Give me a supermarket trolley with flame throwers, please

Flame
My version of social distancing

By John Fraser

I have written before about the ignorant morons – staff and customers – who infest the supermarkets in which I shop during this 21st Century version of the Black Death.

There is normally sanitiser available for hands and trolley handles, but social distancing? Near impossible.

Today I stormed out of my local branch of Pick ‘n Pay – or should that be Pick ‘n Plague? I did try, using my trolley as a barrier, avoiding busy aisles, waiting patiently while people set up tent in just the area from which I needed to pluck my gourmet-select bread and gruel.

Boy, was I funny?  People found it so amusing that someone wished to keep himself – and them – as safe as possible.

Eventually, the crowding in the aisles, the total ignorance and indifference to social distancing, drove me out.

I left my trolley in situ, and left. Situ ain’t safe.

On instead to my local Spar. A more spacious store, but still full of people who wished to infect me. Soon after I entered, one staff member approached me and I held out an arm to indicate she should keep her distance. Oh, no. She gave me a friendly fist punch, making skin-to-skin contact, potentially infecting me with the killer virus.

A complaint to the manager secured an apology, and I took another dose of sanitiser. Maybe Trump’s idea of drinking bleach isn’t so stupid, after all. It’s probably safer than entering a South African supermarket

Before heading out to shop, I had watched our Trade, Industry and Competition Czar Ebrahim Patel informing MPs that infections among supermarket workers are 10 times the norm.

If the general population were to reach that scale of infection, it would overwhelm our country’s pathetically inadequate healthcare system (my definition, not Patel’s).

To conclude this brief, – but heartfelt – rant, I had to act like a grumpy, loudmouthed shit to keep myself safe.

The public – black, white, yellow, green and silver – doesn’t seem to understand the risk, and stores do not seem to be getting the message to their workers. 

Who are already more at risk, even without their stupid behaviour.

So I am opening up a tender for a supermarket trolly, armed with a battery of flame throwers.

It may sound cruel to burn others to a crisp as I meander along supermarket aisles, but it is not as if these morons would not kill themselves before long.

Be warned.

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Wine tasting podcast. Bonnievale Limited Release Cabernet Sauvignon 2017

bonnievale

By John Fraser

I despise the current prohibition imposed by the Soviet-inspired Command Council in South Africa.   This podcast is not intended to annoy those of us who are fast running out of booze, and are prohibited from buying any more.

Our intention, instead, is to serve as a reminder of a time when a group of chums could get together and relish a few glasses of the red stuff.

Michael Olivier, sommelier to the stars, poured out the Bonnievale Limited Release Cabernet Sauvignon 2017 to a receptive bunch.

Guest tasters were analyst Chris Gilmour, brander Jeremy Sampson, and technical supremo Malcolm MacDonald.

We also chatted about the merits of online purchasing, a pleasure allowed in SA at the moment unless you want to buy booze and ciggies.

Click below for a brief return to civilisation.

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Do also check out:  http://www.michaelolivier.co.za

South Africa’s COVID-19 strategy needs updating: here’s why and how


South Africa’s hard, extended lockdown has come at a significant economic cost. Shutterstock

Imraan Valodia, University of the Witwatersrand; Alex van den Heever, University of the Witwatersrand; Lucy Allais, University of the Witwatersrand; Martin Veller, University of the Witwatersrand; Shabir Madhi, University of the Witwatersrand, and Willem Daniel Francois Venter, University of the Witwatersrand

Decision-making at the early stages of the SARS-CoV-2 pandemic (the coronavirus causing COVID-19) was constrained by a paucity of medical evidence and epidemiological data. Knowledge gained over the past two months can, therefore, inform the next phase of the strategy.

In the context of the initial uncertainty, South Africa’s early lockdown was prudent. It allowed time to prepare the health care system, to ramp up wide-spread testing and to introduce other measures to reduce transmission rates. Extending the lockdown is no longer required. It is also no longer reducing transmission rates and has become unaffordable.

