With the spectre of anti-market populism a threat all over the world, Johannesburg’s libertarian mayor, Herman Mashaba, is a refreshing cause for optimism.
In May, South Africa fell into recession and experienced a 14 year high in unemployment. Johannesburg has long been wracked by poverty and crime.
Taking office late last year, Mashaba’s first budget came into effect at the start of this month. As a free market libertarian, Mashaba believes it is free individuals, communities and entrepreneurs who will solve these problems. This is a message other developing world leaders, indeed political leaders everywhere, would do well to heed.
Take housing, for example. The chronic shortfall of government housing has been the cause of public disorder in various poor communities in the city in recent months.
But as Mashaba points out, 300,000 housing units are required to meet the backlog, with the government only able to deliver 3,500 units per year. It will take the government 85 years to get this done.
Clearly, the only way all citizens of Johannesburg will access adequate housing is not through government at all, but via a vibrant market economy and dynamic construction sector.
Mashaba recognises this, which is why he aims to turn Johannesburg “into a construction site” by easing the regulatory burden on business.
Indeed, Mashaba’s most startling achievement so far has been to clamp down on corruption. His council has uncovered R10 Billion in fraud and corruption with 314 people (including city employees) arrested, 100 employees suspended and 12 officials resigning as a result of investigation. Talk about draining the swamp.
Clearly, having faith in the government to solve every problem in Johannesburg is naïve, when simply not stealing from the citizens is rightly considered a giant step forward.
Most importantly, at the core of most of the problems besetting Johannesburg (and many other parts of the world) is poverty and unemployment. There are 862,000 unemployed people in Johannesburg, at an unemployment rate of over 30%. That jumps to over 50% for young people. Unemployment doesn’t just have economic consequences for individuals but denies people what Mashaba rightly calls “the dignity of work”.
If governments could just draw forth jobs and economic well-being from the ether, all South Africans would be very wealthy by now.
But despite claims around the world to the contrary, economics hasn’t changed. It is individuals, entrepreneurs and businesses that can get Johannesburg’s enormous economic engine humming. Mashaba realises this and that’s why he’s reducing government interference by removing regulation and fighting corruption.
It’s also why his administration is ramping up the processing of title deeds for the multitude of citizens living in dwellings without a title – a hangover from the Apartheid era when black South Africans were often prevented from owning property. In the 2013/14 financial year the previous ANC administration failed to hand out a single title deed. The new council has processed 4000 since their election ten months ago.
Property rights give people economic security, the ability to pass wealth down the generations and the possibility of using their asset as collateral to acquire credit to start enterprises. Not to mention the intangible impact of many families experiencing the dignity of owning property for the first time.
Of course, there are definitely some things that government ought to be doing, such as upholding the rule of law. Here, Mashaba aims to make further progress tackling drug gangs and slumlords. Johannesburg is one of the most dangerous places on earth and addressing these issues will be good for the economy and the daily lives of citizens.
An important area where Mashaba must distinguish between law and order and economic freedom is with regards to Johannesburg’s enormous informal sector. The previous ANC council launched Operation Clean Sweep in 2013 which saw the often brutal removal of 8,000 street traders from their places of work.
These small entrepreneurs have the right to pursue a better life for themselves and their family and the City must make it as easy as possible for them to do business and enter the formal economy.
Apartheid was an inherently evil regime that deprived people of their basic rights. A core part of this was its system of economic repression. Whilst the ANC deserves credit for removing many of Apartheid’s restrictions it is, at its core, a socialist party with an unyielding faith in government to create a better world. That is an idea that has had its day.
Of course, expectations must be kept in check. Johannesburg’s problems are entrenched and won’t be fixed overnight. Furthermore, Mashaba is only major of Johannesburg – not the President of the country. All governments and political leaders have the potential to turn bad and the needle is yet to move on any of the key indicators pointing to significant economic improvement in the city.
But an overtly libertarian, free market political leader, particularly in the developing world, is sadly a rarity. Ultimately the most important ramifications of Mashaba’s success may be the example it provides to others around the world.
It is individuals, communities, entrepreneurs and businesses that will lead Johannesburg and South Africa into a brighter tomorrow. Mashaba’s faith in the people of Johannesburg to take control of their own destiny is a very good thing.
Peter Gregory is a Research Fellow at the Institute of Public Affairs.