Given the current economic situation in the country characterised by low growth, more people are coming to appreciate the sound moral, philosophical, and economic underpinnings of a free market economy. The most important principles are without doubt those that relate to the freedom of the individual, which in a free society are supported by laws and regulations that are consistent with the rule of law. Economist Walter Williams defines a free market as “voluntary exchange between individuals, free of third party intervention”. The word “voluntary” excludes force or fraud. Who can have a problem with such a basis for peaceful human interaction?
The apartheid system was characterised by authoritarian socialism, with domination by government over the entire population but with black South Africans bearing the brunt of the authoritarian policies. The FMF was founded in 1975 and spent almost 20 years arguing against apartheid and for freedom for all in a non-racial South Africa with equal rights for all. In doing so, the FMF published many books, monographs, papers and articles promoting the ideas of liberty, which it continues to do. Today, the same principles are promoted and the FMF continues to argue for a non-racial society and equalty before the law as being the best route to a prosperous and peaceful nation.
Urban land – title deeds without pre-emptive clauses
Most of the victims of apartheid either live in cities or towns or would prefer to do so. This means that urban land and houses are their preferred assets. Government should therefore give secure tradable title to the recognised occupants, at no cost to the recipients, of all urban government-owned houses and plots of land. Pre-emptive eight-year clauses in title deeds to so-called RDP houses, prohibiting owners from selling or letting their houses, should be removed to give the occupants real ownership of their properties.
The FMF’s Khaya Lam (My House) Land Reform Project, is being carried out with the wonderful assistance of sponsors, who range from large corporates and small firms to foundations, trusts, foreign and local philanthropists, and an amazing list of individual donors, and with the excellent co-operation of municipal councils who are intent upon positively transforming the lives of the families in their areas. The project demonstrates the goodwill that exists in South Africa between its peoples and how much can be achieved through kindness and co-operation. The number of homes already titled by Khaya Lam and are in the pipeline now exceeds 5,400.
Farm land – fully tradable title deeds for black farmers
A list of applicants for farm land should be compiled by government together with details of their qualifications for farming the land efficiently and productively. No further farm land should be purchased or expropriated by government until all farmland already in the hands of government has been transferred to those black applicants. Such transfers should be accompanied by fully tradable title deeds that contain no provisions that prevent the holders from selling or mortgaging their land or limiting to whom they may sell or let it. Such policy would remove a great deal of the uncertainty that currently exists and will provide a real benefit to the black South Africans who have the ability and the wish to farm. There is no reason to withhold property rights from black farmers – after 78 years of property rights deprivation, black people deserve to be trusted with fully tradable property rights.
Unemployment is arguably the most serious problem facing South Africa. The issue is not receiving the attention it deserves. The fundamental source of the problem of unemployment, as pointed out in the FMF publication, Jobs for the Jobless, is that, “Onerous termination requirements, minimum conditions of employment, compulsory minimum wages and other regulatory conditions imposed on employers, all serve to consign some people to the ranks of the permanently unemployed”. From the point of view of the unemployed, these requirements imposed on employers represent barriers to entry into the labour market. The barriers to entry, and unemployment, are scheduled to become even higher with the introduction of the National Minimum Wage (NMW). Total unemployment (measured according to the expanded definition) will probably increase to about 10 million people – 38.67% of the potential workforce.
Bill of Rights and the unemployed
The Bill of Rights “is a cornerstone of democracy in South Africa. It enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality and freedom. The state must respect, protect, promote and fulfil the rights in the Bill of Rights.” The unemployed do not receive “equal protection and benefit of the law”, their “dignity is not respected and protected”, their “right to life” in the form of their right to earn a living to sustain themselves and their families, is not respected. In their quest to find work, they are “deprived of freedom arbitrarily (and) without just cause” and deprived of their right to “freedom of association” in that they are prevented from entering into agreements with potential employers at wages and on conditions acceptable to them, because of the legislative and regulatory barriers to entry into the job market. Failure to respect the rights of the unemployed should be seen as unconstitutional. The unemployed people of South Africa have a strong case for requesting government to find a way to remove the barriers that prevent them from entering the job market. The adoption of the NMW, which will increase the barriers to entry, makes finding a solution more urgent.
The FMF has proposed a solution that will allow the unemployed to find jobs without affecting the job security of the people who already have jobs. The solution is very simple: Issue “exemption certificates” to people who have been unemployed for 6 months or more (to stop firms from firing and re-hiring employees once they have exemption certificates), valid for at least two years to give the exempted workers time to consolidate their positions in the job market. Formalise this proposal with obligatory simple agreements documenting the agreed terms of employment.
Rule of Law
Section 1(c) of the Constitution (a Founding Provision) states that among the values upon which the Republic of South Africa is founded is “Supremacy of the constitution and the rule of law”. The central role that the rule of law should play in determining the laws of South Africa is not generally understood and the FMF’s Rule of Law Board of Advisers, under the Chairmanship of former Judge of the Supreme Court of South Africa, Rex van Schalkwyk, is working on bringing about a proper understanding of its vitally important role. This is not merely an academic exercise. Our research has found many provisions in existing laws that conflict with the rule of law and are therefore unconstitutional. Many laws and regulations contain provisions giving excessive discretionary powers to ministers and officials, granting them virtual dictatorial powers over important areas of the economy, outside of the oversight of Parliament and the courts. The result is the “rule of man” instead of the “rule of law”. The FMF’s research has discovered several provisions in Acts that conflict with the rule of law and the constitution through the granting of excessive discretionary powers to the executive branch of government. These provisions will in due course be brought to the attention of Parliament with a view to rectification.
The Rule of Law Project has set out what it describes as the “Ten Imperatives of the Rule of Law”. The first three imperatives will immediately allow readers to identify some or other law or official action that conflicts with the rule of law:
1. All law must be clear, predictable, accessible, not contradictory, and shall not have retrospective effect.
2. All legislation that makes provision for discretionary powers, must also incorporate the objective criteria by which those powers are to be exercised.
3. All law must apply the principle of equality before the law.
Success in bringing about the proper application of the rule of law in the formulation and application of South Africa’s laws and regulations has the potential to dramatically improve the functioning of the country’s legal system and the lives of its people.
Economic freedom (with all its implications) is the best route to increasing economic growth and reducing unemployment; reducing constrictive regulation to allow innovation and entrepreneurship to flourish; opening the areas of the economy currently dominated by SOEs to allow private competition to spur efficiency and improve delivery; and an overall improvement in the investment environment free of surprises and uncertainty.
Ayanda Khumalo is acting chairman of the Free Market Foundation