SA reality in balance

Malema must learn there are no short cuts to prosperity. Ultimately it must be built on vastly improved education: on job creation, on hard work and on social co-operation

IT IS unfortunate that the Free Market Foundation no longer offers the excellent course in basic economics it used to provide to the youth, to workers and to anyone else who would listen.

As I recall, it taught basic economic realities - including the underlying truth that investment, management and labour all have complementary and indispensible roles to play in the generation of wealth.

Judging from recent events and statements, many South Africans are in urgent need of the FMF's economics course - most notably the ANCYL and its voluble president, Julius Malema.

There are some who believe one should not react to Malema's outbursts - that to do so, simply gives him oxygen to further inflame the national debate.

Unfortunately, that is not the case. For better or worse, he comes from - and claims to represent - a vast and restless constituency of young South Africans who are effectively shut out of the economy by unemployment and their lack of education.

They face a future of unrelenting poverty, hopelessness and dependency. They subsist on the social allowances of their grannies, their children or their younger siblings. They hunger for hope and for some way out of their desperate condition.

Malema evidently believes that with their support he can attack President Zuma and other ANC leaders at will. He boasts that the Youth League will be able to persuade 70 percent of the ANC members at the National General Council, currently meeting in Durban to support nationalisation of the mines.

Also, we cannot ignore Malema because he articulates fundamental misconceptions shared by millions of South Africans.

The basic idea is that the "whites stole the national wealth from blacks"; blacks won the struggle but had to negotiate a temporary agreement with the "Boers"; but now they have reached the point where they can tear up the agreement and grab the wealth.

As Malema put it last Friday: "Now we are in charge, it's no longer negotiated settlements ... Through negotiated settlement we said fine, we give you this and you can give us this. And the Boers agreed." But "...why should we continue like we are still in a government of national unity? It's important that people know that the ANC is in power."

The crux of Malema's demand is that "the property clause (in the Constitution) should be amended and that proper legislation should be passed by Parliament to regulate how the state should expropriate private property in the interests of the people."

According to Malema, "we no longer want townships and rural areas, we want our people to live as equals. Where there is land for settlement, let's get that land for our people to settle.

"It doesn't matter where that land is located. If it is on the beachfront of Cape Town, let's use that land for the benefit of our people and let's not sell it to the foreigners."

Malema insisted: "we need a government to say we're going to take this land, then we will determine the price ... take it, or leave it."

Finally, we cannot ignore Malema as he is, in fact, articulating a central theme in the ANC's own Strategy and Tactics documents. According to the ANC "the ownership and control of wealth and income, the poverty trap, access to opportunity and so on - are all generally defined, as under apartheid, on the basis of race and gender."

Accordingly, "the central task in the current period is the eradication of the socio-economic legacy of apartheid; and this will remain so for many years to come".

Well, what would happen if Malema were to get his way?

Firstly, the property clause is one of the cornerstones of our constitutional accord. It was the subject of hard negotiations and painful compromises.

It accepts that property can be expropriated in the national interest, but insists fair compensation must be paid. If this cornerstone were removed, the whole constitutional edifice of the new South Africa would be seriously jeopardised. Such a move would also polarise the country along race lines.

Secondly, it would have a disastrous impact on investment. South Africa's credit rating would be sharply downgraded, which would make it much more difficult for government to raise the loans it needs to finance its growing deficit.

The cessation of short-term investment would also have a devastating effect on South Africa's international balance of payments and on its ability to pay for essential imports.

Thirdly, the country would lose more essential skills. There would be fewer skilled and experienced people to run the mines, factories and farms - and there would be fewer taxpayers. Under these circumstances, the nationalised companies - like virtually all the existing parastatals - would start to lose large amounts of money. Instead of paying the fiscus billions of rands in taxation, they would require enormous subsidies to stay afloat. There would be substantially less money for social programmes.

Unfortunately, this is not just a spook story. It has already happened in several African countries that nationalised or expropriated property.

It happened in Mozambique after 1976 and in Zimbabwe after 2002. The only difference is that their impoverished citizens could flood across the South African border in search of food and employment. There would be nowhere for South Africans to go.

Also, because South Africa's economy is so much larger and sophisticated than those of Mozambique and Zimbabwe, its collapse would be far more spectacular.

Malema and his friends could observe all this from their newly expropriated penthouses along Cape Town's Atlantic coast - but probably without plumbing and electricity.

And yet Malema is quite right to want equality for his supporters. But if he had attended the FMF's basic economics course, he would have learned that there are no short cuts to prosperity. Ultimately it must be built on vastly improved education: on job creation, on hard work and on social co-operation.

Also, in our volatile multi-ethnic society, it cannot be achieved if all of us do not work together within the rules of the constitutional accord that we concluded 14 years ago.

- The writer is executive director of the FW de Klerk Foundation