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Reflecting on South Africa and the Economic Freedom of the World


JOHANNESBURG, SOUTH AFRICA

WITHOUT robust, rapid economic growth, the prospects on employment and standards of living will remain gloomy in South Africa. Every sensible person understands, and should understand this. It is not rocket science and is widely acknowledged by both economics and politics gurus. What these gurus tend to misunderstand though, is that without economic freedom, rapid economic growth and prosperity will be hard to achieve in the country.

With the launch of the Economic Freedom of the World 2021 (EFW) by the Free Market Foundation (FMF) and Canada’s Fraser Institute early this week, we were reminded of the importance of economic freedom in our society.

By economic freedom, the Fraser Institute and FMF mean minimal government interventions in the economy. The metrics the Fraser Institute and FMF use to measure economic freedom in 165 countries are: size of the government, legal structure and property rights, access to sound money, freedom to trade internationally, regulation of credit, labour and business.

In this year’s EFW rankings, Hong Kong is at the top again. Hong Kong is a territory that economic freedom lovers around the globe cherish. Professor Milton Friedman, the Nobel economist who died in 2006 loved Hong Kong. He even featured it in his Public Broadcasting Services (PBS) television program Free to Choose, back in 1980.

Hong Kong is still a bastion of economic freedom to this day. Although, as the Fraser Institute notes, “China’s heavy hand will likely lower Hong Kong’s ranking in future years.”

South Africa is not in a desirable position in the EFW rankings. This year, the country ranked better than five years ago, at 84th; and its score of 6.97 out of 10 was an improvement from half a decade ago. However, it is very important to point out that South Africa’s ranking twenty years ago was better than today and five years ago. So, overall over the past twenty years we declined on the EFW rankings.

What is important to spotlight, as I mentioned in my speech at the launch, is that South Africa’s economic performance was better twenty years ago – better on economic growth and better on unemployment rates. Yes, we were still in double digits on unemployment, but it was not the higher, shocking, double digits we have today.

Looking at the EFW, one thing is very clear; it is that Western countries are the freest. Hence we must all understand why desperate people from impoverished conflict-ridden countries risk their lives attempting to enter Western countries. That phenomenon makes sense.

Most analysts tend to look at the EFW solely from an economics perspective. I believe it is a publication that must be looked at from an individual freedom perspective. We are a society of individuals pursuing their separate interests. Individual freedom is something that we must strive for as South African citizens.

A poor South African ought to have a right to decide to take any job that he or she wants. The employer or potential employer, should also pay a wage that he or she thinks the employee is worth. Based on this principle,  the employer and the employee can then reach a wage agreement without the government’s meddling. Government’s role in the process is to enforce that agreement.

During the launch, one attendee asked what it is the private citizens can do to move the country in the right direction that will improve its ranking in the EFW. The answer to that question is not sophisticated.

The private citizens, as voters, must vote for people who believe in the limited role of government in the economy. When you observe South Africa’s political landscape, it is clear which parties are far-left, left-centre and right-centre. The least we need in South Africa is right-centre governance – and citizens should vote for that.

Supporting organizations like the Free Market Foundation and Solidarity can also help. Solidarity has built a world class science and technology college called Sol-Tech in Pretoria. I visited Sol-Tech months ago, and I was very impressed. It is a college entirely built by private citizens who are members of Solidarity.

The basics on how to build a prosperous society should not be only understood by bureaucrats and  technocrats. Private citizens also need knowledge and understanding.

If I were the leader of South Africa, I would, amongst other things, devote my labours in educating my people. I would not pursue wealth redistribution. I would educate and upskill my people so they create their own wealth. Competition in business, education and other sectors that sustain South Africa’s economic productivity would characterize the nation I would be governing.

We have a steep mountain to climb if we want to improve our ranking in the EFW and improve people’s lives. The work begins now! PM

First published on Politicsweb.co.za.

© PHUMLANI M. MAJOZI


1 Comment

  • Darren Palmer <span>October 27, 2021 at 3:43 pm</span>

    A very interesting article, I would like to see an expanded view on your thoughts regarding, how to get the economy going.

    Reply

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