Business Day – May 17 2016

The problems with “Rhodes Must Fall” are land-based.

 

SO-CALLED stolen land, withheld tips and typical white tears can instantly provoke a social media frenzy. Unfortunately, the controversy ignited by Rhodes Must Fall activist Ntokoza Qwabe is unlikely to lead to sensible engagement on the land question, or how South Africans can extract greater benefit from our nation’s 122-million hectares.

Land is an emotive issue, but it shouldn’t be a mindless one. Some sound minds made a promising start when they framed our constitution. Its preamble says the land of SA “belongs to all who live in it, united in our diversity”.

The highest law in the land repudiates the apartheid government’s attempt to allocate to whites all the land outside the former homelands and the land in the latter to blacks. So the land has already been returned.

So far so good. Now to engage with some practical difficulties. How do we distribute ownership of 122- million hectares among our 56-million people? Simple division won’t work. One person’s 2.2ha in the middle of Sandton (Africa’s richest square mile) would be worth a million times more than another person’s 2.2ha of drought-ravaged scrub in the Northern Cape.

Only 15% of SA’s land is arable. Therefore, land values vary considerably, with or without the disparities created by urbanisation and industrialisation. This means “fair shares” could be pretty unfair. So, for now

let’s forget fairness and go for outright expropriation — as sometimes advocated by politicians in search of headlines or votes.

Grabbing the land of our 36,000 commercial farmers without compensation would disengage them from the production of our food. New owners may or may not engage in such productive activities. The probable consequences would be the collapse of South African food production, capital flight from a country that flouts property rights, economic crisis, industrial breakdown, hunger, social dislocation and perhaps armed conflict. This moves us on to entirely new ground, not too dissimilar to the landscape you find in Syria.

Are there less divisive alternatives — ways of deriving value from the land that might benefit all citizens? There is at least one way of taking leave of the status quo without taking leave of our senses. It’s called land rent, an idea that’s been around for hundreds of years. The classical economists of the 18th and 19th centuries understood that you cannot produce wealth, goods and services without work, land and capital.

Currently, the state penalises those who work hard by taxing them. The more they work, they more they earn and the more tax they pay. Land rent (a single land tax that replaces most other taxes) works the other way. The taxpayer is incentivised to make productive use of the ground. The more the land produces, the bigger the net gain after rent on the land has been paid.

There is no physical dispossession, no removal of title and no interference in the selling, leasing and use of the land. Rental levels would be set by market forces and determined largely by locational advantages or disadvantages.

Owners of land rich in big city office developments would pay more. Owners of rural grazing areas would pay so little they would have the opportunity to amass capital and launch new enterprises, perhaps reinvigorating communities blighted by generations of poverty.

Rental is not an imposition. It is justifiable. All land value is due to the community (or state). Owners could not enjoy the natural and man-made advantages of their land without security of tenure bestowed by the community. The state, by collecting this value instead of levying taxes, would be collecting something it helped to create rather than robbing workers and businesses of the fruits of their endeavour.

Our constitution also states that “the state must take reasonable legislative and other measures … to foster conditions which enable citizens to gain access to land on an equitable basis”. Land rent qualifies as a reasonable measure. Land would immediately become more freely available (ie accessible) as inefficient owners or speculating land hoarders would be inclined to sell.

All landowners, including government, would use land more efficiently to ensure they more than recouped the rent they were paying. Rental streams into government coffers would finance new infrastructure, enabling increased economic activity while enhancing rental potential. Government would have a financial incentive to improve service delivery. Better services in fully functioning communities with good schools, clinics and hospitals would increase the desirability of surrounding land — pushing up the rental stream.

Land would become a rental engine and we would happily pay. After all, the rent would be the price we paid for peace and prosperity; for jobs and economic growth. No more tears, and perhaps restaurant-goers could afford to give better tips. The starting point is sensible engagement, something we’ve yet to see.

Meintjes is co-author with the late Michael Jacques of Our Land, Our Rent, Our Jobs

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