More on the land reform issue

It’s no secret that I have always been in favour of Agrarian land reform in principle, but that I have my reservations with the system by which Government has sought to attain the redistribution. It is also no secret that I am completely opposed to the EFF’s policy of "overnight" expropriation without compensation, but I’ve only recently realised that I have never really giving full voice to why I am opposed to what is effectively the willy-nilly nationalisation of farmland. For me, there are simply too many unanswered questions surrounding this particular idea to support it.

Questions of occupancy

There is currently no system in place where we can quickly and definitively determine who owns what amount of farmland, so the immediate problem would be that you create massive uncertainty as to who has the right to occupy and work the land on behalf of the National Government should nationalisation ever occur. If we are not able to rapidly make changes to the occupancy of farmland, then indeed we have made no fundamental change and coupled with the fact that there is simply no definitive indication as to who has historical claim to what part and amount of farmland, we instantly create the very real possibility and prime conditions for the violent land grabs we’ve seen north of the Limpopo river.

The second question is the method of occupancy and remuneration of the people that work the land. In Russia for instance, the state paid people a salary for producing what they were ordered to produce, but irrespective of the amounts produced. The problem with this particular system, of course, is that there is simply no motivation for people to produce as much as possible because it does not determine their remuneration and theft of the produce, in order to avoid paying higher prices later on, was absolutely rife. This particular system also creates an absence of any sort of hierarchy, since everyone is paid the same salary and thus have no authority to tell other people what to do; people simply do not function as effectively without one because there will always be the perception of “I have to do everything around here” that will cause production to suffer.

The alternative, more modern system would be for farmers to rent the property from the state over the long term (50+ years) and take their profits as income in the normal fashion, but, as left wing detractors will argue, this is fundamentally no different from private ownership except for the fact that the State can place limits on how much land an individual is able or allowed to rent, while holding very little improvements for the lot of farmworkers. Capitalist detractors of such a system will no doubt point out that it opens up the door for large scale abuses by unscrupulous Government officials, would kill off all private investment in the agricultural sector and destroy access to credit in the agrarian sector of the economy.

The loss of skills question

A major argument against the redistribution of land is that the recipients of the land do not necessarily have the necessary skills to ensure the successful operation of a farm while the previous owners will simply leave and take their skills with them. Supporters of the system normally see this as an insult, but that particular concern is very real and one’s personal feeling about it does not make it less valid, because with a large scale transfer of land, there will be some level of skill loss, so it is only prudent to at least attempt to minimise its impact. It is a sad historical fact of South African land restitution that as much as 80% of all projects fail or become unproductive within 24 months of the land transfer taking place and if this should happen on a national scale, it is something that our economy will simply not recover from during the lifetime of anyone that happens to read this. In many other instances, the community is forced to rent the property to outside operators (often the previous owner) at a mere pittance of what they could have made if they operated things themselves and this is simply not the intended purpose of land reform in my opinion.

While many people would undoubtedly see this as yet another baseless claim that blacks cannot be successful farmers, the intention of this statement of fact is to serve as an indictment to both the absolute absence of support systems and the haphazard manner in which land reform has been applied in the past. The overall goal is not only the transfer of land, but also the skills necessary to fully exploit it and both of these aspects require serious investigation before we can attempt land reform in a responsible and non-destructive manner.

The question of Resources and Infrastructure

It is common knowledge that the amount of commercial farms and farmers has seen a steady decline over the past two or three decades due to both natural and economic considerations, even if there is nothing strange about this phenomenon. It is a common symptom of an economy that makes the move from the primary sector and into the secondary or tertiary sectors of the economy, since they offer bigger professional security and higher income. The problem created as far as the redistribution of land is concerned is that the resources and capital goods required for farming existing in the sector has also been reduced. Yes, it’s only logical that a larger farm would need more tractors for instance, but only up to a certain point, since more of them would mean that they are not being used with maximum efficiency. Another aspect not to be ignored is the fact that necessary structures like housing, barns and storage space for example, would have become fewer in line with the reduction in the amount of farms and the same applies to infrastructure where “unnecessary” infrastructure like roads, water delivery systems and electrical connections have been removed or allowed to deteriorate into oblivion.

