ANC's Economic Policies Are Destroying The Economy
Jan Lamprecht - 7/4/2006
I have been warning for some years now about the damage caused by raising the minimum wage. But today it really hit home to me just how much damage the ANC"s laws do to the very blacks it claims to be helping. The minimum wage is a violation of the Free Market principles first expounded by Professor Adam Smith in 1776. Let us not forget that it is his analysis which resulted in modern economics and which is the cornerstone of modern Western wealth. Today, socialists seek to destroy the very principles which created the First World’s wealth.
It is much more difficult noticing the damage that socialism causes in the First World than it is in Africa, a far less developed continent where the damage is easier to see.
When Robert Mugabe came to power in Zimbabwe, he raised the minimum wage from $10 per month to $100. The result was that whites could no longer afford hiring blacks for domestic work. This may seem like menial stuff, but it did give many blacks a form of income. When the whites fired those blacks, many of those blacks never had formal employment ever again.
Now here in South Africa, the ANC has imposed "labor laws" designed supposedly to "protect workers from exploitation". This is merely socialist jargon. The reality is that poor blacks will lose their jobs.
One of the laws forced employers to contribute monthly returns to an Unemployment Fund. This is a nuisance. If you have someone working for you a little bit, and you’re hiring them off the street, and now suddenly you find yourself having to register them and filling in monthly forms and sending checks to government. Immediately, what used to be a simple process now makes you think twice before hiring someone. So now instead of quickly hiring a black guy off the street to help you for a few days in your garden or house, may do not! And both of you are the losers, but he is the bigger loser of the two.
It is harmful raising the minimum wage if you are dealing with unskilled people. What can they do now? The only work they can perform is very simple, and even in the easiest tasks, they have to be extensively trained and supervised. Thus, they have very limited economic use for anyone. So it was much better under Colonialism when you could make a person an offer and he could work for you, if he so chose. If you had a small business, then the cheap labor allowed you to expand and employ more people. Under Colonialism, the economies exploded because cheap labor was an asset – plus it offered those blacks employment and some kind of growth as opposed to sitting around their huts making a subsistence living. But now, a small business or a private person needs to think twice or thrice before hiring people.
Government legislation costs money and slows down the economy. There is hardly ever a law that improves economic efficiency. Laws are really just a way of putting the brakes on business. Government legislation not only costs money to create, but it also adds to the input costs of businesses. Legislation comes at a price - a big price, especially if the laws are badly thought out by people who have no experience of how the real world actually works!
So I have always been extremely skeptical about the value of all the myriad of laws the ANC has enacted in this country. And the ANC really goes to town when it comes to wasting taxpayer money and many times these laws also result in a requirement for new types of courts!
One of the latest harmful ANC laws is The National Credit Bill. Wait until you see what that law will do to banking in South Africa. They claim (as they always do), that it will "help the poor", but it does the opposite. The NCB is going to create many problems (including bad debt) for the banks, which will probably refuse to deal with the poor altogether. In the short term, the banks will not be able to bear the immediate costs of the bill without finding some way of indirectly charging customers for it.
I know someone who often has a jumble sale, which attracts blacks in our suburb. But over the past few years there have been less and less black domestic workers attending the sales! Finally, the cause hit me. There are less and less black domestic workers in the suburb. But it is now evident that the majority of black domestic workers have disappeared from our suburb during the last 5-10 years! We hardly see them on the streets. It has happened quietly. Even I make as little use of black domestic workers as possible. Additionally, because of crime one thinks twice before hiring someone they don’t know.
Our government pretends that the job situation in this country is improving. But I question this. They claim that a few thousand jobs were created recently - in a country of 45 million with 40%+ unemployment, that is a “drop in the ocean”. But I wonder if their job statistics ever included black domestic workers - many of whom were employed informally and there was no official record of their employment. My guess is that whites have fired hundreds of thousands of them in the last 10 years. And I will bet you that most of those fired blacks were unable to find any work at all afterwards.
We also now have lots of blacks here in South Africa from neighboring states who are happy to do any work you give them, and because many are here illegally, they will do it without their employers registering for the UIF. I am shocked at how many Zimbabweans are working here in Johannesburg! It is almost like "Little Zimbabwe" these days. The whites too have been migrating south since Robert Mugabe’s rise to power in Zimbabwe.
Let me state clearly once more that there is virtually nothing the ANC can do to actually "help" the blacks because its socialism stifles all business and makes it more inefficient. The ANC has no interest or knowledge of how to truly implement a Free Market system because at heart all their economic ideas are nothing more than variations of Marxism.
As I look around, the "slightly rosy" time we’ve had economically in the last few years is fast coming to an end. It could be that the next 5 years will see the downward swing resuming – but it will resume with a vengeance.