‘Diverse People Unite’ is the motto on the South African coat of arms. Diversity is a great thing, we believe, because it exposes us to new peoples, new experiences and new ideas. But what if diversity also results in lower productivity? This is the uncomfortable result of a forthcoming paper in the Quarterly Journal of Economics, one of the foremost journals in the field. The paper, written by Jonas Hjort of Columbia Business School, provides evidence that suggests that ethnically diverse teams are less productive than ethnically homogeneous teams. Hjort writes:
A body of literature suggests that ethnic heterogeneity limits economic growth. This paper provides microeconometric evidence on the direct effect of ethnic divisions on productivity. In team production at a plant in Kenya, an upstream worker supplies and distributes flowers to two downstream workers who assemble them into bunches. The plant uses an essentially random rotation process to assign workers to positions, leading to three types of teams: (a) ethnically homogeneous teams, and teams in which (b) one, or (c) both downstream workers belong to a tribe in rivalry with the upstream worker’s tribe. I find strong evidence that upstream workers undersupply non-coethnic downstream workers (vertical discrimination) and shift flowers from non-coethnic to coethnic downstream workers (horizontal discrimination), at the cost of lower own pay and total output. A period of ethnic conflict following Kenya’s 2007 election led to a sharp increase in discrimination. In response, the plant began paying the two downstream workers for their combined output (team pay). This led to a modest output reduction in (a) and (c) teams – as predicted by standard incentive models – but an increase in output in (b) teams, and overall. Workers’ behavior before conflict, during conflict, and under team pay is predicted by a model of taste-based discrimination. My findings suggest that inter-ethnic rivalries lower allocative efficiency in the private sector, that the economic costs of ethnic diversity vary with the political environment, and that in high-cost environments firms are forced to adopt “second best” policies to limit discrimination distortions.
Pushed to the extreme, these findings suggest that, if South Africa’s businesses want to become more productive, then they should forget about the ‘Rainbow Nation’ and only employ people of the same ethnicity, i.e. Xhosas or Sothos or Afrikaners or Zulus. Businesses that opt for diverse teams will grow slower than businesses which employ only people from one ethnic group; in a profit-maximising, Darwinian world, the ethnically homogenous businesses will eventually win against the diverse but unproductive ones. Where businesses already employ different ethnicities, Hjort’s evidence suggests that it would be best to let those of the same ethnicity work together in teams instead of mixing team members across ethnicities. So much for ‘Diverse People Unite’!
Of course, things are not that simple, and it would be silly to conclude from this that diversity is evil. We should remember that most teams in the real world don’t assemble flowers into bunches; teams are often required to provide creative solutions to complex problems where innovative, out-of-the-box thinking is required. It seems reasonable to assume that ethnically diverse teams have a higher probability of dissimilar ideas than ethnically homogenous ones. In economics jargon, perhaps ethnically diverse teams are more prone to economies-of-scope rather than economies-of-scale. And a logical conclusion from Hjort’s work is that, were ethnic rivalries to disappear, the negative impact of diversity on productivity would all but disappear too.
But such results force us to stop and think about the untested assumptions we make. And it raises difficult questions too: even if our own labour and development economists find that diversity hurts our productivity, is there not a moral argument in favour of maintaining ethnically diverse teams? Given our history of forced racial segregation, how do we weight the ethics against the efficiency arguments? My expectation would be that some of the counter-productivity effects that Hjort finds will be mitigated over time by working with people from a different ethnic group, and that this in any event is the only way of addressing the issue at its core. As economists, we should understand the value in delaying instant productivity gains for even greater long-term benefits.
Amanda Gouws responded in today’s Cape Times to my blog post of August 29, which later appeared in the Cape Times under the regrettably misleading heading “Gender parity is not the ideal”. Prof. Gouws is right on many fronts: I have not read the literature on formal versus substantive gender equality, and know little about the different definitions of gender justice. I also had not read the open letter published by the Women’s Forum and, in truth, did not even know that a Stellenbosch University Women’s Forum existed or that it was them who had published the poster in the lift.
