Bill Gates Supports the EFF's Policies

2014-12-12 11:51

The way Bill Gates has transformed himself from a monopolist at Microsoft to chairing the Bill and Melinda Gates Foundation in the past ten years has been remarkable. His insights are not just that of a technology executive who will tell us about how the latest code can change the world, but he is equipped with knowledge as a philanthropist. I read his latest blog on LinkedIn which you can find here: https://www.linkedin.com/pulse/can-asian-miracle-happen-africa-bill-gates?trk=nus-cha-roll-art-title, and from it are some anecdotes that could give more credibility for the crowd calling for more government control of financial institutions and land reform (read: Economic Freedom Fighters). However, will that work?

In his review of the book How Asia Works, by Joe Studwell, Bill points out a couple of things that the EFF and co can add to their arsenal. Why have some Asian countries developed faster and more sustainably than others can be roughly explained by those winning countries (1) creating conditions for small farmers to thrive, (2) utilizing agricultural proceeds to create a manufacturing base whose main aim is to export to other counties, and (3) nurture the agricultural and manufacturing industries with the support of financial institutions controlled by the government. On the first point, the South African government enacted laws to encourage land redistribution to non-Whites (post 1994). However under the Mbeki and Zuma administrations, the success of those laws has been non-existent. For South Africa, the biggest culprit for that failure has been the legacy of the past government, i.e. formal, large-scale agricultural concerns that have long existed. Because of this, small farmers had (and still have not) the economies of scale to compete...without the help of the government. Essentially, Gates and Studwell's answer (in a South African context) would require us to go back to before the Union government enacted their development policies and all together start from afresh.

...most poor countries have feudal land policies that favour wealthy landowners, with masses of poor farmers working for them. - Bill Gates.

On the second point, the idea that agriculture can have so much a critical mass that it could support the development of a manufacturing base sounds far-fetched to me, in South Africa anyway. The farm labourers wouldn't be in qualifying income tax brackets. The only feasible way to tax them would be through consumption. Also a high tax on consumption of domestic produce and protein would likely discourage us from buying those made in SA goods and we'd buy food from elsewhere like we currently do. Thus, little money would find its way to subsidize the capital-intensive manufacturing sectors.

Of state financial institutions that support both these, well we have the Land Bank and IDC, both legacies of the past government which have become less powerful as forces of development than they once where or still can.

My brief arguments dispel Gates and Studwell's solutions for South Africa simply because of our hybrid economy. Unless we can separate the two economies and have different macroeconomic policies for the fledgling industries and developed industries that in the end support each other, their ideas in South Africa would just be unworkable. Those same ideas are those purported by the EFF and co if I am not mistaken.

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