Malema's cockeyed view of economic freedom

Jack Bloom says economic liberty is dependent on entrenched property rights

It should be good news that the leader of the ruling party's youth wing is calling for economic freedom. Julius Malema calls himself an economic freedom fighter. He says that after the fight for political freedom comes the struggle for economic freedom.

I agree, but the problem is that he has a totally cockeyed notion of this concept. Economic liberty is the freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. It requires free markets protected by the rule of rule and entrenched property rights.

Various studies show that countries with higher economic freedom rank better on virtually every indicator of well-being. They have higher living standards, better health and less corruption.

Economics is known as the "dismal science" because its predictive power is usually low. But evidence for the uplifting effect of economic freedom is as solid as you can expect to get in the so-called social sciences.

Malema's version of economic freedom, however, requires expropriation and control. He advocates nationalization, which amounts to property theft. In March this year he said that the ANC Youth League wanted 60% of Anglo American Corporation. As for other white business, the league just wanted "its fair share". He declared: "Share that delicious piece of cake. Don't eat it all alone!"

Who will actually benefit if these businesses are "shared"? If the state takes over, then the usual cronies will get rich and the general population will suffer as the economy goes down the drain. Foreign investment will vanish, and a diminishing economic cake will be fought over. This is what happened in Zimbabwe, so it is no surprise that Malema admires Robert Mugabe.

Malema's outbursts reflect a widespread view that wealth creators are rich because they have somehow taken from poor people. Wealth is seen as a fixed quantity that can be shared out without affecting the ability to create more wealth. This reality is captured in the phrase "you cannot multiply wealth by dividing it". Business owners need incentives, and if these are diminished they will create less new wealth or go elsewhere.

Trade union federation COSATU also misunderstands the wealth creation process. Economic freedom includes the right of association to enable workers to protect their interests. But strikes that gain high wage increases without increased productivity make life more difficult for those without jobs.

For instance, the public sector wage bill has doubled in the last five years from R156 billion to R314 billion. Has public service delivery improved at all with this huge increase?

Poor people who are most dependent on government services don't see the benefit. And extra taxes to pay for the public sector hurts the private economy that creates jobs. The rigid labour laws that COSATU champions also discourage the hiring of new workers.

COSATU claims to be "pro-poor" but its policy positions have harmed the poor in every country where they have been tried. We desperately need a rational debate on the true meaning of economic freedom.

It's not just the absence of restraints in a free market, but sensible regulation and provision of the basic means for people to help themselves. This is the economic freedom we should be fighting for.

Jack Bloom MPL, is DA Leader in the Gauteng Legislature. This article first appeared in The Citizen.

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