Stephen Meintjes joined the School in 1962 while studying Law at Oxford in England.  He returned to South Africa in 1963 and in 1969 presented the first economics course in the Johannesburg School; his work with economics has been continuous since then. Stephen was also involved in politics for more than 25 years. He has co-authored two books, the last one detailing proposals for a shift in tax from land and capital to natural resources rental collection.  In South Africa it really could work.  See Stephen in the UTube clip below.

Starting a Conversation

Stephen Meintjes on SA news

Stephen Meintjes, Johannesburg

Miracle needed

Back in the Sixties the challenge was very different: how to get rid of the Nationalists and apartheid and it took decades of political effort from many players.  In the late Eighties, we realised that, even if the political and constitutional miracle (which duly materialised in 1994) were to occur, it would founder on the rocks of unemployment and investor aversion aggravated by populist demands, swingeing taxation and huge imbalances in land ownership.  

So it dawned on Michael Jacques, a long-standing School student of economics and Sanskrit, and myself, that we needed yet another miracle. Only this time it had to be economic. Moreover we also realised that all those years of economics courses meant we were sitting on a powder keg of knowledge.  So Michael and I wrote The Trial of Chaka Dlamini - an Economic Scenario for the New South Africa.  It was published in 1990, not long after release of Nelson Mandela and the commencement of four long years of constitutional negotiations. These culminated in that marvellous day in April 1994 when millions of South Africans queued peacefully, black and white together, in our first ever fully democratic elections.

That same day, the man who had been Minister of Finance the day before came to my home where Michael and I presented to him the proposals in The Trial of Chaka. The proposals were, of course, designed to boost South Africa's ability to create the millions of jobs it needed, via a shift from taxation of labour and capital to collection instead of land rentals. Afterwards he stood on the verandah, looked at the trees and said 'everything you chaps say is true but I think we need some kind of sales tax so all our compatriots can contribute to the Exchequer'.  

Time of change

Despite the fact that Mandela reappointed him a week later and we had given presentations to the ANC and other parties, what we thought would be a no-brainer became a non-starter.  It was a time of massive change generally and therefore understandable that our ideas were lost in the general noise. Nevertheless, albeit disappointed, we continued to promote these concepts to the best of our ability.  Around this time I was invited to join the ANC (African National Congress), but I declined as we thought it best to promote these concepts on a non-partisan basis.

Towards the end of Mandela's term, however, the ANC's underlying agenda began to unfold.  Black Economic Empowerment, with which everyone agreed in principle, steadily degenerated into crony deployment and corruption.  BEE included the placing, throughout the public sector, of party cronies who were usually inexperienced and often not suitably qualified. In many cases they were corrupt, leading to massive wastage of taxpayers' money on rigged tenders often awarded to incompetent contractors who simply subcontracted to those who could actually do the work.  This has resulted in elite enrichment, widespread dysfunctionality in the public sector and one of the highest unemployment rates in the world.

Practical proposals

Meanwhile, by the mid-Noughties, with our representations to Treasury having met with minimal acceptance, we had decided to return to the drawing board.  The Trial of Chaka had been set in the (black) townships of the late apartheid era with dialogues between a (black) Socrates and the township youth and was focussed on explaining the principles to the lay reader.  But we realised we needed to go a lot further with practical proposals to convince all those who had said it was great idea but would never work in practice. This included policy makers, economists and business people as well as ordinary folk. Given the huge aversion amongst people to reading anything to do with economics, this was always going to be difficult. Nevertheless, despite the need to be a little technical every now and again (these bits can easily be skipped) initial feedback is encouraging. [See Stephen's second book, Our Land, Our Rent, Our Jobs.]

Rent

For the uninitiated, rent can be said to be the difference between what can be produced on the least productive piece of land in use and all others, given equal effort and skill (or inputs of labour and capital). This difference is reflected in land values, all of which are due to the state which gives security of tenure without which landowners would not be able to enjoy the natural and man made advantages of their sites.

With low rainfall, only 16% of the surface area of South Africa is arable and this results in huge differences in land values with values in the prime urban land being up to a million times more valuable than grazing land in some areas of the Northern Cape. In broad terms therefore one could say that nearly half the land is marginal or near-marginal.

Tax

Now the trouble with our tax system, like many others, is that it vastly under-recovers rent from prime sites and attempts to over-recover from marginal sites. As foreshadowed earlier, the ANC duly ramped up indirect taxation in a big way, thereby decimating economic activity in the former (tribal) homelands and causing a massive influx into the already overcrowded cities.  Meanwhile businesses in the urban centres continue to enjoy the benefit of public infrastructure such as toll roads and, in Gauteng Province, the upmarket commuter rail link between Pretoria, Johannesburg and the international airport as evidenced by tall office towers sprouting up around the GauTrain stations.

It could succeed in South Africa

All of this could have been avoided if South Africa had opted for government paid for by collecting the rents it in effect creates - instead of taxing labour and capital for working and investing. This can of course still be done and the purpose of the book is to start a national conversation as to how. To this end we shall endeavour to present to the major political parties.

Why would this succeed in South Africa? In many ways we are a microcosm of the world with developed and developing components. We have a proven capacity to implement sophisticated revenue collection systems and, unlike the English after the Conquest, the majority are not going to tolerate the status quo. They want "their" land back! Since there are 52 million South Africans and 122 million, mostly dry, hectares, there is no way a physical distribution can be made.  This book shows how each and every South African can get full value for all of his or her land.

After a promising start prior to the holiday season we are now about to ramp up our media campaign again and reach out to the politicians and others. The intention is nothing less than to ignite a nationwide conversation as to how best to do it - for only then will it work.

Email Stephen: stephenmeintjes