The perilous state of South Africa’s economy makes it morally reprehensible that scarce government resources are time and again given to failing SOEs.
By Chris Hattingh, a project manager at the Free Market Foundation
There needs to be a serious discussion around the allocation of taxpayer-provided resources. Just last week, news broke that the SABC would receive a R2-billion bailout. To give a bailout to the SABC when government talks about the vital importance of welfare and the need for the state to help poorer people in society, betrays a misunderstanding of economics and reason itself.
Instead of spending its ever-shrinking resources on sorely needed welfare for poorer people, the government helps an entity that has repeatedly proven its unsustainability. The only moral way to ‘help’ the SABC is to treat it like any other company – let it stand or fall on its own feet.
Many large companies like Discovery and MultiChoice locally, and Apple and Google internationally, are often accused of engaging in ‘unfair competition’ or monopolistic behaviour. We must ask whether those companies grew to their current strength by providing consumers with sought-after goods and services (a moral endeavour) or whether they engaged in force or fraud (an immoral endeavour).
But instead of asking this question, all bigger companies are painted with the same brush. As a result, the state continuously tries to bring them down. The state’s attempts to cut big companies down to size is couched in the language of ‘fairness’ and ‘consumer interest’, but nothing could be further from the truth. It must be up to each consumer to decide for herself which product she wants to buy, from whom and under what conditions. It is neither fair nor moral to dictate to consumers which products they may buy.
Let us look at the example of TV broadcasting in South Africa. Many companies are vying for our hard-earned rands. From MultiChoice (DStv) to Netflix, to Amazon Prime and the SABC, all are trying to convince us to buy what they’re selling, and the market is open for competition from all sides.
Except, is it truly?
Notice the odd one out; the SABC. The SABC already has an unfair advantage over any current or new competition because it receives these bailouts. If it underperforms (a kind descriptor given SABC’s track record) it needn’t worry – the government will be there to help it out. Whereas a private company needs to perform, keep its costs in check, and make a profit, state-owned companies such as the SABC are not held to the same demanding standards.
This state of artificial ‘competition’, in which a state-owned company receives financial assistance, is made all the more deplorable by ICASA’s proposal to force sporting bodies to make “sporting events of national interest” available to the SABC before private market players may bid.
Sports bodies will also be barred entirely from selling such broadcasting rights – their own private property – to companies on an exclusive basis. Instead of allowing true competition, where any company can freely bid for the sports rights (as is currently the case), ICASA is trying to stack the deck even more against the private sector.
If a company gains superior market share by offering a better product or service than its competitors, this is not a monopoly. The concept of a monopoly implies that a company is using force or fraud to undermine any and all competition. Indeed, this is exactly what the state is trying to do for the SABC – to stack the deck so high against private companies that they’ll be forced out of existence.
Sports bodies will suffer because they can no longer make a profit from selling exclusive broadcasting rights. Tens of millions of rands will be lost to these bodies as private broadcasters – who will not purchase rights that are not exclusive – focus their attention on other areas of entertainment.
This means sporting bodies will no longer be able to invest in the development of their sports, particularly in poorer communities, and they will no longer be able to offer competitive salaries to sportspersons, who will look abroad. There goes the transformation in sport which so many in government apparently desire. And consumers will suffer the most, as they always do when the state professes to do something in their ‘interest’.
It appears as though regulatory bodies in South Africa have adopted an antagonistic attitude towards enterprise and private business. Instead of making the rules as transparent as possible, and applying them equally to all companies, regulators trend in the direction of undue interference in business affairs.
When this climate causes more businesses to leave South Africa, we must not be surprised when people lose jobs, and join the more than 10 million unemployed. Operating a business in South Africa should be as straightforward and easy as possible from a compliance perspective. But that is most assuredly not currently the case