Sound Money

Avoiding identity politics

I avoid aligning myself with labels, tags or groups because I don’t want to bear the consequences of associating with people where I have limited control over their actions. Political parties, in particular, are a minefield of identity politics. As soon as you identify as Republican/Democrat in the US, Labour/Conservative in the UK or ANC/DA/EFF in South Africa you’re labelled as the worst or best version of these parties policies.  These labels colour the conversation and can make it difficult to dialogue constructively. People feel like they can assume your position on unrelated subjects purely because of the party you support. You’re immediately on the back foot, trying to explain a nuanced position but the back foot is never a constructive place from which to debate.

Social movements and change require group cohesion

Limited group association is a common trait of liberty minded people who prefer to let their ideas, opinions and actions speak for themselves. They encourage direct criticism, rather than have to defend the actions of someone to whom they are not personally connected. That being said, groups/organisations, societies and parties are the vehicles through which people come together, discuss, debate and spread ideas, which allows social movements and real change. It is unwise to allow my philosophical hesitation to result in permanent inaction.

Capitalism is a difficult moniker

I’m really glad there is a political party taking a stand for capitalist values in South Africa, the ZACP. I’m surprised that they decided to wear the capitalism moniker. Capitalism has been saddled with negative connotations and bears the brunt for societies failings so it’s tough to be associated with it.

But perhaps this is what it takes… perhaps people like me need to stop being so timid, stop hiding and stop avoiding the difficult conversations just because of the label that we might bear. South Africa desperately needs more capitalism and pretending otherwise would be dishonest.

Straw man for the world’s problems

I’ve written before that capitalism is a straw man for the world’s problems. In reality, capitalism is simply a political and economic system guided by free markets and liberty. That’s it. Less politicians. Less blue lights. Less broken promises. Less legislators constraining your freedom. Less spending on grandiose pet projects. Less national debt, burdening future generations. All those good things. 

Capitalism system where government isn’t directing the significant portion of the countries resources, inefficiently spending it on poorly planned projects and syphoning tonnes of precious resources to friends and family. These aren’t just South African problems - large governments in the US, UK and Europe are also poor capital allocators and are prone to nepotism. 

Limited government solves corruption

The simple truth is that most people have a thread of partiality to family, religion, gender, culture, etc. The bigger government becomes the greater the risk of unfair partiality by one group over another. These risks are reduced somewhat in developed countries, where political systems are more competitive with checks and balances, but they certainly are not removed. Each successive political party and President favours his/her constituency over the rest. In younger democracies, the problem is heightened by support for liberation parties and less stable political competition.

The solution to this dilemma isn’t to fight to become the ruling elite so that you can set it straight through more equitable distribution of resources. Someone in your tribe will be just as susceptible to discriminatory risks as those in power. The solution is to limit the size of the state and it’s capacity to expand, reducing the pervasiveness of state-led and monopolised discrimination. The most effective way to limit corruption in South Africa is to reduce the size of the state and simplify its goals.

A limited state is a successful state

Not only will a smaller government reduce corruption but it would be more successful. Imagine we could clearly identify and achieve a 5 to 10 goals over the coming years, rather than try to achieve 50 to 100 goals. A focused effort to provide water, electricity, basic education and transport, for example, rather than attempting health insurance, sugar taxes, carbon taxes, immigration control, chicken tariffs, etc, etc. Our government sets itself so many goals that it’s little wonder that it fails so often. Think about your own life…the greatest accomplishments are usually focused, rather than days filled with numerous disconnected goals and endless tasks.

Important to note, limited government doesn’t imply no government, no legislation, no social welfare or anarchy. The state just needs to be focused and directed towards a few simple goals that will truly propel society forward.

I’m not sure if the ZACP’s 10 goals are unequivocally the best but it’s the principle that matters. Prioritisation and the calculation of human complexity are eternal problems for socialism, where government elevates it’s influence and determines the direction of numerous aspects society. It’s impossible and dangerous. At the extreme, socialist states become like Soviet Russia where the state determined each price in the economy, leading to shortages, bread lines, starvation and years of underdevelopment. Obviously, this is an extreme example and it isn’t the precise condition under which most economies with socialist inspired governments live. However, we must be aware of the philosophy of socialist lead states. Watch as their penchant for centralised control creeps into each aspect of your life – healthcare, schooling and perhaps even religion. We can identify this characteristic in the South African government as it tries to determine sugar intake, immigration and your investments, etc.

