The absurdity of our inequality

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si Lonmin mine0 Motshwari mofokeng Wrapped up: A Lonmin mine worker at the forefront of the gathering at the Wonderkop township near Marikana before 36 people were shot dead and 78 others injured two weeks ago. Continued inequality compounded with a large underprivileged population politicised by activism, creates a combustible situation. Picture: Motshwari Mofokeng

The shootings at the Lonmin mine give rise to grave concern. Many have spoken eloquently about the tragedy with compassion for the families and the deceased. The events surrounding the tragedy are blurry, leaving people on different sides of the divide to form their own opinions.

We bask in the glory of our “constitutional miracle” and the legal freedoms it has brought. Continued inequality compounded with a large underprivileged population politicised by activism, creates a combustible situation. Our Constitutional Court has expressed democracy beyond the right to vote and requires the government to consult ordinary people, where a decision affects them.

Lonmin should make us ask: what about meaningful consultations, beyond collective bargaining, concerning corporate decisions? Our constitution has horizontal and vertical application. Deputy Chief Justice Dikgang Moseneke on the occasion of the Ruth First Memorial Lecture a few weeks ago remarked, “[t]he exercise of public power, and indeed of private power where it serves the same purpose as public power, must be rational”.

Under their co-determination laws, countries such as the Netherlands and Germany impose a duty on corporations over a certain size or asset value, to give workers a voice in the governing structure (board of directors). Studies demonstrate that there is less industrial and social strife in these countries and less worker alienation. Nor do they have the economic disparities we experience.

The media do a good job reporting on the string of government scandals, corruption and ineptitude pulsing through the country. Fair competition and economic justice get scant attention.

Lonmin reminds us that we live in the most unequal society in the world. The revolutionary writers, including Montesquieu and Jefferson, wrote about the challenges to democracy where you have wide disparities in wealth. Montesquieu wrote that democracy cannot function where beggars and millionaires live side by side. Similarly, Jefferson wrote that democracy would be undermined if one group had large amounts of property whereas others had very little.

It is astounding that many basic staples and services cost more in SA than in advanced developed countries, where individual earnings are much higher. Lonmin is a reminder of the wave of uprisings in North Africa over low wages and the high cost of living.

With the exception of intervention by the Competition Commission over price-fixing, there has been little analysis of the high cost of living and accountability by private actors for the high prices of goods and services, including those by banks.

The high prices should be a matter of grave concern, given that food and basic staples in SA are produced locally and workers earn far less than their counterparts in developed countries.

The mantra often recited by capital and the media is that the labour laws are stringent.

How much more would they want to enhance the absurdity of the inequality in SA by stripping worker rights?

Mining in SA may no longer be as profitable as before, but someone is still making colossal amounts of money through the toil of the poor.

Since 1994, economic choices have been made where things have been rigged in favour of a few, while the majority continue to reside in poverty. Beginning with the Thabo Mbeki and Trevor Manuel leadership, the government embraced the Washington Consensus and rabid free trade.

These leaders took us into the GATT agreements, succeeded by the Worled Trade Organisation, whereby SA undertook First World free trade commitments as a developed country, which we are not. This resulted in severe damage to sectors such as textiles.

The agreements mean SA is legally circumscribed in subsidising businesses even within the historically disadvantaged population because this would invite charges of unfair trade practices.

Undoubtedly, apartheid shielded inefficient industries. At the same time, apartheid also meant that the historically disadvantaged live in an undeveloped reality and suffer grave impediments that prevent them from competing on an equal footing.

The Mbeki-Manuel policies were neither informed, nuanced nor reflective of our unique realities.

No other country with the level of unemployment and abject poverty of SA has assumed developed world obligations.

Britain, France and many developed countries embraced free trade only after they achieved a certain level of economic prosperity that filtered down to their populations. Otherwise, they could not have competed equally.

The enticement of foreign investment (which has largely failed to materialise) remains a primary objective of our government. Countries like Taiwan, Malaysia, Korea, and Singapore or for that matter Germany after World War II invested in their people and their education. The engines for their growth were their own populations and not an expectation of economic delivery from foreign multinationals.

The abject failure of the education system is scandalous.

The decision to allow major corporations to move their headquarters to foreign lands defies reason. If one could find a description of economic treason that would be it.

The conventional orthodoxy disseminated by business, media, professional societies and many academics suggested it was a sound decision.

These institutions contribute to the shaping of public perceptions. Government action as it pertains to corruption or ineptitude is rightly held up to scrutiny.

Many of these institutions continue to exist under apartheid-influenced structural perversities. Government actions that aid the historically privileged are rarely subject to critical scrutiny.

The miners working for Anglo American and the workers of the other corporations whose headquarters the government has allowed to move to foreign lands need to explain what benefits this has brought to the country. We are confronted by a game where the rules in significant areas are rigged for the benefit of the privileged.

Ultimately, it means that companies that are truly South African are allowed to repatriate their profits to foreign destinations. Before 1995, they had to invest their profits in SA to benefit South Africans. These more recent decisions were indulgent to the privileged sector.

South Africans are subject to regressive laws that provide exclusive licensing rights to privileged parties that distort competition and lead to higher prices. Parties with distribution licences can prevent the parallel importation of legitimate goods under copyright protection.

The US approach applies the “doctrine of first sale”, which means a legal copy can be sold to anyone. Once you have a lawfully made product, whether purchased locally or from a foreign source, there can be no limitation on selling that product because of an exclusive licence. In Japan, the exclusive right of the copyright owner does not extend to genuine or licensed goods that have been sold to a third party outside Japan.

The EU, through the “doctrine of exhaustion”, has increased the scope of competition in member countries.

The SA approach protects the profit margins of businesses, distorts competition and leads to higher prices for many goods which retail for far less in the developed world. Economic choices need critical repositioning.

The ANC and its allies, the SACP and Cosatu, cannot continue using the playbook of patronising the downtrodden while using the levers of power to do little for them. South Africans need to mobilise and make up for the lost ground.

The irrationality of government choices, the problematic way in which private power is exercised , the tremendously high cost of living and other economic anomalies need to be confronted.

Unless we upend the economic and social order, infuse it with a different ethos that eliminates corruption and ineptitude, and invest in education, we are fast approaching an existential crisis.

n Motala is professor of law at Howard University School of Law


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