Government hurting the poor...again

Government destroys wealth.  Taxing the dynamic sector of the economy to redistribute funds to the sclerotic sector destroys wealth.  Spending on wasteful projects and make-work programmes destroys wealth.  Inflating the money supply destroys wealth.  Minimum wage laws destroy wealth.  Red tape destroys wealth. 

While this legislated destructive chicanery is usually draped in the supposedly noble garb of “income redistribution”, the tragic irony is that such policies end up hurting the poor the most.  The rich, through greater mobility of capital both internationally and between asset classes, access to personal tax consultants, high levels of productivity, and greater ownership of real productive assets, are by and large able to stay afloat (even if only just) despite all the fiery arrows the state flings at them. 

The poor are not so fortunate. 

Despite South Africa already having a hard time of it trying to recover from a painful boom-bust cycle, Government continues to destroy wealth, economic freedom, and prosperity among some of our poorest communities through sheer policy pigheadedness. 

Windsor is a small suburb in Randburg, South Africa.  Although bearing a regal name, the area is anything but lofty and pristine.  Once a ‘whites only’ suburb during the bad old days of apartheid, replete with manicured gardens and kempt apartments, Windsor now serves a far more vital function to poor black communities seeking work and better economic opportunities in nearby areas.  

Windsor stands out conspicuously amid the leafy middle class suburbs that surround it.  The area is full of renters so is less well looked after than neighbouring suburbs and the streets are usually dirty relative to surrounding areas.  Residents are low income earners and families often share tiny apartments to make rental payments.  Reinvestment in improvements to apartments is lacking as landlords know they can get away with shoddy treatment of renters as space is limited.  Property values in Windsor have fallen considerably through the years, or at the very least not nearly kept pace with rampant increases in other suburbs. 

Many look upon Windsor with derision.  Varsity potheads see it as an easy pick-up point for drugs, while middle class families see it as an undesirable place to buy property to live in. 

Many argue that Windsor needs to be ‘reclaimed’ and gentrified back to its former glory so that the suburb can once again fit in with nice middle class happy-land.  The overall view seems to be one of contempt for the suburb.  It is seen as a stain on the landscape.  The local police view the area as a nuisance, constantly having to raid Nigerian drug dealers and deal with domestic violence and drunken brawls.  Windsor is seen as a harbour for criminals targeting the more affluent nearby suburbs. 

Windsor is not perfect, but the people who want to wipe the stain off the map are wrong.  Windsor has sprung up organically due to a demand for labour in the area.  The suburb provides a major a pool of workers to businesses and households in the area who otherwise would have to trek in from far flung areas to work everyday.  Windsor is bustling and is a hive of activity as people try to make a living.  Normal families live in Windsor who, like anyone from anywhere, want to give their children the best they can and make an honest living.

Windsor exists for a good reason and it serves its purpose superbly.  Windsor is the New South Africa’s answer to the Group Areas Act.

Windsor’s street pavements are often crowded with businessmen and women trying to sell their wares.  The merchants usually live in Windsor and are able to meet needs by offering goods people want and can afford.  This is a highly valuable service to local residents.  Without this, long journeys would have to be taken to source cheaper goods, or people would simply be forced to spend more at the upmarket ‘formal’ retail outlets nearby. 

The people of Windsor need their local trade to not only survive but to create a business culture within the area.  The more every rand can circulate through peoples’ hands in the suburb the more mutual value people are deriving from one another and the more wealth can be generated and retained within the community.

Unfortunately government has other ideas.  Police routinely raid Windsor’s street pavements to clear away ‘hawkers’ and confiscate their wares.  This is police brutality cloaked in law.  You see, because Windsor is not ‘zoned’ as a commercial area, people are not allowed by law to just set up shop on the street.  Instead, the small business owners have to go through a bureaucratic palaver wrapped in red tape just to engage in peaceful voluntary exchange. 

A hawkers licence needs to be purchased from the government and even then a merchant may only sell their goods in certain designated ‘hawking’ areas, usually far from where they live and far from their captive customer base.  This means people with considerable stock, who usually have no private means of transport, need to lug their wares over long distances, risking damage or theft.  It also undermines their business model which is geared toward meeting the needs of their community, in the community. 

These merchants are regularly harassed by the police, have their merchandise permanently confiscated, and generally operate under near-impossible circumstances. 

Is the law really benefiting our society?  Government always talks of fostering small businesses and the need for a greater degree of entrepreneurship in the poorer communities, but then acts in the complete opposite spirit.  Windsor is not the only place where this is happening, just one example of thousands.  In townships and poorer communities across the country entrepreneurs have to earn their daily bread by trading covertly, under the radar of the law and constantly at risk of loss through confiscation, simply because zoning laws proscribe such activities in residential areas. 

As a result, only the crafty risk takers stay in business, while the others soon give up their business dreams and settle for a paying job or, worse, nothing.  Why government feels it must legislate where and how people can sell is a mystery, but current laws governing small merchants are killing off the entrepreneurial spirit in the communities that desperately need to be serviced by them. 

The entrepreneurs lose out, and so do the consumers.  Provided someone is not trespassing unlawfully on private property, why should they be prohibited from engaging in any form of commerce anywhere?  There is no good reason, which is probably why it is written into our Draconian laws. 

The state’s lust for control and coercion never leads to good, and South Africa’s courageous micro-entrepreneurs are feeling the brunt of such idiocy. 

Folks, South Africa is often referred to as a free country, but if we can’t freely engage in such a basic human function as buying and selling, then are we free at all?