

Temba Nolutshungu

Union of Jewish Women on Black Economic Empowerment.

The Foundation’s message to government

-                Maintain the rule of law and uphold the letter and spirit of the Constitution.

-                Provide truly independent, efficient and just law courts with adequate infrastructure.

-                Combat crime and ensure sufficient and effective policing.

-                Adopt proven free market economic policies to ensure high economic growth.

-                Withdraw from the business of business and leave the production of goods and services to private enterprise.

-                Reduce regulations and taxes on business and consumers.

-                Reduce anti-employment rigidities and compliance costs in the labour market.

-                Abolish counter-productive exchange controls.

-                Discontinue existing price controls and do not introduce new ones (because they distort markets by causing needless shortages and surpluses).

-                Adopt personal and economic freedom as the fundamental basis for living and doing business in South Africa.

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