In the name of economic freedom, leave Djo BaNkuna …

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In the midst of the Covid pandemic, at a time of economic hardship, at a time of dramatic change, we have something new to fear: Djo BaNkuna’s cabbage patch.

Tim cohen

Tim Cohen is the editor of Business Maverick. He has been an economic and political journalist and commentator for more years than he likes to admit. His freelance work has included contributions to the Wall Street Journal and the Financial Times, but he has spent most of his life working for Business Day. After a midlife crisis that didn’t include the traditional fast car, Cohen now lives in the middle of nowhere in the Karoo.

First published in the Daily Maverick 168 weekly newspaper.

Djo BaNkuna is a resident of Theresa Park in Pretoria North, and he used land outside his house to grow cabbages. The soil is fertile and its cabbages look great.

But last week he was threatened with arrest by Tshwane metro police officers for planting vegetables on his sidewalk instead of grass, flowers or trees.

BaNkuna told Maverick Citizen that the police told him that if he didn’t remove his garden by Tuesday last week, “we have to enforce the law against you.”

In all the big problems of our time, Djo BaNkuna’s cabbage rack looks like a little potato. But in reality, it is much more important than it sounds as it concerns some of the saddest aspects of the South African state mentality.

The question is, why do South Africans, and the South African government in particular, claim to cherish freedom, but fail to apply that notion to economic freedom?

In recent years, the Minister of Trade and Industry and Competition has convened various industry groups to Pretoria to discuss “master plans”. The plans have positive aspects, but given Patel’s history and inclinations, they also have negative points. The effort is classic of commerce and industrial interventionism.

In principle, I don’t think there is anything wrong with this – it is a fairly normal policy. But Patel’s inclinations are deeply rooted in a sort of socialist mentality: often his priorities are well-intentioned but misplaced. The emphasis on local production, the lack of appreciation for how value is actually created, the inclination to wield the legislative stick, the use of trade barriers, all demonstrate a fundamental hostility to economic freedom.

So it doesn’t surprise me at all that SA once again ranked poorly in the Economic Freedom Index released this week by the Canadian think tank Fraser Institute. This year, SA ranked 84th on the list of 152 countries analyzed. The SA has now been overtaken by fifteen former communist countries and has seven African countries ahead of it on the economic freedom list. Note that this is an improvement compared to the 2013 and 2017 rankings (101 and 96 respectively). It actually corresponds to my own perception; after years of ignoring business, the somewhat desperate government is finally listening a little better to what business has to say.

But it’s still a bad score, and reflects the lost ground. In 2000, South Africa ranked 58th on the list. And this has also been demonstrated in real terms: the contribution of manufacturing industry to gross domestic product (GDP) has increased from 24% in 1980 to around 14% today. In absolute numbers in constant currency, manufacturing has been static for over a decade.

You might think the Fraser Institute is a right-wing organization with all of these tendencies, but you’d be wrong. For the first time this year, the organization has included gender disparities in its formula.

There are arguments against the index, but the arguments against the broader concept of economic freedom are just terrible. Countries in the top quartile of the Index of Economic Freedom had an average GDP per capita of $ 50,619 in 2019, compared to $ 5,911 for countries in the bottom quartile. Yes, that’s right: people who live in economically free countries have ten times more wealth than those in the lower category. They also have extreme poverty rates of 1.9% compared to 34.1% in the bottom quartile.

The main argument against the index is old: correlation is not causation. Or to put it another way, look at China. China actually ranks below SA in the index, and its economic growth has been fantastic. The measurement criteria have also been criticized. It measures the size of government (spending, taxes and businesses, legal structure), security of property rights, access to sound currency, freedom of international trade, and regulation of credit, labor and business.

But after thousands of studies, its veracity and ability to predict the future has also been demonstrated. Even China is at least directional, an example. Although China is socially very restrictive, there is no doubt that the introduction of economic freedom has been a crucial part of its economic growth trajectory.

So message to the Tshwane police: leave Djo BaNkuna’s cabbage patch alone. DM168

This story first appeared in our weekly Daily Maverick 168 which is available for R25 from Pick n Pay, Exclusive Books and airport bookstores. For your nearest dealer, please click here.

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