Current evidence indicates that:

  • It is impossible to eliminate the virus and the spread will continue. Only a few countries have been able to minimise the rate of spread but they remain highly susceptible to repeated outbreaks.
  • The majority, approximately 70%, of people infected with SARS-CoV-2 are asymptomatic or have a moderate, self-limiting illness (approximately 25%). The 5% who develop severe COVID-19, with the risk of dying, are usually older than 65 years (greater than 80%) or have underlying comorbidities (such as hypertension, diabetes and obesity).
  • Children under 18 years are generally spared from developing severe COVID-19 and contribute less than 1% of all COVID-19 deaths (none among the more than 30,000 COVID-19 deaths in Italy).
  • It is not likely that a vaccine will become available in the near future. Without this, control of the infection would require about 60% of the population to develop immunity. This will take time and while there is considerable uncertainty over the number of deaths that may occur from COVID-19 over the next two years, current evidence suggests that it may be less than originally estimated.
  • An extended lockdown comes with substantial health costs. These include costs brought about by undermining public health initiatives such as immunising children against threatening diseases and in the impaired provision of health services to those living with comorbidities such as diabetes, tuberculosis (TB), HIV and hypertension. Indeed, there is evidence that currently the gains made over recent years in reducing the rates of, and deaths from TB are being reversed.

Read more: Coronavirus risks forcing South Africa to make health trade-offs it can ill afford


  • SARS-CoV-2 is highly infectious, with a reproduction rate every four days of roughly 2.5 at the onset of the outbreak. The reproduction rate measures the number of people to whom an infected person will pass on the virus. When South Africa introduced the lockdown, the reproduction rate was low relative to other countries. However, South Africa’s reproduction rate has remained above 1, even under a highly restrictive lockdown. Indications are it will remain above 1 at least for the foreseeable future.
  • The hard, extended lockdown has come at a significant economic cost. While there is debate about the cost to date, with estimates from 5%-16% of GDP, economists agree that this has been significant.
  • The lockdown has also imposed social costs. For example, children are missing out on schooling. This is detrimental for their cognitive development and for many other reasons. Children are at risk of becoming malnourished due to missing out on school feeding schemes, as well as from the increasing number of families that are being pushed into poverty.

Read more: Why South Africa needs to ensure income security beyond the pandemic


South Africa needs to accept that it is not on a unique trajectory. The virus cannot be eliminated. The country’s strategy needs to move away from a hard lockdown. In our view, South Africa should focus on using interventions aimed at slowing the virus’ transmission rate.

The success of these interventions depends on the buy-in and cooperation of citizens. The message to South Africa must be clear: It is not going to be spared deaths from COVID-19. But it is possible to prevent some of these through our own actions and by promoting strategic public health interventions.
South Africa should plan to mitigate the effects of the pandemic using the above strategies for at least two years, or until a vaccine becomes available.

Areas of uncertainty

There are two important areas of additional uncertainty. The first is that it is too early to establish the effect of COVID-19 on people living with HIV. But emerging evidence appears to be reassuring. People living with HIV who are on antiretroviral treatment do not appear to be at an increased risk.

Secondly, South Africa is not achieving the testing levels or reporting speeds required to contain the spread through diagnosis and contact-tracing. This gets harder as infection rates rise. Without this, it is unlikely that the country will stay ahead of the epidemic.

South Africa’s strategic thinking should, therefore, be informed by the following:

  • The need to minimise infection in vulnerable, high-risk groups and, where possible, to minimise deaths from COVID-19. This requires clear communication on the actual threat of the virus, preventative strategies, and slowing the spread of the virus to levels that spare the healthcare system and the economy while preventing the economic effects themselves from causing death.
  • It is not possible to contain the spread through lockdowns, because of the economic cost and the fact that it is not possible to keep the reproduction rate at consistently low levels easing lockdown.

It is therefore vital that the country develops strategies to control the virus and simultaneously manage the health, social and economic implications without resorting to further lockdowns.

Economic strategy

We suggest that South Africa move rapidly to stage 2 lockdown and that a risk-assessed framework be adapted. We propose that such a framework permit all economic activity, except where there is a clear and material threat to public health. The other exception is activities that pose a high risk of transmission over a short period of time, for example, mass gatherings or transmission hotspots.

The framework should specify, by exception, any economic activity not allowed on public health grounds. This would see the reopening of critical areas of the economy coupled with current behavioural and societal mechanisms to slow the viral spread.

