WORLDVIEW: Here’s what the ANC is really missing & why it hurts

Like everyone, I have a favourite theory of what the ANC is doing wrong. While some people get worked up about cadre deployment or racial policies, my diagnosis is that the ANC insists on focusing its attention on things it can't do well and ignoring things it could..Let me explain..The New York Times recently published a long opinion piece by authors Anu Partanen and Trevor Corson, a couple who moved from the US to Partanen's native Finland. Titled Finland is a Capitalist Paradise, the piece echoes the message of Partanen's book, The Nordic Theory of Everything – there is no reason that a vibrant capitalist system cannot coexist with a healthy amount of state support for citizens..___STEADY_PAYWALL___.The piece is written as advice for America, which has engaged in a long experiment with trying to keep the state out of every aspect of citizens' lives and is now wrestling with the consequences of that, such as falling life expectancy and the fact that almost half of working Americans toil away in low-wage, go-nowhere jobs..But Finland also has an important lesson for South Africa. While the problem in the US seems to be that the government is not doing enough where it counts, the problem in South Africa is that the ANC-led government is doing far too much where it doesn't count..Under the ANC, the apartheid-era policy of allowing the state to run monopolies in multiple sectors of the economy more or less continues. The ANC, to its credit, let Telkom escape the fold, but it has firmly held on to enterprises in transport, shipping, electricity, and other key sectors..Read also: Tell the ANC the time for platitudes is long past.Unfortunately, it turns out the government hasn't been very good at running utilities, railways, ports, and the like. Already burdened by inadequate apartheid-era infrastructure designed to benefit only a small proportion of the population, the government has failed to invest in new capacity and maintain existing capacity, leading to a downward spiral. We're seeing the impact of this in the most vivid way possible: Stage 6 load shedding or, to put it a little more bluntly, virtually nationwide blackouts..Now, some people interpret this to mean that the government should get the hell out of every aspect of the country barring, presumably, the army, police, and courts (and some extremists would probably go further)..But this path risks ignoring the important lesson we can learn from the Nordic countries: the government has a vital role to play as the partner of private industry..In most Western democracies – specifically, so-called social democracies – there is an understanding that business can and should take responsibility for finding ways to deploy capital and labour for profit (that is, that capitalism is better than socialism). But left uncontrolled, capitalism very quickly leads to monopolies, rent-seeking, inequality, and exploitation. (This is a fact, not a bizarre political belief – you can read plenty of academic work on this subject from econometrics, game theory, classical economics, and so on. Alternatively, you can just read a newspaper.).Therefore, many societies have decided the government should focus on a few core areas..Law and order.Capitalism requires the rule of law. You'll notice that few innovative companies emerge from unfettered libertarian paradises like South Sudan. This is not a coincidence. If you want to run a business, you need some kind of guarantee that someone with a gun won't just come around and take your stuff. You also need a guarantee that, if you pay someone for a product, you will receive that product and that it will be safe enough to use it without killing yourself..Allowing private interests to run, say, the courts or the police is not a great strategy. You can see a good example of private "policing" if you read about the gang wars in, say, New York City back in the day. Indeed, the history of policing is basically the story of the government deciding to consolidate all the rival gangs into one, single gang run by the government and allowing that gang to ruthlessly put down all the others..Thus, the ANC should put a lot of energy into building a clean and efficient judiciary, good contract and safety laws, and protecting South Africans' basic physical security..Infrastructure.While the problem with private policing is that it is indistinguishable from the Mafia, the problem with private infrastructure is, generally, that it is too expensive with too little payoff for private companies to do. A project like a new highway can have enormous economic benefits. But for a private company, earning a return is tricky. As we know, people don't love paying tolls, and recouping the upfront costs of something huge, like a new power plant, can take decades. Few private investors are interested in that kind of ultra-long-term capital tie-up..Further, private companies are only interested in building infrastructure that can be profitable, so they only want to build in rich areas. This limits the potential for growth in poor areas, which may be substantial with the right investment. It is also undemocratic..Thus, even America relies on government spending to finance – at least partly and often fully – its roads and bridges. As for an emerging market like China, well, the Chinese government has spent trillions to bring infrastructure up to scratch, enabling an explosion of economic activity..Thus, the ANC should put energy into getting an unbiased, ideally external study of our infrastructure needs and financing needed and productive infrastructure spending..Human capital.The final ingredient in creating an enabling environment for business is human capital. Your basic peasant farmer from Germany 300 years ago would not have done well in a modern BMW plant. Without the ability to use complex technology or, for that matter, to read, the peasant would have been a liability to the modern economy. Similarly, even though I have had extensive university-level schooling, when I have the flu I am not a particularly valuable employee because I am unable to stay awake and perform basic tasks..Sick and poorly educated people are simply not as productive as healthy, well-educated people. This is not rocket science. Companies do not want to take on the responsibility for producing healthy, educated people. That's a big cost with an uncertain payoff. They want to employ healthy, educated people in productive ways to generate profit. To do that, you need an external supply of healthy, educated people..Thus, the government has a vital role to play in healthcare and education..Read also: Loyalty valued above competence by ANC – IRR's Sara Gon.As an aside, are other reasons to support universal healthcare and education. First, talent is not concentrated in rich families. Indeed, many of the scions of wealthy families that I personally know are morons who shouldn't be entrusted with managing a pizza order. Universal education allows a society to identify true talent and to nurture it and, one day, deploy it for profit. Far better to have the genuinely talented son of a township family in charge of your rugby team than an entitled private school kid who only made it because his family spent tend of thousands on rugby camps and training..Similarly, heath is not evenly distributed. Cancer doesn't only strike down unemployed murderers, it affects hardworking people with families. In the private US healthcare system, exorbitant medical bills are one of the major reasons why families enter bankruptcy, losing their jobs and their homes. It makes little economic sense to allow a family to become homeless because one of the breadwinners had the bad sense to get hit by a drunk driver..Here, the ANC deserves special censure for allowing SA's education system to fall into such a grim state. Creating a level playing field begins with giving children the right state – enough food and medical care to be healthy enough for schooling, and quality schooling to allow the child's talents to flourish. SA doesn't need more opportunity for the rich to stream their kids into good private schools. It needs a functional and high-quality education system to ensure that we stop haemorrhaging human capital..In short, the problem with the ANC is that it is focusing on all kinds of random and non-core activities – like managing an airline – and ignoring the central and most vital government functions. Like a messy conglomerate with too many interests, its dispersed attention is not serving shareholders (voters) or delivering results. It's time for a rethink. SA should be more like Finland – it should have a government that does the job government is supposed to do.

WORLDVIEW: Here’s what the ANC is really missing & why it hurts

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