As South Africans are increasingly faced with loadshedding, potholes and the deterioration of so many services; the penny has dropped that it is no use waiting for the government to fix it. In his New Year’s message, Gift of the Givers, Dr Imtiaz Sooliman said he believed that fixing the country does not belong to the government, but to all of us. Well, this is exactly what South Africans are doing as they start providing their own electricity, while communities are coming together to fix potholes and clean streets. Frans Rautenbach, a labour lawyer from Cape Town, believes that the process of helping ourselves can be taken a step further. He has written the book, Help Yourself South Africa. Rautenbach told Biznews about his blueprint to fix education, health, housing and other functions of government and suggests that some of the labour laws in the country could be challenged constitutionally. He looks at where regulation was shackling South Africans and suggests a way around them. Rautenbach even has ideas about a new currency and hopes his ideas will be tested in a model ‘dorpie’. – Linda van Tilburg
China in the 80s is a powerful example of change to a free market zone
I thought of a very powerful model for change, which we saw in China in the eighties, when Deng Xiaoping had to change in desperation to a more market-oriented economy. He decided, well, I’m going to test the waters and create places like Shanghai, which are effectively free market zones. Those all were so powerful that people then clamoured, they wanted to become part of that system. So that’s the thinking. But you can’t ask our government to put up a free market zone; it will laugh you out of court because that will show up its own faults and it will lose initiative. It goes against the government’s instinct . If you are an organisation like our government is, and most governments in fact end up favouring central government power; then you won’t consent. So I needed to find another way. And that other way is to create by private agreement little pilot projects for all the areas of reform which you’ve already started mentioning, (education, agriculture, health care manufacturing, housing) and those will then demonstrate – show, rather than tell – the benefits of a free market.
Give R20,000 rand per pupil to entrepreneurs to create schools
I’ve done research. There is no question that decentralised private education is far superior, both in terms of cost, ultimately in terms of value for money and in terms of efficiency. One of the arguments that I have given in the chapter about Merit is Macau, which now has 97% private education and is one of the very top educational achievers in the world. So, there’s no question that you’re going to have a good quality education if you have private education, but it can also be done cheaply. The experiment is you create a budget of R20,000 per learner, which is what the government pays at the moment and you give that to a private entrepreneur. You say for R20,000 per child, per year, build us a school, run the school, and then let’s tot up the totals. Let’s see who does best. That’s a demonstration model. Then at a later stage, my suggestion is that employers should come to the party but the same principle: R20,000 a head. Instead of having this employment equity system that we have, let’s rather focus on schools.
Medical aid instead of a medical scheme with less onerous regulation
Healthcare is, of course, disastrous. I start the story with healthcare by comparing the Covid results in the plus-minus first six months of the pandemic, comparing private dominated countries and national health system countries. I was shocked to find that Britain, for example, had almost ten times the rate of fatalities of those countries which are privately dominated. So, there’s no question about the superiority. The other surprise was I found that despite our poverty and despite our unemployment, 41% of our citizens make use of private medical care. So, that is quite a remarkable thing. The value of private medical care is recognised, but you must find a way to get employers to help employees to get private medical care. At the moment, a small minority of employers provide a medical scheme but the problem with the medical scheme is that the legislation is so restrictive that it is not cost-effective for ordinary people. So besides, of course, increasing employment, we must double the current employment and that’s a separate topic. But once we start doing that, salaries will go up, benefits will improve, and employers will be able by designing a benefit for their employees whereby they (the employer buys the medical service), they will get much cheaper medical aid. It’s not a medical scheme that’s the important thing and you will find that’s a theme in the book. You look at where the regulation stymie is, where it shackles us and then you find a way to work around that. So that is what we do, we design the scheme so it does not get defined as a medical scheme.