The question thus becomes how the existing resources will be distributed and how shortages are to be met, because even if the farms are expropriated without compensation, Government would still be stuck with a capitalisation bill that could easily run into the billions, if not hundreds of billions, of Rand. Also, in the event of a total command structure, who will be responsible for the administration and cost of maintaining the mentioned equipment and structures? Since they are essentially owned by Government, it is only logical that Government should shoulder the responsibility, leading to a massive administrational problem.

The African experience

The experiences north of our borders since long before Mandela took his Long Walk to Freedom all show the same result; that it is highly risky and near economic suicide to attempt such reforms without due consideration and having iron clad systems in place. The country most on the up and up after forty years of this system being in place is Zambia and I would like to discuss their system as a possible model for South African use for a moment.

After colonisation ended in 1964, the new Republic sought a land reform project to replace that enforced on the country by the British. The specific land reforms were announced in the Mulungushi Economic Reforms of 1968 and these included the following:

1. all land should be vested in the President of the Republic of Zambia,
2. all land under freehold should be converted to leasehold tenure for  hundred years,
3. land under customary tenure not to be converted into leasehold, and
4. land reforms should be directed at improvement of the use of agricultural land

The problems encountered with this policy however was that the land was often not used productively, that the uncertainty created by the leasehold structure made it nearly impossible for farmers to access credit and that the land under customary tenure was poorly administered.  A more recent development of this land reform project is that Zambia no longer possesses people with the necessary skills to boost agricultural production in the country and the Government realised that it was time for a new round of land reform. Since then most of the non-tribal land in Zambia has been under a 99 year leasehold system that automatically renews upon expiration to overcome the problems with uncertainty of tenure and a provision was brought that allowed users of customary/tribal lands to obtain a leasehold on a piece of customary land after due investigation and consultations with tribal leadership in an attempt to make more efficient use of tribal agricultural lands.

In the most recent development, however, the Zambian Government began to actively court Zimbabwean, South African and Namibian commercial farmers in an attempt to overcome their agri-skills shortage and in their first year (2011/12) 100 Zimbabwean farmers brought hi-tech farming techniques to the country and managed to produce 70% of the country’s maize output, thus turning Zambia from a net importer to a net exporter of food, ironically supplying the bulk of Zimbabwe’s maize imports. The final changes are that the Zambian Government is endeavouring to overcome the lack of private investment in agriculture by providing tax/rent rebates on certain private investments in agriculture and that a Certificate of Occupancy by the Zambian Government is now accepted as legal collateral for banks in order to extend credit to farmers thanks to the automatic renewal of the lease.

What I think

First of all, I don’t favour a total command system since I think that it would simply be too big of a bureaucratic burden on a State that thus far seems to fall woefully short in matters of administration. I also think that we can learn a lot from the Zambian example as system that could be successfully applied to our situation, but I still do not think that an overnight change to such a system would be prudent, even if it were possible.

Every instance of land reform in Africa and the modern world points out the fact that it should be done with the utmost care and circumspection; adding to our problem is that we not only have different agricultural regions in the country (dry vs. wet land farming, crops vs. livestock, et cetera), each of which has different requirements, but that we are also facing a definite change in climate in most of these regions, thus rendering traditional crops less productive. So what we need, before we do anything else, is a complete investigation into four aspects of the process:

1. The viability of different crops and livestock in different regions
2. The amount of land that would constitute a “living income,” i.e. how much land is required in the different areas that would enable the farmer to make a decent living off the land, otherwise there is simply no point.
3. The size, scope and cost of the required capitalisation and infrastructure spend as it would most likely be the biggest determinant of the pace at which land reform can be achieved.
4. The total amount of outstanding bonds against agricultural land, because if the land is expropriated, who is responsible for the bond against it? We simply can expect the bank or previous owner to accept responsibility for this, so the responsibility should either fall to the new tenant or Government, since we risk huge losses in the financial system if the bond is merely “written off.”