Who are the ‘Capitalists’ we despise anyway?

Generally, society has a positive view of business people. We applaud the commitment and energy of the mielie lady who walks the streets – she’s a capitalist. We approve of the ingenuity of the barber on outside the taxi rank – he’s a capitalist. But we also idolise people like Steve Jobs who built one of the biggest corporations in the world. Why do we idolise Steve Jobs? Because he gave his life to build a business that was focused on delivering transformative products that serve consumers. Jobs wasn’t even trying to make lots of money, he was inspired to make a difference in the word. Yes, he became stinking rich but, generally, society doesn’t frown on this type of wealth because it’s self-made, innovative and tied to significant personal risk.

The “capitalists” that society has grown to despise are the fat cats in big corporations who hide behind lawyers, have very little personal liability for poor business outcomes and whose companies take advantage of regulations in order to exclude smaller players and squeeze customers. These types of companies and people aren’t particularly innovative, they don’t shoulder a huge amount of personal risk and they don’t necessarily provide significant value-add for society. They may have been innovative risk-takers in their early days but now they’re tempted to sit back and exploit their position of power.

Despite being labelled as “capitalists” it’s these types of corporations and executives whose business principles stand in contrast to true capitalism. They appreciate regulation, legislation and red tape because their size, experience, budgets and relationships with regulators allow them to manipulate the outcomes favourably. Look at how many senior EXEC’s in big corporations have close links to the government and the ruling party - its a  cosy relationship. By contrast, regulation, legislation and red tape are expensive and onerous for small players, which makes it difficult for them to compete.

State-led employment results in mass unemployment for everyone else

One thing all South African political parties agree on is the need for more jobs. Most South African political parties hope that the state will be able to drive job creation. However, it is as clear as day that this strategy is a terrible failure. The public service has employed millions of South Africans but at what cost? Not all, but many in the public service are inefficient, corrupt or some combination of the two. Take Eskom as an example, external analysts advise that a 60% cut in its workforce is required to steady the ship. Drastic restructuring is required to keep the lights on, provide electricity, allow the economy to grow and generate employment. Public sector employment has been an abysmal failure because the longer it continues the longer the rest of the country will deal with stagnation and catastrophic unemployment rates.

Capitalism is the system that would undoubtedly spur job creation in SA. It would allow street vendors, entrepreneurs and young people to flourish without the shackles of onerous government regulations that currently require reams of paperwork and licences. It would reduce the power of big corporates to manipulate regulations, making it easier for smaller job-creating companies to compete. Capitalism would also reduce the number of government tenders, which are unfairly dominated by political cronies who run inefficient companies with less sustainable employment practices.

An opportunity to debate liberal values

I don’t know the people in the ZACP and I have limited desire to align with them personally as a result. But the principles that they’re advocating are reasonably sound, they’re beautifully simple and most of them are principles I can stand behind.

Re gun control, it’s not a topic where I have a particularly strong opinion. I’d prefer it wasn’t a central pillar to their strategy but I’m also not against well-regulated private gun ownership.

I’ll stick my neck out, I don’t see any other political party that gets me interested in debating their policies. I welcome criticism. In fact, the reason I’m writing this down is precisely to induce that outcome. I don’t see any point in subtly walking into a voting booth in May and sneakily putting an X next to any of the political parties. What’s the point if we aren’t using the whole election period to discuss, debate, disagree, find common ground and find out about the political principles of our family, friends and colleagues? So invite you - please critique me and change my mind.

I don’t really care much about the ZACP at all but I do care about my friends, family, colleagues and the broader South African society. I strongly believe that South Africa needs a less government steeped in socialist ideology and more influence from the rest of us if we’re going to pull ourselves upwards and onwards towards greater prosperity, freedom and opportunity. Socialism, central control by the state, is the economic and political system advocated by pretty much every other political party in South Africa. In varying degrees of course. The EFF wants 100% control and the ANC and DA are somewhere in between 100% and 0%. I hope that debate around the merits of ZACP might at least change the conversation at the margin, from depressing party politics towards principle-based debates about what will truly engender freedom, opportunity and prosperity.