Within this framework, we also suggest that:

  • The health of workers should be a high priority. Precautions with respect to the protection of healthcare workers and protocols in healthcare settings require careful attention.
  • Regulations should specify employer responsibilities to ensure that the opening up of the economy does not result in flareups of infections.
  • Retail opening hours be extended to reduce density and exposure to the virus, with early pensioner-only hours.
  • The frequency of public transport services be increased to enable movement subject to the adoption of health protocols. These protocols can be enhanced as necessary.
  • The hours of work for accessing public services be extended to make it possible for the population to access services in ways consistent with health protocols.
  • For now, international travel for leisure should not be allowed.

The health risks associated with this economic strategy should be premised on effective strategies to mitigate the rapid rate of transmission of the virus. This is best achieved by:

  • Reinforcing physical distance measures in settings where people have no option but to gather, and paying attention to ventilation. In the case of busses and taxis, windows should be opened to prevent prolonged contact with potentially contaminated air.
  • Reinforcing evidence-based public health measures like hand washing. This should include providing sanitation to all communities.
  • The continued use of face masks for all outside of the home. Reusable masks must be made available to all communities free of charge.

This list is not exhaustive but sets parameters which can guide an adaptation to level 2.

The ability of the country to avert the possible full impact of the virus will only succeed if all citizens of South Africa cooperate willingly with measures aimed at slowing the rate of transmission. If that does not happen, the full might of this virus will manifest itself sooner rather than later, irrespective of the level of official lockdown.

This article is republished from The Conversation under a Creative Commons license. 

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The Myth of the Mask

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We still know it’s you, Cyril

By John Fraser

I get a lot of dirty looks when I go shopping,  But that’s better than getting just one dirty C-19 germ.

You see, I don’t want to catch this killer virus, and if I am already carrying it, I really don’t want to infect anyone else.

Yet it seems I am in a minority.

Walk into most stores and supermarkets, and it is virtually impossible to keep a safe distance from staff and other customers.  

True, they will spray your hands with sanitiser when you enter the emporium, but that ain’t going to help when somebody coughs ferociously.  While standing right next to you.

Staff huddle in clusters near the tills.  In both Woolworths. and Checkers I have run out of fingers on one hand when making a tally of members of the same group of anti-social non-distancers.

Adjacent tills are opened up, instead of spacing the cashiers, and it is impossible to pass through the checkout without getting dangerously close to the packer.  or the person on the neighbouring till.

Hence my fear of the myth of the mask.

Customers and staff alike seem to believe that if they have a bit of fabric over their face, they will be fine.      Not so.

There is some protection – much, much better than nothing. 

But you are playing Russian roulette with your own life and with the lives of others if you over-rely on any mask.  An ostrich with its head in the sand may feel safe.   And yet most of those I encounter make ostriches seem like Mensa members.,

Which is why I use my trolley as a weapon, to keep the pox-ridden hordes at bay.

I switch aisles if it looks unsafe – and try to avoid shelf-stackers, who show little or no understanding of the concept of social distancing.

I shout at people if they look as if they are coming too close.

More than once I have been told how rude I am.

No problem.   

I would rather be rude than stupid.  And dead.

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If you care for South Africa, please buy and drink our wine.

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Wonderful, wonderful Cape wine

By John Fraser
It may sound strange, stupid, authoritarian and cruel, but the sale of booze in SA is currently banned, under lockdown regulations which have been sponsored by a bunch of Cabinet Ministers who know what is best for us.   Or think they do.

The result is that an important component of farming, of retail, is in dire trouble.

South Africans themselves are pretty powerless to do much about it, but this does not mean that the many, many friends of South Africa in Britain, the rest of Europe, the US, Hong Kong – you name it – can lend a helping hic.

For the one ray of sunshine peeping through the dark clouds which have descended like a shroud over the Cape Winelands is a re-opening of export channels for SA booze.

This means, bizarrely, that while the shelves of SA supermarkets are bereft of wine, you can still buy it in most other parts of the world.

And why should you not choose a Cape creation?

There is no shortage of brilliant whites, reds, rosés, bubbles, ports, sherries (though the latter two have to be called something else), whiskies, brandies, liquors, beers……….   All proudly South African.

So come on, you Brits, you Yanks, you Frogs, and others.    If is no great sacrifice for you to pick up a case or ten of the Cape’s finest.   All qualities, all prices are available.

