Property rights: Alternatives to govt's expropriation plans - FMF

Martin van Staden says progress made since end of apartheid is at risk of being done

New Free Market Foundation paper reveals viable alternatives to government’s expropriation plans

23 June 2021

Johannesburg – The Free Market Foundation (FMF) published a new research paper highlighting the dangers of property confiscation (also known as expropriation without compensation) and nationalisation. It identifies at least five alternatives, each of which empowers the vulnerable, to the government's dangerous plans which simply empower the state.

Parliament is on the cusp of amending the Constitution to allow the government to confiscate property without compensation, and even to nationalise all fixed property. The Expropriation Bill, being separately considered, is the means through which the government will try to achieve this.

In his paper, Private Property, Public Interest: Alternatives to Confiscation and Nationalisation, author Martin van Staden discusses:

-  The dangers of government’s proposed confiscation regime

-  Why secure, entrenched private property rights serve, rather than undermine or hamstring, the public interest

-  Discusses the alternatives to confiscation and nationalisation. These include the fact that government is financially capable of providing market-related compensation for expropriations; that restitution of land and property is achievable (indeed imperative) without destroying property rights; that urban land reform success is within grasp but underappreciated; and that much can be done about rural reform without threatening the economy or food security

-  A viable, pro-property rights alternative to the government’s proposed legislation

Van Staden clarifies what is at stake, “All the progress made since apartheid ended stands to be undone unless people recognise that a most fundamental human right is for people to have the ability to own and control property. When security of tenure and property ownership are removed, quality of life and income levels decline across all races and economic classes.”

Property rights are a vital ingredient for countries that wish to achieve a high level of economic prosperity for the majority of their citizens. As Van Staden points out, “the Economic Freedom of the World Report shows that the poorest 10% of people in countries in the top quarter of economic freedom have incomes nearly eight times higher ($12,293) than their counterparts ($1,558, PPP constant 2017, international$) in the lowest quarter economically free nations over the 2000-2018 period.”

Notably, the higher a country ranks in the report, generally, the stronger the property rights (and state respect thereof) in said country.

The FMF maintains that confiscation, and particularly nationalisation, amounts to the stripping away of all South Africans’ property rights. Van Staden adds, “This will in no way resolve the country’s land dispossession legacy. Instead, it will make life even more difficult for the poor. Those who can afford to leave South Africa will do so; but for the majority, this will not be an option.”

Further, to adequately address the causes of the decade of state capture and looting during the COVID-19 pandemic requires the avoidance of policies that increase the discretionary powers of ministers and officials, as confiscation would entail. The kind of transformation the country needs is of the empowering kind, as opposed to the kind that would strip away South Africans’ property rights.

“Aside from its political disenfranchisement of black, coloured, and South Africans of Indian descent, apartheid’s greatest crime was its denial of the common law property rights protection enjoyed by whites. South African must not repeat the easily avoidable mistakes of the past.” argues Van Staden in the paper.

The paper can be accessed here: Private Property, Public Interest: Alternatives to Confiscation and Nationalisation

Issued by the FMF, 23 June 2021