Stability in SA depends on legal property rights

Property rights provide an owner with the legal ownership of a resource. This is backed and enforced by the legal system as well as the protections the government provides through law and order. It allows owners to freely use their resources however they see fit – with the comfort that their assets will be legally protected. But in South Africa these rights are threatened by legislatively enabled expropriation without compensation, which empowers state officials to seize any citizen’s property. Coupled with criminal syndicates potentially invading your property at any moment, the outlook does not look good. Nicholas Woode-Smith explains that to ensure the protection of property rights, laws like the Expropriation Without Compensation should not exist, and tribal trust lands should be abolished. He believes the importance of property rights cannot be understated as they are one of the cornerstones of a stable and prosperous economy. This article was first published on the Daily Friend. – Asime Nyide

The necessity of property rights 

By Nicholas Woode-Smith*

Nicholas Woode-Smith

Property rights are the bedrock of modern civilisation. Without certainty that one’s property will remain one’s own and not be stolen by criminals or robber barons, there is no incentive to develop it, invest in it, or even maintain it.

Expropriation without Compensation could kill property rights in South Africa. It makes property an ephemeral and transient commodity that is highly risky to develop or invest in. Why spend money building on your property, growing crops or developing its value and usefulness if some corrupt politician can just decide to seize it at any time?

And why put effort into owning or expanding a home, if it can be taken from you?

Tenants of a landlord, especially a capricious landlord, do not invest much into their rented property. Why would they? All their investment could be wasted if they are evicted.

People need certainty that their investments will remain theirs. That’s why we need property rights. To provide the certainty that the sweat of our labour and the money we have spent will come to benefit us – and not those who would take away our property.

Violations of property rights hold us back

Think about the current violations of property rights in South Africa.

Criminals roam the streets and threaten our belongings. As a result, we tend not to fix our cars. We don’t maintain our yards. We are afraid to own nice things. Because they can just be stolen from us.

Without the assurance that our property will remain ours, we will fear to put any effort into maintaining or developing it.

The ex-homelands, currently held in tribal trust, also demonstrate the destructive nature of not assuring property rights. Tenants of the tribal trust lands do not benefit from property rights. Any investment they put into their homesteads, farms and land can just be taken away from them.

Insecure ownership has locked huge amounts of land into underdevelopment.  No one wants to risk putting effort or money into raising the productiveness of their land or attempting to start a profitable business.

Imagine if all tenants of the tribal trust lands owned their property. They could build the homes they wanted to own, they could cultivate their land without fear of it being stolen by corrupt leaders, they could build a business.

Or, just as rightfully, they could sell the land to investors who could give them the money they need to start a business, invest, or move to an area where they could find access to education and better jobs. They could rent their land, hold it in private trust, sell it, keep it. Whatever they’d like. And it’d be up to them. They would no longer be treated as foolish children, but as financially independent adults.

With a title-deed and property rights, countless South Africans could be given the ability to gain capital, financial leverage, and the capability to move up in the world. They could finally escape the modern-day feudalism of the tribal trust land system and become citizens – not serfs.

Property grants rights

Property rights don’t only ensure that people can become wealthy and develop their properties, it also gives increased rights to people in other ways – and helps to ensure stability and minimise conflict.

Allotting limited resources responsibly and ensuring that people’s claims over resources are protected helps to prevent conflict and determine who has say over what. Conflicts over visiting particular land, over who owns what, and what land should be used for can be solved if a private citizen owns it.

District 6 has stood as useless, unproductive land, despite being prime Cape Town real estate. This is because the land has been held back by political conflicts, corruption, and sentimentality. But the benefits of the land being divvied up and owned by private owners would be immense.

Property prices would be lowered in Cape Town by an increased supply of housing, and new zones for businesses would lead to employment opportunities. Jobs would be created in the construction industry; wealth would be grown by developers and investors. And a huge blot on the city would finally be filled in. All by private property owners.

Private property is intrinsic to democracy

Every successful democracy has been in a country dominated by private property owners. And this is fundamentally due to the fact that voters act more responsibly if they have a real, physical stake in the land where they vote.

Property gives economic power. It empowers voters with a real stake in the country to influence what happens there. And having that stake gives people a real sense of urgency and responsibility  to ensure the country is run well.

To ensure a country full of private property owners, property rights must be protected. This means not allowing laws like Expropriation Without Compensation to exist. It means abolishing the tribal trust lands. It means title-deeds for all tenants of public property.

Ensure property rights, and South Africa will be more than one step closer to becoming a prosperous country. It will have won most of the battle.

The views of the writer are not necessarily the views of the Daily Friend or the IRR. If you like what you have just read, support the Daily Friend.

  • Nicholas Woode-Smith, an author, economic historian and political analyst, is a contributing author for the Free Market Foundation. The views expressed in the article are the author’s and not necessarily shared by the members of the Foundation.

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