South Africa's New Policy To Confiscate White Owned Land Without Compensation
Following in the footsteps of neighboring Zimbabwe, South African leadership voted last month in favor of a policy to amend their constitution to allow the government to confiscate farmland from white owners without compensation.
Amid calls for South African President Jacob Zuma to step down on corruption charges, political unrest has embroiled the country. The ruling party in South Africa, the African National Congress (ANC), has recently had to sharpen its rhetoric with populist movements taking root. Julius Malema, a well-known voice in the movement, has urged his followers to take whatever land they want, because “it belongs to you”. In response to this movement, the ANC has formally published that codes for black empowerment would be adjusted and require a quarter of farms to be owned by black people whose produce should be sold to the government. Cyril Ramaphosa, the ANC’s leader and frontrunner for the country’s 2019 elections, has been quoted saying that “expropriation could make this country the garden of Eden”.
Land is a very politically sensitive subject in the country that was under Apartheid rule between 1948 and 1991. The country is also in dire trouble economically. The budget deficit is 4% of GDP and public debt is now over 50%. South African bonds were downgraded to junk status by S&P in November. And in April, the taps may run dry in drought-stricken Cape Town.
This is a very similar story to what happened in Zimbabwe. Zimbabwe embarked on a violent land reform programme in 2000, taking over white-owned farms to resettle landless blacks. Thousands of white farmers were forced off their land by mobs or evicted, with ex-president Robert Mugabe saying the reforms would help black people marginalized under British colonial rule. Critics blamed the land redistribution for the collapse in agricultural production that saw the former regional breadbasket become a perennial food importer.
These types of policies are one of the worst forms of market manipulation by government forces. This is no different than if they were to simply subsidies the farmers. Farmers grow the food that a society needs to function and sell their crop at a price determined by the free market. What happens when a government decides that they need to subsidize farmers in the form of loans in order to bring down the price of their crop? What if they want to loan money to a man who otherwise was not able to raise enough capital to start a large scale farm production? Without going into exhaustive detail, ultimately the government is capable of taking greater risk than a private firm. A private firm has been selected for success by the harsh realities of survival of the fittest; if they make poor decisions, they run out of money and go out of business. If they take a risk on an individual who has not proven themselves to be a capable farmer and that farmer fails, they lose their capital. The government does not run that risk. If they make a poor decision, there is always more tax money to be handed out. By handing out this money to less capable individuals, you not only run the risk of them failing, but you also deny the more productive farmers of this funding, and you also deny the taxpayers their ability to buy products of their own choosing. Unintended and unexamined side effects like this are what many people ignore when suggesting things such as universal healthcare and education.
And at the end of the day, farming is not going to revitalize the country’s economy. Two-thirds of South Africans now live in cities, and they are not going back to the countryside. They want jobs, schools and cleaner government, not fields to grow maize in. More than 70% list unemployment as their biggest worry. Only 2% say farming is. This is hardly surprising, as farming is about 2% of the economy. That is even true for those who were kicked off their land during apartheid: most of those who have lodged claims for restitution have asked the courts to give them cash as compensation instead of farms.
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