Many South Africans were pleased a short while ago when it was revealed that our own Pretoria boy, Elon Musk, has overtaken American Jeff Bezos as the world's richest person. Less well-known, however, was that a short while later, Musk again fell below Bezos. Musk is now worth "only" $176.2 billion (~R2.7 trillion), compared to Bezos’ $182.1 billion (~R2.8 trillion). There exists a gulf of inequality between these two individuals: around $5.9 billion (~R90 billion)! Where is the outrage?
All politically conscious South Africans must by now be aware of the so-called "triple challenges of poverty, inequality, and unemployment" talking point often regurgitated by politicians. The fact that "poverty" and "inequality" are separated here doesn't register to most people as it has become common to regard poverty, destitution, and inequality as meaning the same thing. But they self-evidently do not.
Inequality is what exists between Elon Musk and Jeff Bezos. Astronomical inequality! But no sane person will describe either of these billionaires as poor or destitute.
Poverty is what exists in a South African shanty town. Often extreme poverty. But no sane person will look at any two people in that shanty town and describe them as being in a relationship of inequality. Which of these two situations is problematic? Surely, only the second, where inequality does not feature as a consideration.
The inequality between Musk and Bezos is not a problem because it has no bearing on the ability of either to provide for themselves and their families. The inequality between Musk and someone in a South African shanty town also should not be a problem because this, too, has no bearing on the ability of either -- specifically the pauper in the shanty town -- to provide for themselves and their families.
This is the nature of inequality. It measures nothing but difference, and difference, even when extreme, is not a problem. What should be the subject of our concern is the poverty or destitution -- whether someone can or cannot take care of their own needs and those of their family. Whether someone else has more than they do should not be part of that inquiry.
People say South Africa is one of the most unequal countries in the world as if that is the problem. South Africa's problem is rising unemployment and destitution, not the fact that while some South Africans cannot provide for themselves and their families, others can.
But why am I making such a big deal about this? Surely, if inequality is only of academic value, we should not be concerned about the narratives surrounding it.
The so-called "solutions" to "solve" inequality are part of the reason why South Africa's economy has been caught in an almost permanent slump for the last decade or more. The solutions for inequality and the solutions for poverty are not the same. In fact, the solutions for inequality often worsen destitution.
The most common "solution" put forward to solve inequality is redistribution. Resources are (ostensibly) taken from the haves and redistributed to the have-nots. Whether this takes the form of a so-called "progressive" income tax or ill-fated plans for seizing private property without compensation and dishing it out, redistribution is all about taking what already exists from someone and handing it to someone else.
The solution to poverty and destitution is liberalisation and growth. This empowers the poor to become active participants in the economy to generate wealth for themselves. It could take the form of reducing regulations that disincentivise paupers from starting new businesses. It could also take the form of establishing strong protections for private property, after all, nobody would invest in and expand their business if it could be taken from them by either the State or criminals at any moment.
Redistribution is bad for the poor. It inhibits the creation of new wealth in the economy because it is obsessed with ensuring "equitable" formulas of resource distribution are adhered to insofar as existing wealth is concerned. Dennis Davis wants lifestyle audits to be conducted on the wealthy, something that will certainly help keep new investors and high net worth immigrants away from our shores. Elon Musk certainly won't be moving back to Pretoria any time soon if he sees the South African government incessantly meddling in the affairs of successful people. That means we -- particularly the poor -- lose out on incredible opportunities for job creation and community upliftment.
If we want to solve the challenges of poverty and unemployment, we need to unshackle the economy and let loose the creative and innovative power of tens of millions of South Africans eager and ready to create wealth. If, instead, we want to continue to satisfy university professors and ‘activists’ at certain NGOs and focus on the purely academic phenomenon of inequality, South Africa is going to continue to suffer.