Clem Sunter

Define economic freedom

2011-09-07 13:45

Clem Sunter

In philosophy, two kinds of freedom exist: freedom from and freedom to. It is quite easy to understand what political freedom means in these two senses: freedom from tyranny and freedom to exercise your vote as you wish for the political party or individual of your choice.

Economic freedom can be easily defined too in the first meaning of freedom. It is freedom from economic misery by breaking the shackles of poverty. For this reason, the welfare state has been around for more than a century in virtually all advanced economies - and is growing in more and more developing economies - in order to minimise the economic misery of those who for whatever cause have fallen by the wayside in today’s competitive economic environment.

Of course, the problem for many countries now including the US is that the magnitude of the welfare state has overwhelmed the ability of governments to raise tax revenue. It has therefore precipitated unacceptable national debt to GDP ratios. In South Africa we have 15 million people on welfare compared to 5.5 million taxpayers, which is clearly unsustainable.

It is to the other kind of economic freedom that governments everywhere are increasingly turning their attention, particularly in these global hard times. This kind of freedom – the freedom to pursue a career, earn a wage, start a business, pursue a life that is satisfying for both you and your family – is based on the competencies of the individual. Those competencies can only be acquired by a decent education system and a supportive family background. Equally important is a strong work ethic; thrift in the sense of not squandering everything you earn and getting yourself heavily in debt; and getting along with people generally so that you can be an effective member of the team or, as an entrepreneur, convince customers to buy your product.

This second kind of freedom is the one that South Africa should be pursuing at a full tilt because it is the one that will improve national self-esteem more than anything else. To a certain extent, moreover, a focus on the first kind of economic freedom can undermine the second type of economic freedom on account of instilling an entitlement culture.

The education system here is no longer about money but management. It has been clearly shown that if black pupils are fortunate enough to go to the best schools and universities in South Africa, they can compete with anybody anywhere and have economic freedom in the most powerful sense of the word.

Thus, all the revolutionaries clamouring for economic freedom must concentrate on one of its most important aspects: a clearly accountable schooling system where principals are solely chosen on merit and bad performance has consequences for the teachers involved. The key to the positive economic freedom I have described rests on quality of education. Singapore which is now No3 in the Premier League (behind the US and Hong King) has realised that. We should too.

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