Instead, I arrived at work one morning, got into the lift and, as one does, scanned through the wall posters. One of them, the infographic on gender inequality, was fascinating. I got out of the lift and later that week, I wrote a post on this blog about my thoughts on the difference between a strict 50% gender quota and gender equality, which I defined as the opportunity to be promoted and to earn the same regardless of your gender. I said that where discrimination still persists, it is wrong. I said that I suspect we are moving in the right direction; that if you had to draw a similar infographic a decade ago, it would look remarkably different. And I made suggestions that could speed up the process by, for example, making parental leave for men compulsory and equal to that of women.
Somehow, though, prof. Gouws has missed that I agree with her on nearly every point she raises in her response today. Instead, she chooses to build her own straw man, one that vaguely sounds like he might have said the things she protests against, and shoots him down. She misquotes me several times. To give one example, she writes: “Fourie thinks it is ‘normal’ to have fewer women professors”. I don’t think that and didn’t say that. Control-F my blog post or the Cape Times piece and see if you can find the word ‘normal’ in it, which she attributes to me by placing it in direct quotes. I also did not say “in time it will change”, although, according to prof. Gouws’s own statistics, it has. She notes that in her twelve years in the Senate, the number of female professors has increased from 6 to 60, an annual growth rate of 21%. If the trend continues, we could see gender parity at senate level within the next decade, not 40 years as prof. Gouws suggests. Now that is worth celebrating, right? Wrong, according to prof. Gouws. It is simply my “sexism hiding behind arguments about numbers”.
A week or so after I wrote the original post, I was contacted by Stellenbosch University’s marketing office to know whether they could send the piece to the media. My blog is public, so I don’t mind if the posts are reposted elsewhere, and so I agreed. A month later, September 30, the piece was published in the Cape Times under the title “Gender parity is not the ideal”. I would have chosen a different title, but newspapers need an audience, and catchy titles like that sell. So I understand why they did it. But I certainly did not find it “necessary to take the issue into the media without consulting the Women’s Forum”, as prof. Gouws claims.
The Women’s Forum, according to prof. Gouws, “wanted to start a debate about gender equality at Stellenbosch University. This was an opportunity for our male colleagues to show solidarity with women.” I would suggest prof. Gouws got exactly what she wanted.
Seeing that, according to the Cape Times, I don’t believe in gender parity, I might as well go the full distance and call for gender apartheid. Yes, I want separate neighbourhoods for boys and girls, separate beaches and benches, separate entrances to public buildings. Heck, I might even demand separate homelands for men and women. And to be honest, this will be much easier than implementing racial apartheid because we already have separate schools, separate sports teams and separate toilets.
You might think that I do this because I believe that one gender is somehow inferior to the other, but in fact I’m basing my big plan for gender apartheid on science which says that separate gender development is better for both sexes. According to a paper published in the American Economic Journal: Applied Economics, boys and girls do better at school if they interact less with the opposite sex. Here is the blurb for Andrew Hill’s paper The Girl Next Door: The Effect of Opposite Gender Friends on High School Achievement:
This paper finds that a student’s share of opposite gender school friends negatively effects high school GPA (grades). It uses the gender composition of schoolmates in an individual’s neighbourhood as an instrument for the gender composition of an individual’s self-reported friendship network. The effect occurs across all subjects for individuals older than sixteen, but only in mathematics and science for younger students. Additional results indicate effects may operate inside the classroom through difficulties getting along with the teacher and paying attention, and outside the classroom through romantic relationships.
Hill’s paper comes at a time when there is some debate about whether single-sex schools or mixed-gender schools are best. His results show unequivocally that single-sex classrooms are better for kids because they get along easier with the teacher and are not distracted by opposite-gender friends. I would think that a romantic relationship might prove to be a valuable confidence booster, with a positive impact on grades. But alas, it seems like the opposite sex is bad news. One might also think that causality works in the opposite direction: that poor-performing kids tend to select into relationships with the opposite sex. Let me rephrase that: nerds have their books and jocks have their girls. But Hill’s clever use of an econometric technique called instrumental variables avoids this possible causal problem: kids that live in neighbourhoods with lots of kids from the other gender tend to do worse in exams than kids who live in neighbourhoods where the other kids happened to be of the same gender. Causality runs therefore clearly from interaction with other kids to worse grades.
But somehow I am slightly uncomfortable with the policy implications of these results. Maybe it’s because I attended a mixed-gender school and simply don’t want to believe that these schools are necessarily worse than single-sex schools. (My mother and my wife attended a single-sex school, though, so I can’t be too critical.) But maybe it’s also because I believe that schools impart more than just our ability to do math and learn history. Maybe the social interactions in school are really important to teach values such as fairness, equality and diversity. Of course, many single-sex schools organise student interactions outside the classroom to accommodate this vital part of social learning. But taking Hill’s findings literally, one would want to avoid even these social interactions.
