JOHN STEENHUISEN: Reject SA’s socialist slide

While the world’s last few pockets of socialism slowly come to terms with the inevitable failure of this ideology and have started reversing some of their policies, our ANC government is pretending not to see any of this.

It still has every intention of pursuing its vision of a socialist utopia, as though we’re still in the mid-20th century and the Soviet Union is stronger than ever. In recent years, countries like Venezuela, Cuba and Zimbabwe have all taken steps to undo some of the devastation caused by their flirtation with this ideology.

From Venezuela’s decision to start returning state businesses to private hands, to Zimbabwe’s announcement that it will return expropriated farms — or at least offer victims compensation — the message is clear: don’t do what we did; it doesn’t work.

And yet, the ANC is still betting on nationalisation and expropriation.

Venezuela’s spectacular fall — from one of the world’s most prosperous nations to a country with hyperinflation, empty shelves, 96% of people below the poverty line and 5-million economic refugees — coincided with its swing to socialism. The decline started in the 1970s as the petroleum industry was nationalised, but it was under Marxist populist Hugo Chávez in the 2000s that its economy really stepped off the cliff, as agriculture, transport and mining were nationalised too.

Argentina also learnt the hard way that wealthy nations can quickly become impoverished if they let the state take control of the economy. In the first half of the 20th century, Argentina was one of the world’s richest nations. But once it embraced "democratic socialism" with its massive, all-controlling government, its fortunes changed dramatically.

Compared to countries that opened up their economies and embraced private enterprise — like Singapore and the Seychelles — the contrast couldn’t be more obvious.

There’s no other way to interpret this: only free markets produce the price signals that decision-makers need to make optimised decisions, which in turn produce a functional economy and a prosperous society.

If our economy goes into free fall the way Venezuela’s did, our humanitarian disaster could dwarf that country’s

A state-controlled economy only does the opposite. For all its good intentions, socialism has only ever deepened poverty and hurt the people it was meant to help.

Margaret Thatcher famously said the problem with socialism is that you eventually run out of other people’s money. In SA, we don’t have to wait for full-blown socialism to see what this looks like. Thanks to a fast-dwindling tax base and a ballooning state spending bill, we’re already out of money. We borrow R2bn a day, at punishing rates, just to cover the basics.

In real terms, government spending is shrinking on everything from education and health care to policing and housing. But the most worrying cut is to social grants, where below-inflation hikes over the next three years will see the poorest citizens become even poorer. How much worse must it get for people to realise that the intentions of the government’s socialist plan will never become reality?

We also can’t ignore the ANC’s track record when it comes to the parts of the economy already controlled by the state: it’s an eat-as-much-as-you-like feeding frenzy. Every state utility or procurement project seems to have two goals only: employ as many people as possible and make as much money as possible through inflated contracts and kickbacks.

It is unsurprising that the economic model that puts entire sectors of the economy in the hands of a governing elite should be so enticing to the ANC. It will never walk away from this.

There is no reform on the horizon, despite what President Cyril Ramaphosa and finance minister Tito Mboweni might say. Reform talk is only there to appeases the critics, throw the media a bone and buy the ANC more time to push through its flagship socialist projects like National Health Insurance and expropriation without compensation. Everywhere else in the world socialism is fast losing support, but here in SA the ANC still stubbornly ploughs ahead with this failed 20th-century experiment.

Like the Japanese soldier stuck alone on a Philippine island for three decades after World War 2, the ANC is still fighting an imaginary Cold War more than 30 years after the fall of the Berlin Wall.

Today, SA is a country with its back against the wall. If our economy goes into free fall the way Venezuela’s did, our humanitarian disaster could dwarf that country’s.

We don’t have the reserves or time to learn our lessons about socialism the hard way. We need to see how this movie played out elsewhere.

It comes down to a simple choice: socialism or liberal democracy. We can either persist with the path the ANC has set us on, or we can opt for the only economic model that has ever improved lives: a liberal democracy with a growing market economy.