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The Saga of South Africa's Economy / Artikel mises.org

verfasst von - Elli -, 27.04.2004, 15:55

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The Saga of South Africa's Economy
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by Harry Valentine

[Posted
April 27, 2004]

<img alt src="http://www.mises.org/images3/southafrica.gif" align="right" border="0" width="140" height="261">It
was 10-years ago this month when South Africans of all races elected Nelson
Mandela as their nation's first democratically-elected, post-apartheid
president. South Africa's previous president, F.W. deKlerk, showed
unprecedented statesmanship by having undertaken the bold move to end that
nation's apartheid regime. By the early 1990's and the economic and political
collapse of the former USSR and Soviet bloc, the South African government
could no longer justify its brutal enforcement of apartheid as a means by
which to combat the threat of a Soviet-inspired communist takeover of South
Africa. The official end of apartheid offered the prospect of new hope for a
nation of disenfranchised people who were oppressed as a result of the
combination of the color of their skin and their ancestral heritage.

South Africa's system of apartheid
became officially institutionalized after the Anglo-Boer war. In 1910, one of
the Boer generals who fought against the British, General Louis Botha, became
the Prime Minister of the Union of South Africa. The Union of South Africa's
economy initially depended heavily on such labor-intensive industries as
mining and agriculture. Large numbers of relatively poorly educated non-white
South Africans became the nation's single largest source of labor. The high
demand for low-cost, low-skilled non-white labor which was abundant in the
labor-intensive economy, made racial segregation easy to introduce and
initially easy to enforce. Wage rates were based on racial background, that is,
white workers were paid more than black workers doing the same work.

Before 1920 and during the early
years of apartheid, the majority of the small number of educated non-white
South Africans saw the white-dominated economy and apartheid as having
resulted from a free-market capitalist economy. They subsequently looked to
communism and socialism as the ideologies that would offer equality and
opportunity to South Africa's oppressed non-white people. Pro-socialist
pamphlets circulated among literate African workers before 1920. Before the
onset of World War Two, South Africa had a communist party and a socialist
party called the Unity Movement. At the present day, a sizeable segment of
South Africa's population still sees Marxism as the road to economic relief
and prosperity.

When Mandela was elected to govern
South Africa in 1994, he appointed elected parliamentarians such as communist
party leader Joe Slovo to high-ranking government posts. South Africa now has
a high rate of taxation, restrictive labor laws, is Africa's largest welfare
state and has Africa's largest, most politically well-connected and
politically influential labor union movement. As a result of the new South
Africa's restrictive labor laws and affirmative action policies, a large
number of educated white South Africans chose to emigrate to other nations.
This response angered and dismayed former president Mandela, who had
previously acknowledged that South Africa needed its educated white population
to help rebuild the nation's economy.

Affirmative action achieved in the
new South Africa what job apartheid had achieved in the old South Africa. In
the old South Africa, certain professions had been reserved for"whites
only," meaning that only qualified and educated white people could be
hired to fill selected vacant posts during the 1960's and 1970's. As a result,
large numbers of educated non-white South Africans that included professionals
as well as trained and qualified non-white tradespeople, emigrated abroad to
where greater freedom of opportunity was available to them in several other
nations. The more recent emigration of entrepreneurial types from South Africa
has impacted on the unemployment rate.

At the present day, an estimated
42% or 8-million employable non-white South Africans are unemployed. The
unemployment among this segment of the population is higher today than at any
time during the apartheid era. During the mid-1970's, the United Nations
revealed that despite apartheid and despite South Africa's disparity in wage
rates, black people in South Africa earned a higher per capita annual
income than black people living elsewhere in sub-Sahara Africa. During the
1980's and early 1990's, the anti-apartheid movement promoted the concept of
"revolution before education," encouraging thousands of non-white
students to abandon their formal schooling.

Many mainly non-white South
Africans have never attended a school, including thousands in the 20 to 30 age
group who are deemed to be unemployable in a economy that presently has little
need for an abundance of unskilled manual labor. This situation has
contributed to South Africa's skyrocketing crime rate which has reached
epidemic levels. Following South Africa's ban on gun ownership, disarmed
citizens in record numbers have fallen victim to crime, including to armed
gangs of criminals. This crime epidemic has not only overwhelmed a police
force coping with low morale and a high officer suicide rate, it has also
discouraged foreign as well as expatriate entrepreneurs and business people
from bringing new investment into South Africa, to further develop and grow
the economy.

South Africa's present day
economics minister, Trevor Manuel, is a firm believer in Keynesian economic
theory and regards it as the economic system that best offers hope for his
nation's economic future. He rejected the idea of an all-out socialist
economic system since his days as an anti-apartheid freedom fighter. The
economic policies upon which he intends to build South Africa's economic
future, are based mainly on a Keynesian framework. It may be of little
relevance to South Africa's post-apartheid era government that Keynesian
economic theories formed the economic basis of apartheid after the late
1950's. Keynesian theories have long been discredited, refuted and debunked by
such noted free-market economists as F.A. Hayek, Ludwig von Mises, Murray
Rothbard and Henry Hazlitt. During South Africa's apartheid era, Ludwig
Lachman introduced several progressively thinking young South African minds to
the rudiments of the free-market economic system when he taught economics at
the University of the Witwatersrand.