The results also imply that with relatively little additional costs, the grades of high school students across the country can be improved by just making all schools same-sex schools. A sort-of Grand Gender Apartheid policy for schools. But I wonder what we’ll lose in the process. If my own high school experience is anything to go by, I would think a lot. School is a multidimensional experience and shouldn’t be reduced to only one criterium – grades. Gender apartheid, much like other forms of apartheid, is a bad idea.
This week I spent a lot of time appreciating the work of two Spanish geniuses of the twentieth century: Antoni Gaudí and Salvador Dalí. Gaudí, an architect whose work is mostly concentrated in and around Barcelona, is probably most famous for his design and early supervision of the Sagrada Familia, a monumental cathedral still under construction in the heart of the city. And even though it’s become polluted by tourists, it is still a breathtaking experience to walk into what will probably be one of the most iconic buildings in the world when construction finishes in 2026, a century after Gaudí died tragically in a tram accident.
To the north of Barcelona is the town of Figueres which is most famous for the Salvador Dalí museum. While it is true that Dalí was a brilliant marketer of his own work, sporting a curly moustache and often acting bizarrely, he was an artistic genius whose surrealist paintings have remained incisive into the present. I was struck by his Review of Poetry of America which portrayed, at least to my mind, the legacies of slavery and colonialism (pictured). What struck me too when visiting Dalí’s museum was his incredible productivity and the scope of his art: he not only painted, but created film sets, jewelry, sculpted, wrote and designed and built several homes including his own.
Experiencing the legacies of Gaudí and Dalí made me wonder about genius. Why is it that some men and women can create something intellectually or artistically breathtaking that can inspire for generations? Ability matters, of course, but that certainly ain’t all of it: there were and are many more intelligent people than Gaudí, but I don’t see them building the world’s greatest cathedral. So if we’re not born with genius, how do we achieve it? Or, to paraphrase Shakespeare, is genius simply thrust upon us?
It turns out that your age matters. Gaudí began designing the world’s greatest cathedral at the ripe age of 31. (Which makes you wonder about the things you’ve done at 31…) A recent NBER Working Paper investigates the relationship between age and scientific brilliance: it finds that the average age at which conceptual economists did their best work (and which later won them the Nobel Prize) was 32, while for empirical economists this is much later at 51. In the natural sciences, as the image shows, Nobel Prizes are awarded in general for path-breaking work during one’s early career.
But, as Helanya observed while we exited the Sagrada Familia, there was another driver of Gaudí and Dalí’s achievements: it was that their passion became their life. Gaudí is the classic example: he dedicated his life to his work. He worked constantly, had few friends and no family life (he never married). When he was hit by a tram, no one recognised him and because of his shabby clothing, he was transported to a hospitable for the poor where he died the following day.
While there are obviously many environmental factors that influence genius, the golden rule, it seems, is complete dedication to one thing. That is a trade-off most of us are not prepared to make.
I was fortunate to attend a workshop on African history in Leiden this week. The workshop, organised to coincide with Robert Ross’ valedictory lecture tonight, brought together his students and colleagues from all over the world: Austin (Texas), Livingstone, London, Melbourne and seemingly everywhere in-between. It was a testament to the immense impact Robert Ross, who has been at Leiden’s Center for African Studies for nearly 40 years, has had on the field. Although I know him as one of the most prominent historians of South Africa, the papers presented over the last two days reflected his wide-reaching interests: from the puzzle of the slave trade in Saudi Arabia, the lives of African interpreters in the Congo, the rise and fall of a pineapple canning factory in Zambia, to the conservation efforts of a mid-twentieth century chief in Northern Malawi.
To me, though, Robert Ross is South Africa’s foremost historian of the colonial period. His books have made telling contributions to our understanding of slavery (Cape of Torments: Slavery and Resistance in South Africa), race relations (Beyond the Pale: Essays on the History of Colonial South Africa), and, probably his most well-known, class and status (Status and respectability at the Cape of Good Hope: A Tragedy of Manners). He was senior editor of the Cambridge History of South Africa Volume 1 to appear in 2010, and has just published a book on a group of fascinating South Africans: Khoe farmers in the nineteenth century Kat River Valley of the Eastern Cape.
