Prosperity 101

Here is Human Action’s list of the top 10 action steps South Africa’s leaders can take in a fairly short space of time to improve the South African economy and build real wealth and prosperity. 

10. Scrap labour law and minimum wages

Contracts between free adults (employer and employee) don’t need to be governed by a special set of “labour laws”.  Why can’t they fall under normal contractual law?  Labour law is a scourge on any people who claim to be free, and sadly, disadvantages workers the most.  There is no good moral, ethical, political or economic justification for minimum wage laws.  The minimum wage is possibly the most discriminatory and economically disastrous law in South Africa today along with affirmative action.  It effectively means that that if you’re not able to produce x value you are not allowed to work – period.  Shocking.

9. Scrap the repo mechanism

Why should borrowing money out of thin air be permitted?  It thieves value from existing currency in circulation and cannot achieve anything but inflation and wealth destruction.  When we borrow we do not borrow money we borrow real saved capital.  Conjuring credit out of nothing is like trying to spend without having produced anything…Doesn’t work.

8. Minimise government revenue

That’s right, minimise government revenue by slashing taxes and putting capital back in free people’s hands.  Why should we always be trying to maximise government revenue?  More money to government means a less efficient economy.

7. Sell all state owned land to private buyers

State owned land is either unproductively used or used to confer special privilege.  Land should be back in the people’s hands.  The private sector will buy all land, even seemingly bad land, at the right price.  The state should auction off land until it is all sold.

6. Institute a flat-rate tax of 10%.  Scrap corporate tax.

Why should low income earners not contribute a fair share to the affairs of running a limited and small government?  All tax laws should be consolidated into a simple tax code.  A 10% flat-rate tax on all income.  Corporate taxes are always passed onto consumers who are already paying tax.  Scrap corporate tax, it is simply a double tax on individuals.  After that scrap tax on interest income, capital gains, inheritance etc.  Scrap carbon taxes, environmental taxes and the like.  Scrap ‘sin taxes’ and all customs and excise duties.

5. Scrap all trade barriers, tariffs, duties, protectionism, and subsidies

All forms of trade protectionism should be scrapped, whether they are given to exporters of importers.  All forms of trade protectionism make us poorer and increase living costs for the poorest.  Adam Smith showed why protectionism is unambiguously bad for the wealth of a nation and no-one has proven him wrong since.

4. Scrap inflation targeting

That’s right, scrap it.  Scrap the inflation target and instead target an unchanging money supply.  This must be part of an eventual move toward a totally free market for money (see point 1).  Targeting a positive level of inflation means targeting a constantly expanding money supply which means targeting endemic wealth destruction.  Inflation targeting is a failed policy.  Instead SA needs to move toward sound money.

3. Privatise all road, rail, electricity and water infrastructure. 

Let the market maintain and operate all basic infrastructure for profit.  End the phenomenon of ‘state owned enterprises’ and take these inefficient entities completely off the state’s books.

2. Eradicate government budget deficits. 

Write a constitutional amendment that any president presiding over a budget deficit will be impeached immediately.  Pay down state debt in 10 years minimum and constitutionally prohibit government from ever going into debt again.  Completely eliminate over time the government bond market. Capital markets don’t need government bond markets to function properly.

1. Let the market choose its money

This had to come in at no. 1 on our list because the fiat money system is probably the single most debilitating force in the modern economy.  Liberalise the market for money.  Eliminate government’s statutory monopoly on currency.  Abolish legal tender laws.  Fully de-regulate the banking system.  Remove the lender of last resort function in the economy by abolishing the central bank.  Let people use whatever they want as currency.  Let any form of money stand up on its own to the scrutiny of the market and wait and see which mediums of exchange are left standing. 

There it is.  Our top 10 steps to economic freedom and true unbridled prosperity in our land.