Finally, a decision must be taken in the historical context; do we continue with historical land restitution claims as we have been doing or do we make the available land open to all South Africans who have a demonstrated will and ability to farm productively? This is perhaps the most sensitive and emotion laden issue surrounding the entire process, but both the domestic and international statistics show that tribal or communal tenure of large tracts of land is simply not as productive as land under individual curatorship.

What we as South Africans from all walks of life and economic persuasion must realise is that this debate is far from over, but if the day should arrive that a political organisation has a land reform policy that answers these (and I’m sure other people will have more) questions to my satisfaction, then I will most likely support it.

The new South Africa (#ProudlyBroughtToYouByEveryone)

It is not every day that I take to getting into debates with socialists like Malaika wa Azania because, well, we could debate until the cows come home and be no further along than we were when we started out because I reject her socialist principles on the basis that it is a system that is proven to open the door for human rights abuses too widely and its failures are all too well documented in the history of Nazi Germany that added a racial element to socialism in order to create what we know as fascism today. She will doubtlessly reject my neo-liberal economic theory on the basis that the unbridled capitalism and consumerism of the modern world will lead to the further exploitation of the poor. The fact that the common consensus surrounding neo-liberal economics and its support of laissez-faire concept of classical liberal economics is actually erroneous since neo-liberal economics was custom “designed” as a third way between the prevailing economic theories of liberalism and socialism at the time, which led to the great exploitation of ordinary people and the near melt down of the international economic system, but this is beside the point as this reply is specifically aimed at Malaika’s latest post on the Thought Leader blogs.

There is no doubt that modern day South Africa has inherited a hugely flawed economic system (#Proudly Brought to you by the Apartheid Government), but it would be hard to argue that we have made significant strides in changing this system since the adoption of democracy nearly twenty years ago. The simple fact of the matter is that we have missed the boat on the one opportunity to truly change our economic system (# Proudly Borught to you by the ANC) and if one considers the meteoric rise of organisations like the Economic Freedom Fighters, the only logical conclusion is that a peaceful and systematic transformation of the economic system, will be beyond our reach in the very near future.

 

If, however, we want any hope of changing this system, we must first understand its origins and the fact that our economy looks the way that it still does today is no accident. The systemic problem in our economy that everyone keeps referring to is the fact that it operates and relies on a system of a small number of economic elite making large profits off the work done by an unskilled or semi-skilled majority of working poor. Consider the vast difference in the income of a few mine bosses and their companies in relation to the workers who actually go down into the mine and haul the ore to the surface and while this is not necessarily a bad thing, what we have to realise is that the level on which this occurs in our economy is simply not sustainable. The real unpalatable truth, however, is that the origins of this system can be traced back to a single moment in time.

"There is no place for [the Bantu] in the European community above the level of certain forms of labour ... What is the use of teaching the Bantu child mathematics when it cannot use it in practice?"

That, ladies and gentlemen, is the exact moment in history that our economic system and its associated modern problems were born, with the promulgation of the Bantu Education Act way back in 1953. Now logic would certainly suggest that the easy solution to the problem would be to simply address the educational disparity between black and white children, but the sad truth of the matter is that we have failed miserably and that only a fool would suggest that there is even a hint of parity between the no-fee public schools and former Model-C or private schools. There simply isn’t and, heartbreaking a commentary as it is, we have no option but to come to the very inconvenient conclusion that “Bantu Education” is actually alive and well, but the colour that matters now is the colour of your money and not your skin. The logical deduction from this statement is that the system will remain as it currently is. The obvious question arising from this conclusion is why this has not been the singular focus of the majority Government since taking power in 1994.

Call me what you will for this, but this is no accident either.

The major problem with politics is a lot like the agency problem faced by large businesses where the people who manage the company are not necessarily the people who own it and this often creates a difference of opinion on where the company should be heading because the two groups have different interests. When you apply the same principle to politics, the people who set the economic and social framework are not necessarily the people who have to rely on them; I cannot imagine, for example, that any Government Minister or even a Member of Parliament is reliant on things like RDP housing or the public healthcare system and this is exactly why education was not priority number one from day number one. A politician will do and promise the people nearly anything in order to cease political power, but once they attain that power, all they are interested in is staying there and the sad truth of the matter is that a singular focus on education does nothing to improve the lives of the voting public, because frankly, school children do not vote. Knowing this all too well, the Government decided to embark on a populist path where they side with the people (the working poor) against the capital (the economic elite) and that is why we are seeing policies like Affirmative Action, Employment Equity, Black Economic Empowerment, the Reconstruction and Development Program and the list goes on.