One of Ross’ most important contributions, I argued in my talk yesterday, is a manuscript he published with his student, Pieter van Duin, in 1987. The Economy of the Cape Colony in the 18th Century used statistics from the vast VOC records in Cape Town to show that the Cape economy was more dynamic than earlier historians had assumed. Here is the introduction to my paper, available online, that explains this important contribution:
For much of twentieth century scholarship, the capitalist, industrialising South African economy began with the 1860s discovery of diamonds in the interior. The Cape Colony of the eighteenth and early nineteenth centuries was, to quote some prominent authors, a ‘social and economic backwater’, ‘more of a static than a progressing community’, a slave-based subsistence economy that ‘advanced with almost extreme slowness’. The traditional view was that although pockets of wealth emerged close to Cape Town during the eighteenth century, this relative affluence was overshadowed by the increasing poverty of the frontier farmers who, ‘living for the most part in isolated homesteads, gained a scanty subsistence by the pastoral industry and hunting’.
In the 1980s Robert Ross, economic and social historian of the Cape, subverted this view by extolling the virtue of numbers. He was the first to recognise the value of the mass of Cape production statistics assiduously collected by the Dutch East India Company. Ross argued that the belief that early Cape farmers ‘overproduced’ during the first half of the eighteenth century – that the market was too small to absorb the rising production of wheat, wine and meat – was ‘not only empirically false, but also conceptually absurd’. He showed that consumption was rising too, driven not only by the demand from ships sailing between Europe and the East, but also by an expanding domestic market of Company officials and settler farmers.
Ross’s seminal arguments of the 1980s, and his hard work digitising the production records of the Colony, breathed new life into a neglected area of South African history. Yet more than two decades later his cliometric contribution often goes unnoticed. In this paper I summarise a new body of work that uses econometric techniques and largely confirms Ross’s arguments. In the introduction to her recent history of mining in South Africa, Jade Davenport suggests that before mining began in the latter half of the nineteenth century, ‘South Africa was a sleepy colonial backwater whose unpromising landscape was seemingly devoid of any economic potential’. Robert Ross and his students would not agree.
Because Ross’s earlier work was central to my PhD research, I visited him several times in Leiden while writing my dissertation. During one of these visits, knowing my interest in historical data, he showed me a census of missionary stations that had been collected in 1849. As he browsed through the data, I realised that this was a wonderful source to test the then fashionable technique of age-heaping, a way to estimate numeracy by exploiting the statistical properties of a society’s age profile. We agreed to investigate this further, hoping that it might say something about the different strategies missionary societies used in their ‘civilizing’ efforts. And it did. Together with Russel Viljoen who collected the original data from the archives, we co-authored a paper on literacy at the Cape’s mission stations. I wrote about the paper in this 2012 blog post, and it has just appeared in the Journal of Southern African Studies.
Scholars such as Robert Ross leave a legacy much deeper than they might ever know. Often working on their own in archives or in one-on-one conversations with students, their legacies may not be as easily quantifiable as those of an entrepreneur or engineer. They often battle the publish-or-perish incentive system of universities focused on immediate outputs. And they often struggle with funding in disciplines that are not considered to have much economic value.
Yet their ideas have shaped – and continue to do so – how we understand ourselves. Their words and books uncover the unknown, hidden or forgotten; much like the European discoverers of the Middle Ages, they sail on fledgling ships to report of great riches and great knowledge. We sit at their feet. They are the interpreters from a distant land called The Past; they allow us to not only learn about it, but to learn from it. They inspire us to travel too, to take the leap. And so we find ourselves in dusty archives one fine Saturday morning. In search.
Tomorrow the Springboks, South Africa’s national rugby team, play New Zealand, their most formidable rivals in arguably the toughest rugby match of the year. Last year I watched the game in a tiny South African underground pub close to the Panthéon in Paris. It was awesome except, of course, for the result, which was largely due to a silly decision by the referee to send off Bismarck du Plessis for a fair tackle on Dan Carter. This year promises to be even more entertaining: South Africa has selected a young flyhalf after losing to Australia the previous week in a game again affected by the heavy hand of the referee. (It must be said, though, that no one deserved to win that game. It was an awful game of rugby.)
