By: Eustace Davie is a director of the Free Market Foundation.
Winning the rugby World Cup has shown what South Africans can do if they put aside differences and work together. What can we do to allow the spirit and courage that the Springboks displayed on the rugby field to spill over into the hearts and minds of all South Africans? From Japan, the team appealed for everyone to co-operate with each other and make South Africans a proud nation. A co-operating nation can work wonders. A squabbling and unhappy nation will continue to drift towards poverty and misery.
Note what Springbok captain, Siya Kolisi, said after his team had won the World Cup: “Since I’ve been alive, I have never seen South Africa like this. Obviously in ’95, what the World Cup did for us, and now …with all the challenges we are having, the coach just came and told us before the last game, ‘We’re not playing for ourselves any more. We’re playing for our people back home.’ That’s what we wanted to do today, and we really appreciate all the support. People in the taverns, people in the shebeens, people in farms, homeless people and people in rural areas – thank you so much, we appreciate the support.”
Fixing an ailing economy can be achieved, to some extent, in the same way a coach would fix an out-of-form rugby team. First, he would probably make sure all team members know and understand the rules of the game. To do well, the members of the team must learn to obey the rules and not incur penalties to avoid causing the team to lose games. The next major task would be selecting the best players, getting them fit and working together as a team. The same rules must apply to all teams and matches must be adjudicated fairly and correctly by referees who supervise matches and ensure that the players play by the rules. In cases where a referee becomes involved in a match by favouring one team over another, it causes havoc. When a referee’s decisions unjustly favour one team over another, it can cause the victimised team to stop trying or take their frustrations out on their opponents. The latter reaction is, of course, irrational, but it is how frustrated individuals are inclined to react.
South Africa’s economy is in dire straits and strategic changes need to be made to alter the trend in every possible way from declining to growing. If we look around the world for answers, we must avoid like the plague the policies of failed economies and emulate those of successful economies. Fortunately, there are numerous studies and analyses available from organisations such as the World Bank, International Monetary Fund, World Economic Forum and others. Canada’s Fraser Institute has gathered up information from these analyses and compiles an annual index, which measures the success or failure of various economic policies. The resultant publications are called the Economic Freedom of the World (EFW) reports, which are available online.
A rugby coach like Rassie Erasmus probably scoured the books on rugby to find the best information on how to field a great rugby team. Fortunately, the people responsible for formulating economic policies for South Africa have access to the EFW reports, which provide excellent information about what has been happening in the South African economy. What they find is that in the rating of the 162 economies evaluated in the study, South Africa was rated at 47th in the world in 2000 and has slid down the rankings to 101st in 2017, a decline of 54 places in 17 years. There are identifiable reasons for this decline. Compare South Africa’s ranking with the amazing rankings of some of the former communist countries such as Georgia 12th, Estonia 13th, Lithuania 16th, Czech Republic 22nd, Latvia 24th, Armenia 27th, Romania 28th, and Albania 30th. South Africa is in the bottom 40% of the 162 countries measured by the EFW while the listed former communist countries are in the top 20%. The people in the post-communist countries had the bitter experience of living under government-dominated communist regimes and obviously decided, when they got the vote, to choose economic-freedom-oriented governments. Economic freedom, in the true sense of the term, that is!
Minister Tito Mboweni could do well to instruct his researchers to delve into the economic freedom phenomenon. They will find, for instance. that It is counter -freedom for a government to force investors to give away a big chunk of their companies if they want to invest in the country, and to prescribe to them who they may employ and in what positions. They will also discover that according to the data, a government that establishes state-controlled monopolies in key industries does its citizens no favours – the reason being that freely competing enterprises in unrigged markets provide infinitely better services to customers at lower prices. Also, that governments that attempt to micro-manage their economies with a plethora of bureaucratically implemented and controlled regulations do a great deal of harm.
This article is not intended to provide solutions to all South Africa’s economic ills. It is merely intended to suggest to government that it would be a good idea to take Siya Kolisi’s advice and start working towards creating a harmonious and thriving economy and country. It is also intended to suggest to Tito Mboweni’s researchers where they can find excellent information on how this can be achieved.