The Dreadful Cost of Racial Legislation

It emerges that the Treasury and the Revenue Service are becoming nervous about the narrowing tax base. Despite a domestic population of 64 million, only 7.7 million people are assessed for tax and are thus liable for the full range of normal taxes, of which by far the most significant is income tax.

Effectively, these 7.7 million people are paying for just about everything, starting with the 28 million social grant recipients. It is no exaggeration to say that without them there would be no South African state.

Yet 1.7 million of the 7.7 million taxpayers are aged above 55 and they pay 27% of all income tax. As this age cohort retires, they will trigger a major fiscal crisis. They will be replaced by the current 18-34 age group, which, at the moment, only pays half as much tax as the over-55s. The result will be a fall in tax revenue of at least R70 billion a year.

Why is This Happening?

US President Donald Trump is wrong to accuse the African National Congress (ANC) of committing genocide against white people, but what is true is that the white minority is being squeezed in a host of ways that tends to drive a steady flow of whites to emigrate.

Nelson Mandela tried hard to stop this outflow because he knew that as a result of previous educational advantages the whites were in general the most skilled, the best educated, and the most entrepreneurial, and that when they left, they also took significant capital with them. They were precisely the sort of citizens that South Africa – or any country – would most want to keep. (Later, a frustrated Mandela, seeing his pleas had no effect, said, “Oh. Good riddance!”)

Unusual

Mandela was unusual among African nationalists in perceiving that national interest, and no African politician since Mandela has adopted his attitude to this question. The particularly damaging policy is affirmative action in the labour market. For many years I have been aware of this through middle-class friends of all races. Typically, they place great emphasis on their children’s education, and these children go on to take degrees at the University of the Witwatersrand or the University of Cape Town (UCT) and then follow that with a postgraduate or business school qualification. All this requires considerable funding.

At the end of this entirely privately provided education many of these graduates are almost unemployable – because they are white, although they are often South Africa’s best and brightest. The whole public sector is effectively closed to them, and the large private companies are under strong government pressure to appoint only candidates of colour. A very few such graduates stick it out, working at jobs way below their skill level, but most emigrate. Occasionally I see members of this cohort – back home on a visit, usually. They always tell me that “not one of my year at ’varsity is still in South Africa”. Many of them are doing spectacularly well in Britain, the United States (US), or Australia, where their talents are rightly appreciated. As they settle down and start families in their new countries, sometimes their parents emigrate to be with them.

The loss to South Africa from this mean-minded situation is colossal. Many of these young émigrés earn high salaries and some start important businesses. (The careers of Elon Musk, David Sacks, and Peter Thiel, all originally South Africans, now all multi-billionaires in the States, are probably the best known, but they are symptomatic of a much larger phenomenon.) Had they stayed in South Africa this generation would have provided the entrepreneurial push necessary to fill the gaps left by their retiring elders. And that would have shown up in the tax revenue receipts too.

But now, thanks to government policies that have effectively excluded this entire post-1994 generation from economic participation, they are making their mark – and their fortunes – elsewhere. This is all directly against South Africa’s national interest. Yet that national interest has been overruled by racial legislation.

Affirmative Action

It should be realised that affirmative action in South Africa is very different from the same policy when adopted in the US or United Kingdom (UK). In those countries the policy is used to benefit a socially disadvantaged racial minority of around 10% of the population. As such, it occurs only in a minority of cases.

However, as a writer in The (London) Times recently pointed out, in South Africa the policy is used to protect an 82% majority of the population from fair competition with an 8% minority. In fact, since white men, considered to be formerly privileged, are the group most discriminated against, we are really talking about discrimination against a 4% minority.

A variant of this situation is seen in our universities, where there is strong, even overwhelming pressure to make affirmative-action appointments – and then over-promote them beyond their ability level. Only a small minority among such appointees is able to grow into their jobs and acquit themselves reasonably, but in most cases such appointments lower the standards of teaching and research. And, of course, the same applies to many of the vice-chancellors and other top administrators appointed essentially on an affirmative-action basis. We have seen many disasters as a result. It is not really possible to create a mature intelligentsia in one generation simply by fiat.

In my own academic career in the UK and France it was taken as axiomatic that any leading university would do all it could to continually raise standards, with each academic generation climbing even higher on the shoulders of their predecessors. It thus came as a shock so see one of my own former students – Max Price at UCT – presiding over a conscious and deliberate lowering of standards through affirmative-action appointments. (To be fair, the same betrayal of the academic enterprise was going on at other South African universities too.)