But instead of chatter about flyhalfs, forwards, referee decisions or Jeanne de Villiers’ centennial test match, the largest game of the year has been overshadowed by the plans of the South Africa Rugby Union, published last Sunday in Afrikaans newspaper Rapport, to have at least a 50% quota of black players in the 2019 Springbok team. To achieve this, the Springbok coach will be ‘requested’ to ensure that at least 7 of the 23 players in his squad to go to the World Cup in England next year are not white, of which 5 have to play and 2 have to be African black. Similar quotas have also been put in place for the South African sevens team, the /19 team, provincial coaches, and referees.
Quotas are not new to the South African landscape; they have been touted as possible interventions to address what I think most South Africans can agree with: that there is too little representation of black South Africans in the national rugby team. Against Australia last week, only one black player, Tendai (The Beast) Mtawarira, was in the starting fifteen. He was replaced late in the second half by Trevor Nyakane, the only other black player in the squad. Bryan Habana, who happened to play in his 100th game for the Springboks, and Cornal Hendricks were the only two other non-white players in the starting team.
Because few would question the goal of greater representation, the question really is whether a quota is the right way to achieve it and, if not, what the alternatives are. Max du Preez and Gareth van Onselen took opposing views on this. (Do yourself a favour and don’t read the comments to the Du Preez piece.) Du Preez says yes, quotas are necessary. Van Onselen says no it’s not. Both raise valid points: Du Preez argues that more than 20 years after South Africa became a democracy, quotas are necessary to ensure that coaches give black players a chance: “When two players in the same position have more or less the same talent and ability, you obviously pick the black one to restore the balance and build a new rugby culture.” Van Onselen disagrees that quotas are the way to do this: “As for coaches who sideline or discount deserving black talent, they should be fired”. He doesn’t really propose any alternative to more rapid transformation.
Both commentators however miss what I believe is the most important factor: the majority of black players are not in schools where they get the necessary coaching that makes a successful Springbok. Rugby has changed. It is no longer a sport where you can simply pick up a ball and run your proverbial way into the provincial and national teams.* The top schools are elite academies where they coach their best players with nutrition, fitness, and technical advice that one needs to succeed. They have good equipment, good infrastructure and offer their players constant exposure to other top talent, allowing them to improve faster.
There is really only a small number of schools that have these facilities, and they tend to dominate provincial and national teams. To prove this point, consider this list of all players that has ever represented South Africa. All 793 players came from only 295 schools high schools, less than 5% of the total number of high schools in South Africa today (6591). Of these 295 schools, a third of all players to every play for the Springboks come from only ten schools. (If you wanted to be fancy you could calculate a Gini coefficient, a measure of inequality in society. South Africa’s rugby Gini is 0.52. This is of schools that at least produced one Springbok. If I were to include all schools, the Gini would be above 0.91, much higher than a measure of income inequality.) Or if you don’t believe that the older statistics matter, just consider the Springbok team to play the All Blacks tomorrow: 8 of the 15 players in the starting fifteen went to one of the top ten schools on the all-time list.
That means that if we are to ensure that more black players play for South Africa, it is not enough to simply say that coaching facilities at poor schools should improve. Even if these facilities improve, the kids won’t have access to all the other elite skills that they nowadays need to be a professional rugby player: gym sessions, nutritional advice, specialised coaching and frequent competition. Even a white kid with potential would have a far bigger chance of becoming a Springbok if he attends one of the top ten schools, than if he was to attend a school that had never produced a Springbok.
Different to the kind of comments you might read on news sites, it is not that the talent is not available. If South Africa had to pick seven black players tomorrow, we could. Among the forwards, Siya Kolisi has recently shown some the form that first made him a crowd favourite while Cheetah flanker Teboho Mohoje is already in the Springbok squad. Nazeem Carr and Lubabalo Mtyanda have been stand-out performers for Western Province and the Pumas respectively. At the back, Lwazi Mvovo still impresses with his speed, although he has perhaps met his match with Western Province and Sevens star Seabelo Senatla. And it’s difficult not to get excited about Juan de Jongh’s and especially Cheslin Kolbe‘s mazy runs. Yet it should be noted that all of these (black) players attended former Model-C schools, with five of those schools ranked in the top 50 on the above list (and 2 in the top 10). Which proves my point that it is really only the top rugby schools where talent can be nurtured well enough to reach the level required to play for the Springboks.