During the early part of the 20th
century, as the policy of official apartheid became institutionalized,
technical innovations that gradually and progressively increased labor
productivity, began to be introduced into South Africa's fledgling economy. As
the mechanization of South Africa's growing industrial base increased,
productivity increased as did earnings and savings in a variety of industries,
allowing new wealth to be created. After the Nationalist Party was elected to
office in 1948, state spending on apartheid increased, but not enough to stall
economic growth. The standard of living for a wide cross-section of working
South Africans gradually improved through the early and mid 20th century,
steadily raising the status and salary levels of several job categories. Under
apartheid, white South Africans benefited the most. By the early 1960's, the
South African government enacted its job apartheid policy that protected
higher-status, preferred job categories for"whites only."

This mercantilist/Keynesian
practice of job market-entry restriction caused many educated, trained and
qualified non-white South Africans to emigrate from South Africa, beginning in
the early 1960's. By the late 1970's, White-owned businesses discovered the
downside to job apartheid, when they were forbidden by law from hiring
qualified non-white candidates, despite an absence of suitable white
applicants. Several businesses revised job titles so as to hire non-white
candidates, who would perform professional level duties. As a result, a
growing number of white South Africans were to discover that their job
security and even the competitiveness of the companies they worked for, often
came to depend on the ability and skill of their educated, non-white
colleagues.

The South African government
eventually revised the job apartheid laws, allowing businesses to hire
qualified non-whites for previously reserved occupations. Technological
progress continually increased business and industrial productivity and as a
result, steadily increased the demand for increasing numbers of qualified job
candidates. By the early 1980's, increasing numbers of educated, middle-class
black professional people began to achieve prominence in South Africa's
economy. Work place apartheid gradually began to disintegrate. At this point
in time, an increasing number of white business owners came to realize the
extent to which the viability of their businesses depended on their non-white
employees and their non-white customers.

By the mid to late 1980's, large
state expenditures causing massive debts were being incurred in administering
and refining apartheid, including maintaining independent black states inside
South Africa. Massive military expenditures were also being incurred at this
point in time to defend the decaying apartheid system from its opponents.
Massive amounts of money (savings) that could otherwise have been used to
create new wealth, were wasted by the government of P.W. Botha and his defense
minister General Magnus Malan, who claimed that they were defending South
Africa from a communist-inspired take over, ignoring the fact that most
communist countries were on the brink of economic collapse.

South Africa's epidemic of state
spending to prop up a decaying apartheid system during its final years,
reflected comments published by Keynes in General Theory about the
alleged economic benefits of state spending. If Keynes's theory was valid,
then an economically prosperous and viable economic system based on apartheid,
complete with independent black states (homelands) inside South Africa, should
still have been functioning at the present day. South African government
spending to defend apartheid during the 1980's perhaps inflicted more damage
on South Africa's economy than the economic sanctions imposed on South Africa
could ever have achieved. Excess state spending during apartheid's last years
incurred a massive deficit that now impedes economic growth in the
post-apartheid South Africa.

South Africa's post-apartheid era
leadership needs to heed two ideas from the previous regime, one being that
excess state spending becomes economically destructive in the long term, the
other being that economic regulation fails to achieve in the long term what
policy planners intend to achieve in the short term. During South Africa's
early post-apartheid years, government officials and people connected to them
embraced Keynesian spending theory with overwhelming enthusiasm. They are
alleged to have misspent, misallocated and malinvested such astronomical sums
of money that claims of high-level corruption abounded in South Africa. That
spending windfall did next to nothing to create the needed wealth that was
essential to regrow South Africa's economy.

South Africa's long term economic
future appears bleak due to the policies that the nation's government has
already enacted. The disarming of the civilian population has left it at
the mercy of armed criminals. Its economic regulations have restricted badly
needed wealth creation and economic growth, while the Keynesian spending spree
achieved a similar end. South African government officials have put their
trust in the policy guidelines and loans from the IMF, but the projects they
funded have not created any new wealth in South Africa's economy. The water
development project they funded is resulting in mass evictions of South
Africa's unemployed and poor people. In view of these developments, the South
African economy may be expected to languish in the doldrums for a few more
years, until some senior government officials finally, if ever, read through
the pages of Human
Action or of Man,
Economy and State, or both.

____________________________

Harry Valentine is an economic
researcher who lived in South Africa for several years and whose online
libertarian/pro free-market commentaries are here. He
can be reached at harryc@ontarioeast.net.
Comment on this article on the blog.

Thread gesperrt

gesamter Thread:

The Saga of South Africa's Economy / Artikel mises.org - - Elli -, 27.04.2004, 15:55
- Re: The Saga of South Africa's Economy / Artikel mises.org - CRASH_GURU, 27.04.2004, 17:48