Expropriation of land without compensation must begin with an end in mind
The constitutional review committee has completed its work and presented its report to both houses of Parliament and the report has been adopted. The next step is for the amendment of the constitution process to begin in earnest with the formation of an Adhoc committee on the amendment bill, which should pass in both houses and should also pass constitutional muster. The real task will be finding the best methodologies to fully realize the new amendment and to strike the best socio – economic balance. Most importantly however, particularly for those who remain apprehensive about this amendment, its important to never lose sight of what the potential of a post-expropriation South Africa could be.
The economic and social benefits of higher levels of Land and property ownership in any country are well documented. Ensuring that property ownership is widespread and deeply felt can lift a country’s economic prospects, give the country’s GDP a leap and increase the per capita income. Research has shown us that where there is high levels of property ownership there are also high levels of educational outcomes. Children of property owners fare better at school than those who are either renting or have unstable boarding. This makes sense not only because property owners can draw down on their equity and build decent homes or pay for their children’s school fees but the security of a home, of assets, gives children the psychological comfort and certainty necessary to focus on their educational responsibilities. This has meant that children who come from family owned homes have a lower rate of dropping out at school than rentals and unstable boarding.
The second benefit of owning property is that in most communities, homeowners, as opposed to rentals are more involved in the community. They participate in community safety programs, economic projects for the community and local elections. Property owners, as research has shown, also are healthier and more fulfilled than those who are not. This makes them more productive and less a burden to the health system. Property is security, which you can use to secure more finances, and start a business or build more assets, and this affects your mental health and wealth standing in society. Distress of not having property or home of your own, results in many mental health problems.
Communities with high levels of property ownership also seem to have lower levels of crime. It is said that its easier to spot a criminal in a stable neighborhood of homeowners than shifting rental neighborhoods where people come and go. It is clear then that people who own land and property are empowered, with a string of other economic and social benefits.
Land Expropriation will also solve another big problem. Land underutilization which stifles economic growth. Concentration of land ownership in the hands of the few results in acres and acres of land which are lying dormant and being used at most to accumulate value and for speculative purposes. This is no different to the general concentration of wealth. If 10 people have R10 million, they won’t spend much of it. If a 1000 people have 10 000 rand, they will likely spend it and boost economic activity. More land ownership will result in higher levels of use of that land and an economic boost.
Expropriation of Land without compensation will therefore, at its tail end, be the best thing to ever happen to our country and our economy. The big question of course is how do we find the right path to lead us to this desired end in mind. What are the economics of expropriating land without compensation. In an economic system, that is at equilibrium, what is given to a person must necessarily be coming or taken from another person or entity. Nothing exists in limbo. The rewards however do not have to be monetary. We do give away things for free, the philanthropic work of billionaires, scholarships, welfare, houses and that does not collapse the system because those who give away don’t only derive the satisfaction of changing another person’s life but are fully aware their contribution, the shelter for the homeless, livelihoods for the poor, brings collective gains to society.
If you give away your land to those who don’t have it, it will improve the countries disposition and entrench social cohesion, resulting in everyone doing well overall, that is an economic reward. What becomes an economic problem is ‘forced redistribution’. This means in South Africa, white people can change the entire economic risk of Land redistribution and turn it into an economic boost by simply viewing it positively.
David and Elaine Potter, a British couple who own a table-grape farm in Stellenbosch did just that. In October they handed over a ‘R30m architect-designed village for their workers on their farm in the Cape winelands and transferred titles to them’. They call this village, for good measure, Lumière, meaning “new dawn”. This couple understood that giving their workers land will not be enough. They must also give them quality houses befitting of the neighborhood they have worked for their entire lives. Now these workers can count among their neighbors, the controversial ‘Remgro chairman Johann Rupert, Richard Branson and Analjit Singh’.
The thinking of this couple in giving away the Estate is that it’s time to break the generational cycle, because not all the children of farmworkers want to be farmworkers, but some want to be accountants and engineers and an opportunity to own property and a home is a key ingredient for that to happen. The problem of course is that as long as we have political parties like Democratic Alliance and Freedom Front Plus among others, creating an impression that the country is engaged in forced redistribution, uninformed investors will have apprehension. Real investors however, like David and Elaine Potter, who have made money in this country since the 90s, decided, of their own accord, that redistributing land and wealth to their workers was the right thing to do.
Welcome to the New Dawn.
Yonela Diko is the ANC Western Cape Spokesperson.