A constitutional challenge to labour legislation and not BBEEE by funding a black pupil
The first aspect is a challenge or a constitutional challenge which will really emasculate the act and I believe it’s at least arguable. It depends on the judge that you find on the day. Employment Equity, I think, can be challenged under the Constitution. But apart from that, even if we fail and we don’t go to court successfully, we can then create by private agreement (which is the main model) employment equity; most people think you have to have a demographic population of various layers of your employment in the company. That’s not necessary. What you can do is, you can say, I’ll give preference to black pupils in a school funded by the employer, and that can be a model. I think that’s the way to go because everybody agrees that we desperately need education. In fact, that’s the main reason employment equity doesn’t work and it’s dysfunctional because you need human capital. You need intellectual capital if you want to promote people to managers and CEOs and directors and that kind of thing. So that’s the private employment equity chapter and then I also have some suggestions for agreements on the ordinary employment contract side.
Claims, a new currency
Obviously, you’re not going to replace the Rand tomorrow. What you want is to create an economy that is built on value creation. First of all I suspect, work with the Rand economy to start with if you have a housing project. There’s no way in the world you can immediately start trading workforce, labour and bricks and mortar and land for the new currency of Claims. What you will do, is you do that in the Rand-denominated economy. And as soon as those systems start getting up and running – when your housing system starts working, your employment equity starts working, your health system starts working, and so on – you create these little pockets of productivity which can serve as examples – those may then provide the impetus. But ultimately somewhere along the way one is going to need a leap of faith and I see that as coming from what we have in South Africa is a very, very healthy retail sector, a powerful retail sector and somehow, we got it right in South Africa. I think they are experts at selling things and what you need is a market -I’m talking about a retail market. You need things to be bought and sold electronically. Think Takealot, Amazon, something like that on which you can then trade with Claims. But that is the area where I think they can germinate, something like that. But it will have to start small and expand regularly. You don’t just announce that the Claim is replacing the Rand tomorrow.
Empower homeless people to build their own houses
One of my favourites is housing. We all know that ever since the government started building housing for free, the homeless people in South Africa have just shot up in number. So how does one counter that. It’s a hugely inefficient system. The government employs contractors who all work under the labour law. It is hugely inefficient. If you work under labour law as an employee, your incentive is to work as long as possible to build the house for as long as possible. What I say is like the homestead pioneers of old, what we should do is incentivise and empower ordinary homeless people to build their own houses. There’s something wrong with this idea that the government has to build a house using employed people and then hand it over for free to people who have done nothing to get the house. If you can find a way – and there are cost effective ways for unskilled people to build houses, but they can’t under the current labour laws because it’s too expensive. So, my idea is to take them outside the arena of employment. Immediately, employment law does not apply, immediately it is just cheaper and the employees or the workers I should say then build their own houses in partnerships of say 20, they build a whole living estate and those are divided up between the entrepreneur who funds it and organises it and each of the each of the workers gets a house. You can imagine the difference, it’s night and day. If you build your own house you are going to build as fast as possible because you want to move in and you want to have the best quality possible. So, the incentive is turned on its head completely
The ultimate goal – building a model ‘dorpie’
Ultimately, I would like to build a model dorpie. I think it’s important that we create something on the ground, that it’s not just an academic idea. Fundamentally, I’m aiming my message at businesses, entrepreneurs, and I want those who are already engaged in the various areas. If you are into housing, affordable housing, if you’re into education, if you’re in power generation, whatever your field of expertise is, I would like to talk to those people and I would like to see if one can start small, persuade people to invest money in something from which they will ultimately make more profit than they’re making. That’s what makes this different from the normal NGO who goes cap in hand and asks for corporate money only to spend it on people who then go and spend it somewhere else. What we say is: we put up businesses and we can make investors make money. That’s the way to do it. Otherwise, it’s not self-sustaining.
Read also:
- South African economy is close to collapse, says economist
- Dr Frans Cronje: Don’t rule out ANC/DA Parliamentary coalition after 2024 Election
- Rob Hersov is back with a plan to turn talk into action: New South Africa.org
