Command economy a death sentence – Bryer

According to Keith Bryer, a Free Market Foundation writer, the recently expanded, all-powerful BEE legislation and the incipient NHI will be the undoing of SA. According to President Cyril Ramaphosa, they will be the saving of it, and correct historical imbalances. Bryer, a veteran freelance journalist, says the penalties and draconian inspection powers of the extended BBBEE laws will scare off investment, stifle existing enterprise and lose more jobs. He sees the NHI as “privatisation in reverse”. Instead of allowing an inefficient SOE to be run by people who know how to manage it, the idea is to take a functioning and well-managed private entity and drown it in bureaucracy. It will also swallow private medical aids. Ramaphosa says the continued exclusion of the black majority from the economy’s mainstream constrains economic growth, impacting all business. Expanding the country’s entrepreneurial base is fundamental to growth. You decide. This article was first published on Medsuitemedia.co.za in April 2022. – Chris Bateman

Government aims to shoot both feet with new health and employment laws

By Keith Bryer*

The new racial laws intending to boost black economic empowerment, and another one to provide a national health service, can be likened to a man taking careful aim at his feet with a shotgun and then pulling the triggers. He can’t miss, but why is he doing it? Taxpayers are likely to be the third foot.

Changes to the Employment Equity Act will give the Department of Labour the power to set racial employee targets for companies that, should they fail to meet them, can be fined between 15 and 10% of their annual turnover (a much higher figure than their profits).

On top of this massive extension of bureaucratic interference with the private sector that pays taxes and employs people, companies that cannot comply because of the national shortage of skilled people of the required colour can also be prevented from tendering for any government business.

It implies forced employment of people without experience or skills, or else. A better way to kill the incentive to grow a business would be difficult to conceive.

To police such draconian regulations, officials will have powers to enter any office, any factory, any shop, any supermarket, and any place of business to ensure the racial headcount is ‘correct’ in the eyes of the Department of Labour. No doubt more people will get government jobs at taxpayer expense.

This example of unashamed racism will dampen any prospect of investment in new businesses, may close existing ones, and blow any chances of foreign investment and new job creation in the private sector. These attempts to have the government provide everything – jobs for all and perfect equality in society – are more likely to boost the rush for the exit before the whole-socialist experiment brings the economy to a standstill.

They will certainly fail to create new jobs; it is so obvious but no one in government seems to understand it.

The next barrel of the shotgun aims at the other foot scheduled for destruction: the private medical aid schemes that will be forcibly shoved into a proposed National Health Insurance (NHI) scheme.

The motive seems to be that because the state-run health service shows every sign of achieving the same state of inadequacy as everything else under civil service management, this new legislation will absorb the private medical aid system that does work, and ‘save’ it.

The bonus for civil service managers will be access to the considerable financial reserves in private medical aid schemes so they too can be mismanaged and siphoned by creating a gigantic state-owned enterprise almost as big as Eskom.

This NHI SOE, however, will be cleverly different. That is because the larger private sector medical aid schemes show every sign of wanting to cozy up to the government, snuffing out competition from the smaller medical aid societies. These smaller medical aid societies, some of which were set up by companies for their staff, have tidy sums that when absorbed into a NHI will emerge on the profit side of their foreign owners’ balance sheets.

One such is the BP Southern Africa Medical Aid Society. It has been in the cross-hairs for some time, targeted as the first private scheme to be “amalgamated” into a national health scheme. So far, the process has been stopped by the courts and protesting BP pensioners, but both BP plc management, the local management of its subsidiary (BPSA) and our government officials seem determined to go ahead anyway.

This National Health Insurance idea is privatisation in reverse. Instead of allowing an inefficient SOE to be run by people who know how to manage it, the idea is to take a functioning and well-managed private entity and drown it in the bureaucratic swamp.

The way to hell is paved with good intentions, so it is no surprise that the idea of a single national health insurance is being presented in glowing terms by its advocates.

Prime among the praise singers is a medical doctor in the health department who emerges now and then to explain there isn’t enough money being spent on the state-run health service as it stands; the same kind of plea for more cash that receives short thrift when tried by a manager in the private sector.

The fact is the state health system is a shambles because of inept management and rampant theft, not because of a lack of money. Fixing it by throwing another R175bn of public and private money will be nationalisation of the private health sector. It is a mistaken and naïve belief that health bureaucrats will do a better job.

Money has been thrown at the state health sector for many years with very little to show for it other than a sizeable addition to those employed by it at taxpayer expense. The idea that they could run a larger national health service would be laughable if it was not so tragic.

As an example of ideological insanity, these two new laws are hard to beat.

  • Keith Bryer, freelance journalist and communications consultant, writes for the Free Market Foundation.

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