Effects

The effects of such practices are quickly seen as some departments become weaker or even collapse, as has happened in my alma mater, the University of KwaZulu-Natal. But a modern university lives by its reputation and by its research and publication output, and very few of the affirmative-action appointees are able to contribute much to the latter.

Quite quickly, universities found that most of their research and publications were being produced by white people aged 55 and over. Typically, most South African universities reacted by counting as their own the research and publication conducted by their retired faculty, but this too soon ran down with a consequent decline in reputation, ranking, and quality. On average, South African universities are now considerably weaker than they were in 1990. This is another major loss for the whole country.

Indeed, South Africa loves being part of the BRICS group but note the difference: China and India do all they can to raise educational standards – China has special “genius” schools for the brightest pupils while Indians are now the CEOs of a number of the biggest tech companies in America.

But South Africa is headed hard in the opposite direction. We have become experts at “dumbing down”. Our universities are in decline. We pass pupils for 30% marks. We invent a non-subject called “maths literacy” to replace proper maths. A professor in the non-subject of maths literacy was recently made vice-chancellor of UCT. And so on.

Illuminating

Sometimes individual cases are illuminating. I think of one extremely talented young woman I know who had had striking success at undergraduate and graduate level. Doubtless affected by the general atmosphere of wokeness at the university, she supported many left-wing causes, including affirmative-action appointments. Then, however, a lectureship she had applied for was given instead to a young woman of colour whom she knew to be, by far, her intellectual inferior. She was stunned. In effect she has been told, “You have no future here.” Within a month she had emigrated to the UK, where she quickly gained a prestigious appointment at a top university.

The fact of the matter is that since South Africa has departed from the world norm of making academic appointments strictly on merit, its universities have been paying a heavy price. As Jonathan Jansen has argued, they are en route to being downgraded to mere teacher-training colleges with no serious research output. Already one finds more and more middle-class families of any race with quite young children putting aside money so that their offspring may ultimately attend universities abroad. Effectively, they have already given up on local universities.

This is the model followed in much weaker and poorer African countries: in effect the racial legislation enacted by the ANC is relegating us to their ranks.

Meanwhile, the government continues to pass more racial legislation. The latest racial bonanza is the R100 billion Transformation Fund, to be funded by clipping the profits of every profitable enterprise in the country. The money will, allegedly, go to create black industrialists, though there is widespread nervousness over how much of that money will somehow stick to government’s hands, get awarded in sweetheart deals, or simply get stolen.

The whole enterprise is grotesque. There has been a fund to create black industrialists for many years already and it has not produced one such industrialist. This is hardly surprising: South Africa has been fast de-industrialising and anyway industrialists have never been created through government spoon-feeding schemes.

And in any case, even should such a scheme succeed it would have merely increased South African inequalities. It is utterly bizarre that this is apparently government’s top priority – the money would be far better used repairing the water infrastructure, mending the roads, boosting the electricity grid, and so on.

In order to get companies to contribute the government is offering them extra black economic empowerment (BEE) points. That is, having invented a Monopoly currency called blackness, the government is offering to sell a bit of bogus blackness in return for real money. These days one can play fantasy football, so the government is trying to get companies to play fantasy racial finance. It’s beyond satire.

Real Intention

In fact, one can see the real intention. The money will get lavished on the government’s favourite BEE business people and tenderpreneurs. None of them will actually become industrialists but it will enable them to indulge in a lot of conspicuous consumption (Ferraris, Lamborghinis, and so on) and then the government will come to the self-same “business people” and demand massive contributions to fund the ANC through the 2026 local elections and the 2029 parliamentary elections.

The mundane truth is that South African business has been through a number of very lean years and at last things have started to turn up a little. It would be far better for the national economy to allow businesses to keep their profits so they can invest more and employ more people. But one gets the impression that the ANC has no notion of the national interest and that that is the last thing in their minds when they legislate.

When the Nats left power the country could marvel at the sheer wastefulness of apartheid – the bogus homelands, the waste of human resources, the immense security apparatus necessary to keep order in the face of a resentful population. But no one could deny that the Nats had built a first-class national infrastructure, fine roads, massive dams, a comprehensive rail system, and major ports.

When the ANC leaves power there will be no such inheritance – in thirty years the government hasn’t built a single dam – and indeed much of the infrastructure will be in a rotten state. And to that will have to be added the appalling damage done by its racial legislation.