These “redress” or “transformation” measures as we’ve come to know them are not a bad thing. They are very good, in fact, and are even supported by my neo-liberal economic theory, but what we have not come to terms with is that none of these programs have the power to eliminate our poverty and income (education) disparity problems. They only have the power to temporarily relieve them, but given the vast percentage of the public purse and the effect on inflation they entail, they tend to be economic monsters that grow as time passes by until they reach a point where they can no longer be sustained by the economy and the whole house of cards comes down. If we now consider the increasingly strict nature of something like the new BBBEE codes, the declared opposition to fronting, the ever growing inflexibility of the labour market and the staggering rise in the amount of people dependent on social security, we have no choice but to acknowledge the fact that we are fast approaching this point and that the opportunity to truly change our fortunes through the equal education of all our children will be lost forever once we go past it.

The worst part about it is that we, the people who have access to all the information and can sit down to read or write pieces like this one, allowed it to happen.

We allowed all of this to happen because we allowed ourselves to get caught up in the populist and often racist politics that goes on around us, because we are blinded by our own short-sighted, narrow and frankly selfish interests. We get into petty squabbles surrounding things like white privilege, black victimhood, the DA being a white only party that wants to bring back apartheid and most importantly, who gets to represent the poor on these forums or we write opinion pieces on corruption, the educational achievements of Jacob Zuma or, my personal pet peeve, what society should do to address the rape situation in the country and then we have the proverbial balls to get up in arms about organizations like Red October that actually got off their asses and did something. This is precisely the reason why we are seeing such an increase in amount of public money that is lost to corruption each year; it is because we can vilify the DA for doing everything in its power to obtain the Nkandla report, while it should be us who are beating down the doors of Government and demanding answers or demanding that heads roll. We have allowed ourselves to be duped into giving up our interest in our own country and its future in order for an unscrupulous politician to obtain a vote he/she thinks they are entitled to because they “fought in the Struggle,” want an equal country for all or some other form of worthless political ideology…

I’ve spent enough time on my soap box for one day, but I know that when I put my six month old son to bed tonight, I will once again start to wonder. I will wonder if the architects of Apartheid would have gone through with it if they had known that their grandchildren would have to go through a situation like this. I would wonder whether those who had died in the ensuing Struggle would experience a sense of shame at our inability to see this through and I would feel my own sense of shame because the way things are going now, there is simply no way in which I will be able to spare him having to go through this as well, even if his father had always been destined for it.

This is not the Transformers

I am not now, nor have I ever been of the view that our current policies on Employment Equity and Black Economic Empowerment are without foundation or not born of necessity given the racial history of our country, but I am of the view that the time has come for us to look at the statistics and start to ask some serious questions surrounding the current format of the legislation, because the simple fact of the matter is that the statistics, as compiled by the South African Institute for Race Relations, simply do not tell the whole story. While I will not reiterate my misgivings with regards to the statistics (having already done so on this forum), it must be said that statistics without context can easily be twisted to fit any political agenda one would care to mention. So why does it now become time for us to critically re-evaluate these pieces of Legislation?

The economic question: What are we even talking about?

We are talking about Black Economic Empowerment, Employment Equity and so-called economic freedom, often referred to as Economic Transformation, but while Employment Equity is rather self-explanatory, the other concepts require some further investigation.

As a political theory or buzzword designed to attract votes, then notion that black people who were previously excluded from the business world can be empowered through ownership works brilliantly well, but the inclusion of the word “economic” makes it rather problematic.  In the true text book definition of the word, having ownership of something does not make one empowered, it makes you rich, while true economic empowerment can only come from the skills and knowledge needed to either use your wealth to generate income or in the very least maintain our gotten wealth. Because of this fact, economic power will always flow to the person/people in the economy who are most empowered, i.e. the people who can employ their skills and knowledge the best.