Because quotas, unfortunately, do not work. Economists know that they can create perverse incentives: It is not only demoralising for a player to know he’s preferred to someone else based on something else besides his skill-level, but quotas will cause wages of good black players to rise sharply in contrast to white players (especially those white players that compete in the same positions with black players). That could lead to interesting team dynamics. Expect less player rotation and more player burn-out as the best black players will be ‘forced’ by their unions to play as many games as possible. Also, expect to see more players from other African countries – or even African American players – because the quotas seem to be about race, not nationality. (WP has already acquired the services of a very skilled Kenyan.) It is not entirely coincidental that when Zimbabwean-born Beast Mtawarira showed the potential he did, there was a hasty process to grant him South African citizenship.
In a utopian world, SARU would roll out clinics and infrastructure and coaches to all of South Africa’s poorest schools and do what everyone loves to call “grassroots development”. That is nice, but it won’t get more black players in the national team. The only way to do that is to grant large numbers of bursaries to black children that shows ability to attend the elite rugby schools around South Africa. Let me put this more practically: The only way to ensure a 50% black Springbok team (with no quotas) in a decade is if SARU identify the top 1000 u/13, u/14 and u/15 black players and ensure that they all receive full bursaries to attend one of the top 20 schools in the country. And the best is: it won’t be that difficult to implement. Give support at higher levels too. Many black players do well at group-age level, but struggle to make the transition to professional player. That is because black students often face high financial demands from family or don’t have the financial support structures that more affluent white kids have. SARU can support provincial rugby academies to provide a holistic approach to player development. And why not start a South African B-team, with a 90% black selection criteria, to play frequently against high-quality opposition? There would be an audience for that, too, I promise.
None of this is perfectly fair to everyone. There will still be many black kids that are excluded, the same as there are many white kids who are not exposed to soccer. But providing bursaries to kids with potential is a far more equitable (and realistic) approach than a quota system that will at best create unnecessary tensions and at worst fall flat (and cause much collateral damage) as such attempts have done in the past. Not only will bursaries broaden the pool of potential Springboks, but it will do so in a way that avoids the artificiality of affirmative action in the national team.
*There are exceptions, of course, like this guy.
Minister of Rural Development and Land Reform Gugile Nkwinti kicked off the Land Tenure Summit yesterday by making several statements about land reform that has left me perplexed. Reported here, the minister said that “privately-owned land is a serious problem”, that “we want to correct a particular South African historical problem”, that “it cannot be that the worker will work forever and at the end of their time on earth, have nothing to show for it. It is not right, it cannot be right” and again promoted the department’s radical plan to give half of each farm to the labourers working on it.
The distribution and productivity of land is the most serious political issue facing South Africa. The alienation of Khoesan lands by European settlers had already started soon after Van Riebeeck arrived in South Africa, but it was really the expropriation of land in the nineteenth century (as British settlers arrived in the Eastern Cape and the Voortrekkers moved into the interior of the country) that has created a legacy of injustice. By 1913 when the Land Act was signed, black South Africans (and those living in neighbouring colonies like Basotholand, Bechuanaland and Southern Rhodesia) had lost large territories of their most fertile land. The Land Act consolidated this expropriation, and even may have prevented further expropriation (see my earlier post on this).
There is no doubt that redress is needed. The question, really, is how to affect this redress. The reason Julius Malema and his Economic Freedom Fighters did so well in the recent elections was because he pushed the land reform agenda to priority number one, and he had a plan. The EFF wants “expropriation of land without compensation for equitable redistribution” and propose a system whereby the “State should, through its legislative capacity transfer all land to the state, which will administer and use land for sustainable-development purposes. This transfer should happen without compensation, and should apply to all South Africans, black and white.” The State will then lease the land for 25 years.
My suspicion is that performance of the EFF in the recent elections has forced the ANC’s hand, and they’ve come up with their own plan for land redistribution. The plan will force commercial farmers to cede 50% of their farms to their workers. This is not the forum to critique these plans in detail, but I can point to others who have done so. Read this, and this. My field of expertise is economic history, not agriculture, and so my only recourse is to look at land expropriation in history. It is not a story to smile about: during the process of collectivisation in the Soviet Union, at least 4 million people died of starvation alone, and the recent land reform in Zimbabwe has resulted in large declines in production, malnourishment and close to 4 million Zimbabweans emigrating to other countries, notably South Africa.
