The formula for inclusive prosperity is the polar opposite …


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The draft amendment to the Law on the Promotion of Equality and the Prevention of Unfair Discrimination that Professor Pierre de Vos welcomes and approves is another vital intervention of the national democratic revolution aimed at weakening the private sector and bringing closer the country of a “socialized” economy.

Dr Anthea Jeffery is Policy Research Officer at the Institute of Race Relations.

In his sarcastic criticism of the Institute of Race Relations (IRR) and other opponents of the proposed amendment to the Law on the Promotion of Equality and the Prevention of Unjust Discrimination (Pepuda) (the criticisms of the amendments to the law on equality and unfair discrimination have a misunderstanding of their meaning, Daily maverick, June 23, 2021) Pierre de Vos indicates that all inequalities in South Africa are the result of “structural or systemic barriers” resulting from the “hierarchy of power”.

De Vos undoubtedly has in mind the pervasive “oppression” for which all whites – by the simplistic principles of Critical Race Theory (CRT) – are believed to be responsible, even in a country where the white minority has voted to relinquish political power some 30 years ago and represents a small (and shrinking) share of the overall population and national income.

Yet there are indeed “structural or systemic obstacles” to upward mobility in South Africa – and in particular for the 11.4 million people now unemployed according to the expanded definition which includes those too discouraged to pursue employment. unsuccessful job search. And these barriers were undoubtedly imposed by a “hierarchy of power” within the country. However, this “hierarchy of power” does not reside in the white minority but rather in the SACP-ANC alliance which has ruled the country for 27 years.

The SACP-ANC alliance has embarked on a National Democratic Revolution (NDR) aimed at paralyzing the capitalist economy to such an extent that South Africa may eventually be pushed towards socialism and then towards communist nirvana.

This remains the central objective of the alliance, even though socialism has failed spectacularly in every country where it has been tried, generating endemic inequalities between the party elite and everyone else and causing repression, starvation and the untimely death of millions of people.

The SACP-ANC alliance nevertheless remains determined to continue the NDR. His many NDR interventions are the main reason why poverty and inequality have increased so much since 1994 – and especially among the black population.

Much of the fault lies in the race-based employment equity and black economic empowerment rules that enrich a narrow, politically connected elite while greatly impoverishing and harming the black majority.

These rules, along with the destructive deployment of executives and the entrepreneurship they spawned, spread dysfunction throughout the civil service, triggered the collapse of many municipalities, crippled Eskom and other state-owned enterprises, facilitated corruption far beyond the capture of the “Zupta” state, caused a drain of capital and skills, reduced growth to rates far below those of other emerging markets, and increased the number of black people without employment (according to the extended definition) from 3.2 million in 1994 to 10.3 million today.

Like other race-based rules around the world, South Africa’s policies only benefit the most skilled and accredited group, which comprises around 15% of the black population. In contrast, the remaining 85% of black South Africans are unlikely to ever access BEE offers, managerial positions or preferential offers at inflated prices. However, they are continually harmed by all the harmful consequences of these rules.

Other damaging NDR interventions have been implemented in many other areas since 1994. The greatest NDR threat at the present time comes from the constitutional amendment and expropriation bills which pave the way for the nationalization of civilians. land and confiscation without compensation of various other assets. These bills show how far the SACP / ANC alliance is prepared to go to advance its revolutionary goals.

The bill that De Vos welcomes and approves is another vital NDR intervention aimed at weakening the private sector and bringing the country closer to a “socialized” economy.

The bill does this by requiring companies to “promote equality” by:

  • “Eliminate discrimination” on 18 (or more) enumerated grounds, whether the discrimination is unjust or not;
  • Provide “equal access to resources, opportunities, benefits and advantages”; and
  • Achieve “equality in terms of impact and results”.

De Vos speculates that the bill makes “a drafting error” by imposing an obligation on companies to “eliminate discrimination”, rather than “unfair” discrimination. He acknowledges that “without the requirement of ‘injustice'”, the clause could be interpreted as “requiring the elimination of all kinds of distinctions based on prohibited grounds such as race … even where such distinctions are objectively justifiable”.

But the bill must be evaluated on its actual formulation, and not on De Vos’s hypothesis. Additionally, the omission of the word ‘unfair’ is consistent with NDR’s goals of eroding business autonomy and forcing businesses to meet the needs of the unemployed poor – even if this means that business income does not cover business. plus operating costs.

Take, for example, banks that charge higher interest rates to people with a higher risk of default – and some of them black. Under the Pepuda Law as it is currently drafted, banks can avoid sanctioning “unfair” discrimination by demonstrating that they “reasonably and rightly differentiate between persons according to objectively determinable criteria, intrinsic to the activity. concerned ”.

Under the bill, however, banks will have to “promote equality” by “eliminating discrimination”, whether or not that discrimination is unfair. The defense of “objective criteria” will not be relevant, as De Vos puts it, and banks could face significant penalties unless they abandon proven methods of risk assessment and adopt lending practices. which may not be durable.

Under the bill, moreover, banks can also be expected to “eliminate discrimination” based on socio-economic status or poverty. Poverty, as De Vos points out, has already been recognized by a Western Cape equality tribunal as a ‘prohibited ground’ of discrimination amounting to race – albeit in the context of state policing decisions. , rather than in business.

While poverty is also recognized as a prohibited ground in business, the bill will also require banks to “eliminate discrimination” between the poor and the better-off. In doing so, as the bill indicates, banks will need to ensure that the poor have “equal access” to the “opportunities and benefits” of home and other loans. They will also be expected to achieve “equality of outcomes” between the poor and those with jobs and income.

Since similar rules will apply to all sectors of the economy, the bill is likely to force many companies out of business. It could also trigger a banking crisis in which almost all savings, including the stokvel savings of the poorest, could be lost.

De Vos seems to think, however, that what bothers the IRR about the bill is the prospect that it will bring increased “social and economic success” to every South African, regardless of race. This is both absurd and totally at odds with the IRR’s 82-year history of opposing racial discrimination.

In defending the bill, De Vos also accuses the IRR of “believing in equality by trickle down”. It is also a distortion, which overlooks the urgency of ending the NDR and achieving “economic freedom” in the truest sense.

Hard data and objective assessment over many years have shown that the “freest” countries – those most successful in avoiding excessive state intervention and defending property rights – have an average GDP per capita. of about $ 44,000, while the equivalent figure in the “least free” countries is only $ 5,700. The poorest 10% of the population also fare much better in the “most free” countries, with an average income of $ 12,300 per person, compared to some $ 1,600 in the “less free” states. Extreme poverty is also much more limited in the “most free” countries, affecting only 1.7% of the population against 31.5% of the population in the “least free” countries.

In short, the formula for inclusive prosperity is proven and well known. It is also the opposite of what the bill requires and what the NDR seeks to achieve. DM


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