The concept of economic freedom, a buzzword that’s become so popular that it has spawned a brand new political organization, is a rather new concept on our political landscape and it is yet to be defined. As far as I can figure, the political definition of economic freedom entails a system whereby the people (through the proxy of the State) own all the resources (physical and financial) in the country with no private ownership and no excessively wealthy or poor people. In economic terms, this would be called communism, but what does economic freedom mean when one considers the theory? I’ll admit at this point that I am nowhere near educated enough to put forward a full definition of Economic Freedom, but I will state that it entails the “Unhampered pursuit of an individual (and perhaps juristic persons like companies) to obtain the highest levels of education, employment and wealth allowed by his/her potential or ability in an homogenous economic system.”

Then we come to the concept of transformation and we can definitely say that you get transformation and transformation. Many a political commentator and economist have highlighted the fact that our systemic economic problem is that it has been built around a small elite that is reaping large scale economic rewards from a large pool of unskilled labour and, while the transformation numbers quoted by the SAIRR and Peet van Aardt do indicate some success in the racial transformation of our economy (more blacks in the elite), there is little indication of the success/failure with regards to the transformation of the systemic economic problem we have mentioned. Incidentally, economists will refer to this transformation as economic development; we develop the skill base of the general population in order to move from a resource based economy towards an economy where manufacturing and the rendering of services play the largest part.

The philosophical question: When does historical redress become racial engineering?

Like I’ve said before, the initial reasoning behind redress legislation is beyond debate, but we have reached the point in time where it becomes a very real possibility that we will start to see “double rounds” of redress taking place when the children of EE or BEE beneficiaries begin to stand in line to receive redress as well. The argument that will doubtlessly be put forward here is that the erstwhile Apartheid System gave its beneficiaries preference for centuries with no regard for double or even ten rounds, with no “sunset clause” in sight. It has been brought to my attention that there is indeed a large knock on effect with current EE and BEE legislation whereby the empowered also use their wealth to empower members of their extended family, but this is certainly not a new or a black only phenomenon. As a matter of fact, the knock on effect from Apartheid legislation is still painfully apparent today, but in today’s political climate and vernacular this often forms part of what is referred to as white privilege.

While what happened before surely does not take anything away from the validity of these arguments, it certainly cannot be called redress when we attempt to ensure the future financial/professional success of a child who has had every opportunity to secure his/her own success in the same, and often better, circumstance as their counterparts. The only success that will be had with such a system is that it will further strengthen the economic elite at the cost of the poor, so ultimately, the possibility and inevitable occurrence of double redress becomes a social question.

The social question: Who is benefitting and who should benefit?

Up until now, and most likely for the foreseeable future, we have not yet seen any indication of who the major beneficiaries of our redress system have been and it is thus impossible to monitor the general success of the policies and legislation. Specifically, we must consider whether the majority of beneficiaries are the politically well-connected or the ordinary “grassroot” people of the townships and while there is certainly nothing wrong with a politically connected person or even an ANC member reaping the benefits of redress legislation, it would simply be wrong for that person to gain those benefits purely because of political connections and it saddens one to state that this does seem to be the case, if we are to take a look at the staggering value and instances of Government corruption, tenderpreneurship and openly practiced policy of cadre deployment. Some people will even go as far as to say that certain members of the ruling party have hijacked this system in order to pay for political favours or support. For those who are interested, here is a report from Business Day on how large scale BEE deals really work.

The simple question we need to answer is whether it would be proper or even moral for us to allow for the continued upliftment of black people on account of being black or if we should rather focus on uplifting people because they are poor and I remind you that cutting a pie into more pieces does nothing to enlarge the pie. I leave you with the concluding paragraph of the SAIRR report.

“The report suggests that turning these figures around will depend on the three Es – education, entrepreneurship, and economic growth – the only way in which real empowerment can occur, particularly for those who were disadvantaged by the racial policies of the past. Future progress may therefore come to depend less on racial policies such as Black Economic Empowerment and more on ensuring access to sound education while fostering a climate conducive to economic growth.”