Why Nations Prosper?
KIZITO OKECHUKWU | JULY 29, 2019
The 144-page document, which I am yet to fully peruse, cements the view that economic freedom can only be achieved if we take the issue of land serious and empower citizens with the right to own such. I guess for the next few weeks and months, this topic will be bright in the country’s spotlight.
I’m a big believer that nations prosper for two simple reasons: the right to physical property and the right to intellectual property. I do argue however, that the latter in today’s world is becoming more muddied, given that the environment is now so open space so to speak and does not allow one to exclusively claim ownership of an innovation. Capital will be key in the intellectual property space, because the quicker one gets to market, the more one cements itself as the custodian or leader of that innovation and a better chance of amassing a great market share.
For example, one can easily develop a similar product to that of an existing market player. Uber perfected the ride-sharing model and Taxify (now Bolt), Careem and Lyft etc. quickly jumped on the bandwagon, proof that today it’s difficult to outright “own” an innovation. Intellectual property is deemed a category of property that includes intangible creations of the human intellect. There are many types of intellectual property and some countries recognize and respect them more so than others. The most well-known types are copyrights, patents, trademarks and trade secrets.
Pompeo went on to say that “Property rights are the bedrock of any successful economy. It’s why the US insists on these protections and in the trade deals that we enter into as we move forward”. I say that the core of intellectual property is how best and quickly you can get to market and monetize it, bearing in mind the constraints of capital availability and timing.
With the disappearance, or rather the difficulty of regulating intellectual property, the physical property right remains something that can be regulated. In the Land Reform report aimed at addressing South Africa’s past injustices, the panel recognises that it’s to restore human dignity and social justice by enabling and resourcing restitution, redistribution and securing tenure in rural and peri-urban areas. A mixed tenure model is proposed, accommodating a continuum of rights from freehold and communal, as well as multilevel ownership arrangements.
The panel supports the position that it is incorrect to view freehold systems of tenure and common property systems as opposites of one another, and the assumption that freehold systems of property are the only forms of tenure amenable to capital investment growth. To this end, the panel has advised on an immediate process of record of rights in rural and per-urban areas with legislative amendments to accommodate forms of collective ownership as currently only freehold is accommodated by Registry. This galvanised for the recommendation to establish Land Administration as the fourth pillar of Land Reform (Restitution, Redistribution and Tenure being the other pillars).
In their piece in 2003, Gerald Driscoll Jr. and Lee Hoskins wrote that prosperity and property rights are inextricably linked. The importance of having well-defined and strongly protected property rights is now widely recognized among economists and policymakers. A private property system gives individuals the exclusive right to use their resources as they see fit. That dominion over what is theirs leads property users to take full account of all the benefits and costs of employing those resources in a particular manner. The process of weighing costs and benefits produces what economists call efficient outcomes. That translates into higher standards of living for all (particularly relevant to South Africa I thought). The excuses for development failure are legion: lack of natural resources; insufficient funding of education, culture, religion, and history; and, recently, geographical location.
Perhaps I argue that getting the physical property right correct could alleviate the government from the burdensome task of building Reconstruction and Development Programme (RDP) houses for its citizens. Many citizens could take up that task themselves with greater dignity.
As Friedrich Hayek, a Nobel laureate in economics, taught us in another context, we cannot explain success by examining failure: “Before we can explain why people commit mistakes, we must first explain why they should ever be right.”
So how can nations prosper? I argue that the difference between prosperity and poverty is property. Nations prosper when private property rights are well-defined and enforced.
I have personally witnessed how wealth is created, thanks to property rights. Nonhlanla and Simba, a few friends of mine, founded Urban Grown and are now farming products on their 10ha land, such as baby marrows, tomatoes, lettuce and many others for both local consumption and export.
Intellectual and private property rights are vital for economic development and entrepreneurs with these rights must be supported with access to capital and expedient processes to get them to market.
Most of us grew up knowing what the basic societal norms are and we adopted them and conformed wherever possible.
The roles and responsibilities of business, political, medical and religious leaders, as well as civil society, parents and family members have changed drastically over the past few months.
In his piece on the meaning of a war economy, James Galbraith wrote that the public obligation is to do what is necessary; i.e. to support the military effort, to protect and defend the home territory, and especially to maintain physical well-being, solidarity and the morale of the people.