Helen Zille
11 July 2004
opinion
Johannesburg — The key issue in our country today is the balance between the market and the state. What role should each play in economic development?
There are no easy answers to this question, and many different opinions. If the debate is to be constructive, we must not caricature each other's positions.
The Democratic Alliance does not believe in "market fundamentalism", as Minister in the Presidency Essop Pahad suggests. Remove that false premise, and much of his argument collapses.
Markets do fail. They fail to provide enough public goods such as transport infrastructure, education, health and public safety. Markets also fail, by themselves, to address the problem of extreme poverty. The state can and should intervene to correct these failures, and here the DA and the ANC agree.
In fact, if the South African state were simply doing what everyone agrees it should, and doing it well, then growth could take off.
The problem is that the state is not intervening effectively where it should, and intervenes where it should not.
As DA chairman Joe Seremane recently noted, when the state starts deciding who may and who may not own property, who may be employed or manage a business, then the state is damaging the ability of our economy to grow and to create jobs.
The irony of the ANC's state-centred approach is that the state simply lacks the capacity to deliver on many of its more ambitious goals. That is especially true in a developing country like ours which suffers from an acute shortage of skills.
A recent study by the United Nations Development Programme, "Unleashing Entrepreneurship", cited compelling evidence that developing countries which place a greater emphasis on private-sector investment and market-led development achieve higher rates of growth than those that rely on the public sector.
The great risk in developing societies, especially highly unequal ones such as our own, is that the government has to answer to a poor constituency for whom the material rewards of a better life cannot possibly come quickly enough. To pacify that constituency, the state is tempted to pretend there are short cuts, and to intervene in ways that seek to create a superficial equality of outcomes, rather than in ways that create new opportunities.
The greatest irony is that this approach ends up helping a small elite instead of the vast majority of the intended beneficiaries.
And this, in turn, leads to a second great irony that follows from Minister Pahad's argument. He claims the government promotes "collective aspirations" rather than the interests of individuals.
Yet the outcome of government empowerment policies has been the opposite, producing what Cosatu has called a few "over empowered individuals".
Instead of empowering the poor, the ANC has set about empowering the elite members of a group whose members are, on average, poor. It justifies this to itself because it believes that individuals and collectives are interchangeable.
That is why Pahad presents the ANC's protection of former Haitian President Jean-Bertrand Aristide as being "in the interest of the Haitian people" and an "identification with the African diaspora".
Again, the irony is that this protects the interest of a corrupt and "over-empowered" individual at the expense of the majority of impoverished Haitians (or Zimbabweans, as the case may be).
The DA does not, as Minister Pahad suggests, believe the state should be responsible for expressing the individualism of every person. Quite the contrary: we believe state policy should ensure that individuals have the opportunity to achieve their own aspirations.
That also sets limits to the power of the state limits that Minister Pahad finds intolerable. He invokes Theodore Roosevelt's idea that society must be ruled by a "controlling and enabling power", and defines this power as "the democratic state and its progressive institutions".
Yet the most enduring American reform of that era, nearly a century ago, was the creation of liberal institutions that were independent of the state and largely beyond the reach of the ruling party. The South African Constitution recognises the value of such institutions.
Unfortunately, the ANC has set about placing all independent institutions under its direct control, through its policy of "cadre deployment". It does not recognise the distinction between the ruling party and the state.
While the ANC may justify this expansion of power in the name of democracy, in effect it is undermining the liberal democracy espoused by our Constitution - and undermining economic development as well.
The most striking element of Pahad's argument - and its central weakness - is his declaration that "governments must ensure the distribution, to defined groups rather than individuals, of the fair benefits and burdens of society".
How are these groups defined? By race? And what constitutes a "fair benefit and burden"?
When the DA insists on the importance of individuals, we affirm that people cannot be lumped together as homogenous masses according to the colour of their skin. Nor can they be owned by a single political party.
Greater state control over the economy allows the ANC to use jobs and procurement deals as forms of patronage, and to create a dependent business class and a politicised civil service. The poor, meanwhile, end up subsidising the new elite. They must suffer the lags in service delivery, and the costs of slow growth and unemployment.
The market will not solve all of South Africa's problems. But state control will make them considerably worse.
Our aim must be to increase the role of the private sector in our economy, while at the same time improving the welfare of the poor. These are not mutually exclusive goals. We can achieve both with the right balance of state and market forces.
Zille, an MP, is the DA's national spokesman
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