The world is changing fast and to keep up you need local knowledge with global context.
All that evil requires to flourish is for good men to stand by and do nothing. Ignorance has the same consequence, blossoming when
illogical prattle is propagated without challenge. Which seems to be happening right now with former ANC Youth League Leader Julius Malema’s Economic Freedom Fighters political party. As Germany did to its eternal cost with Adolf Hitler, when his Nazi’s were gathering momentum the educated folk wrote him off as a joke unworthy of dignifying with discussion. How different history might have been had the warped ideals of Mein Kampf been tackled rationally and methodically rather than ignored. In that vein, the Free Market Foundation invited historian, author and thinker Tom Palmer to South Africa for a rational assessment of the economic policies advanced by Malema’s fledgling organisation. He came to the CNBC studios for discussion on Power Lunch. His conclusions, backed by historical fact, make chilling reading for anyone contemplating life in South Africa under a President Malema. Starvation, wretchedness, ruination. Russia of the Stalin Age; China during the Great Leap Forward. Here’s the interview. Please circulate widely. – AH
ALEC HOGG: Julius Malema’s new Economic Freedom Fighters – it’s a political party we believe – calls for nationalisation, expropriation and centralisation in the name of economic freedom. However, according to Tom Palmer who is the Executive Vice President of International Programs at the Atlas Economic Research Foundation, if the EFF manifesto were to be realised, even in part, it could lead to a collapse into wretchedness. He joins us now. Good to have you in the studio. You’re actually here as a guest of the Free Market Foundation.
TOM PALMER: I am, indeed. I’ve been in Namibia, Kenya, Ethiopia and I’ll be going on to Zambia from here, so lots of African countries I’m visiting on this trip.
ALEC HOGG: Those other countries that you visited don’t have Economic Freedom Parties as we have now – it appears – in this country. They did stand in recent by-elections and were soundly beaten in all of those so I guess there isn’t exactly momentum. But there is a very populist manifesto….
TOM PALMER: Well, I read it and have investigated their program. First thing I would say is: this is not about promoting economic freedom. And in fact their name is appropriate; they’re fighting economic freedom so the name Economic Freedom Fighters is perfectly appropriate.
Crime fighters fight crime, firefighters fight fire and Economic Freedom Fighters apparently fight economic freedom.
The program they’ve laid out is really an assault in my opinion on the working people in South Africa and on the unemployed, because it means that they will have authentic wretchedness. Looking at the program I think it’s a reasonable prediction if they were to get into power this country would realise, within 10 years, actual famine. And by famine I don’t mean just a minor diminution in their well-being, but real hunger and starvation. We’ve seen before these kinds of massive land-grabs by the state in other countries and the consequence is starvation.
ALEC HOGG: Tom, we’ve seen Zimbabwe and I think that’s a reflection for anybody just to the north of the South African borders, but are there any examples where this…the kinds of policies like nationalisation, centralised controls and state management of resources, have been applied and succeeded?
TOM PALMER: No, not a single one.
ALEC HOGG: Not succeeded?
TOM PALMER: Not one.
ALEC HOGG: Are there any examples of where they haven’t succeeded?
TOM PALMER: Unfortunately the 20th century is littered with the corpses left behind by these kinds of policies. Look at the Soviet Union – collectivisation of agriculture, seizure of private farms, the elimination of the Kulaks. The Kulak was a peasant who owned a little bit of land and a cow and they were designated class enemies – bourgeoisie. China, The Great Leap Forward – exactly this proposal for state-led industrialisation and so on – 45 million people died in that country between 1957 and 1961. We’ve seen this over and over. You go to the Korean Peninsula: North Korea/South Korea. South Korea has a private market economy – open to world trade. North Korea: state-managed, state-directed, no private property and land – two million people died of hunger in the 1990’s in North Korea, so the evidence is simply available to us.
ALEC HOGG: We understand that, but in Africa or in any developing country, P is greater than E. Politics exceeds economics and I guess once you get power you can pretty much write the rules in certain countries. If you were sitting in my shoes as a concerned South African citizen, what would you be doing to communicate these issues that you’ve raised so clearly?
TOM PALMER: Well, I think one thing is to communicate to the large percentage of young people in this country who are without jobs, that this is waging war on them. Just take a very simple point. What is it that raises wages and creates jobs? It’s capital investment that can come from domestic savings or foreigners. People too often focus on foreign investment as the only source of investment, but domestic capital accumulation is tremendously important as well. People do not invest for the future if they fear confiscation – period. No-one plants corn knowing someone else is going to be able to come and harvest it. This is a simple fact. It’s true every place on the planet. If you want to create jobs and raise wages, you need more capital investment – not less. This is exactly the kind of thing that scares of foreign investors and domestic investors as well. They’re going to locate their capital abroad or consume it rather than setting it aside in long-term investments.
ALEC HOGG: Capital is cowardly. We know that. But populism does gather momentum and populism in a country where education standards are not that great has a greater chance of success.
TOM PALMER: Not necessarily. There have been occasions in which public educational campaigns have explained the consequences of policies.
Populism typically rests on wishful thinking. ‘Like me, and I’ll do everything for you’. It’s really a kind of a belief in magic.
But we should have turned the corner in believing in magic. There’s cause and effect in the world and the fact of the matter is, many of the people who are considered by this party as helpless victims are tremendous sources of energy, entrepreneurship and dynamism. Go talk to landless people on the land. What do they want, consistently, all over the world? Private property rights. They don’t want to be part of some big communal system or the totalitarian allocation of land use rights which is discretionary and revocable. And what that’s going to mean is: some people get it and some don’t. Support the party – you get it. Don’t support the party – you starve. What they want is private property rights. I was just in Namibia talking to people who are living now with the communal land system. They hate it. They realise there’s too many cattle grazing on the ground. They’re ruining the opportunities. There’s going to be massive cattle die-off and it’s just going to get worse and worse until they move to private property rights.
ALEC HOGG: So how do they change that? How do the people in Namibia that you engaged with who hate the system at the moment, alter it?
TOM PALMER: They are trying to make their views known to the parliament and the fact of the matter is in South Africa and Namibia and other countries there are plenty of rational people in politics. You can talk to them about cause and effect and you can, say, show them the evidence – this will lead to catastrophe. Is it what you want? Some people are willing to risk that, because they think they’ll be the survivors and they’ll be better off. Think about dictators around the world who’ve impoverished their people to enrich themselves: Ceausesco in Romania and Mobutu Sese Seko.
ALEC HOGG: Fortunately those people were around before the Internet. Do you think it’s changed much? Do you think that everyone having access to information about history, about failed policies, will make a difference?
TOM PALMER: I do and actually that’s why I’m much more bullish about Africa’s future overall. There’s a young generation of people across the continent. They have cell phone telephony and Smart Phones. The cost of Smart Phones has collapsed. Young people can afford them and they can see how the world works. They don’t have to just get filtered information from their leaders. These young people are demanding a change. There’s a big movement across Africa – the Students for Liberty movement. In Kenya I was at a big conference. In Nigeria – hundreds of young African people saying ‘we want free markets. We want opportunity and we don’t want to enrich cronies or further their grip on power by giving them all these economic assets through the state’. So I’m genuinely quite bullish about Africa because it’s the young people, that 16-25 demographic that I think are going to change.
ALEC HOGG: Tom Palmer; a pleasure speaking with you.
TOM PALMER: Likewise.
ALEC HOGG: Thank you for sharing your wisdom and Tom is the Executive Vice President of International Programs at the Atlas Economic Research Foundation.