Yet knowing that something has failed in the past – and even knowing that it will fail again – is usually not enough reason for politicians not to attempt it again. In the absence of alternatives, my sense is that black voters will be happy to go along with any plan to redress land, because it will by implication by more fair than the counterfactual, which is to continue the status quo. (This reminds me of why the National Party won the 1948 elections. The ‘racial issue’ had come to dominate the national agenda after the Second World War but the United Party under Jan Smuts had not articulated a clear plan to tackle this issue. Instead, DF Malan proposed a clear plan of separation, of apartheid. Sometimes all you need to win is a plan, even if it is a bad one.)
So what are the alternatives to the Minister’s proposed plan? It depends on your objectives. If the only criterion is to redress past injustice, land expropriation, either fully or, as the Minister suggests, partially, seems like a solution, right? But what are the consequences of such a policy? One can only speculate, but it is likely that commercial farms will see large-scale disinvestment. Farm prices will collapse, forcing other farmers, who have used their land as collateral for loans, to also sell their properties. Movable assets will be sold to provide some capital for a new life in the city. (Other perverse outcomes: expect more golf courses, light industry parks, gated communities and rural retirement villages, and conservation parks and holiday resorts as farmers shift into other industries not affected by the policies.)
Little of this will benefit the new owners. Land is only as useful as the capital investments on it, and without capital (or, at least, new investment in the farm), many of the new owners will find it increasingly difficult to continue the earlier outputs. The state can help, of course, but the state is not a bank who can easily make decisions about which risks to take and which to avoid. (See my earlier post on Tito Mboweni’s plans for a state bank.) Where the new owners are not former workers, an even more serious issue arises: skills and experience. Farming is an increasingly scientific industry. Our agricultural colleges are simply not producing enough graduates nor would they have the experience to take over the immediate operation of large-scale commercial farms producing for the export market. Learning-by-doing is really the only option, which is why this opinion piece by Peter Curle is a useful read. He suggests that the principles of successful BEE transactions could easily be applied to the agricultural sector. This would mean that farmers are able to choose their black shareholders, train them, and be partly responsible for – and benefit from – their success. That is a system that gets incentives right.
The government could, of course, also take another approach. Given that the agricultural sector employs large numbers of unskilled labour (and has the potential to employ more), it could focus on improving the productivity of existing farmers. To do this, the most obvious thing is to identify the currently most unproductive land. That turns out to be communal and state land, not privately-owned land. (And certainly not foreign-owned land, which seems to get all the blame, but is in fact a tiny share of land owned in South Africa.) The power of traditional leaders, however, prevent such communal or traditional lands from being used more productively. In a recent working paper, Daniel de Kadt, PhD-student at MIT, explains why these traditional leaders continue to have such a powerful hold on the ANC:
We argue that traditional leaders, whose power depends on the state, may be incentivized to strategically support political parties who can guarantee their survival and provide them with rents. We study this quid pro quo in the Apartheid-era Bantustans of South Africa. We show that an alignment between the state party and the chiefs maps to increased political support for the party. Further, we provide quantitative evidence consistent with chiefs acting as clientelistic brokers. Our results suggest that chiefs boost African National Congress (ANC) vote-share by 8.2 percentage points in the Bantustans. This translates into roughly 4.5% of the ANC’s total vote-share, and a distortion in the national vote of 2.5 percentage points. This distortion is pivotal in determining whether the ANC is able to alter South Africa’s constitution.
You could also translate it thus: The poorest of the poor South Africans live in Bantustans on communal lands. They, however, are being held ransom by their chiefs who are in cahoots with the ANC, who rely on their support for 2.5 percentage points in each election.
To eradicate the legacy of colonial land expropriation, a thriving agricultural sector is key. The problem is not “privately-owned land”, as the Minister seems to think. Policies that affect commercial farms will only hurt workers and the consumers of cheap food, exactly those people that suffered because of the initial land expropriation. The solution lies in tackling the unproductive, communal lands that is currently held by chiefs or the state. If these areas can prosper, not only will it pull millions of poor South Africans out of poverty, but it will create the necessary skills and capital to allow faster land reform elsewhere. Yet this most important step is unlikely to occur any time soon. That is because poverty alleviation and real redress is not an economic problem, but a political one.