In doing so, you may help to save businesses and jobs – white, black and coloured – in a country which is suffering a dreadful economic recession, compounded by the Wuhan virus.

I promise that once this ban, the least admirable aspect of the lockdown regulations, is lifted, those of us with a parttriotic palate will do our best to help our local producers.  Buying Cap Classic instead of Champagne, Bordeaux Blends instead of Claret, and so on…..   Not that this was ever a problem in the past.

I cannot think of a more pleasant way to show your support for South Africa than to uncork or unscrew a bottle bursting with Cape sunshine.

So the next time you stock your cellar, buy South African booze for the evening meal or (as soon as this becomes possible again) do the same when you pop out for a decent meal.  Read the label.   Select South African.  Do your bit.

A few decades ago, the world helped South Africa to gain its freedom by boycotting our exports.

Now we need your help again.

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Ministers need to provide rational, fact-based, and truthful justifications for lockdown regulations

Minister Zuma

By Pierre de Vos

On Wednesday night, minister Nkosazana Dlamini Zuma published new lockdown regulations to deal with the Covid-19 crisis in South Africa. Some of the regulations will apply for the duration of the national state of disaster, while others relate specifically to the level 4 lockdown that commenced on the 1st of May.

Unfortunately, the regulations are not always a model of clarity. It is also not clear how some regulations, in fact, advance the stated goals of the declaration of a national disaster, rendering them vulnerable to constitutional attack.

From a constitutional perspective, arguments about the pros and cons of various lockdown regulations – the ban on the sale of cigarettes, alcohol and (maybe) some books, the introduction of a curfew between 20:00 and 05:00 each day, the ban on exercise except between 06:00 and 09:00 in the mornings, the treatment of informal traders – seem to miss the point. 

Legally the question is not whether the sale of certain products is a good or a bad thing. Neither is it relevant that the ban on certain activities might lower the crime rate or, conversely, might embolden members of the criminal underworld. Legally the broad question is whether a specific regulation can be justified, given the stated aims of the declaration of a national disaster.

Of course, it is not only for legal reasons that ministers should provide a proper, fact-based, rational, justification for every lockdown regulation they seek to impose. In a constitutional democracy, voters ultimately hold the government accountable at the ballot box, based on the available information. 

While some voters may blindly vote for the governing party (or for another party of their choice), others will make a decision on whether to return the government to power based on the performance of the government.

Some voters may well decide not to support an incumbent party when its government ministers fail to explain monumental decisions like the imposition of a lockdown or fail to advance rational reasons for specific regulations.

Moreover, in a constitutional democracy, it is thankfully not possible effectively to enforce draconian lockdown regulations without the buy-in of the public.

The most effective way to ensure buy-in is by providing members of the public with rational, fact-based, and truthful justifications for specific regulations. 

If the government treats the public with respect by providing us with honest, rational, fact-based justifications for the imposition of certain rules, we are more likely to trust the government in return and comply with the stringent restrictions. A failure to provide rational, fact-based, and truthful justifications, will diminish compliance and will, therefore, be counter-productive.

Matters will be made worse if the government decides to use the police and the military to try and impose its will by force in the face of widespread public resistance.

Back to the legal argument. There are at least two grounds on which the validity of lockdown regulations could be challenged. Both these grounds depend to some extent on whether a plausible and truthful justification was provided for a specific regulation. The justification must be related to achieving the purpose of the declaration of a national disaster.

First, to comply with the principle of legality, all regulations must at the very least be rationally related to the stated aims of the declaration of a national disaster.

Recall that the declaration of a national disaster allows for the promulgation of regulations, but only to the extent necessary for the purpose of (a) assisting and protecting the public; (b) providing relief to the public; (c) protecting property; (d) preventing or combating disruption; or (e) dealing with the destructive and other effects of the disaster. 

If a regulation is aimed at achieving another purpose altogether (like lowering the crime rate or promoting public health concerns not directly related to the Covid-19 crisis), it would not meet the minimum requirement for validity.

If the regulation is aimed at achieving one of these stated goals, but there is no rational link between what the regulation actually says and its stated purpose, this would also render the regulation invalid. 

An absurd example: If a regulation requires members of the public to appear in public wearing purple masks (based on the superstition that purple wards off evil), it will not be rationally related to the aim of slowing or suppressing the spread of Covid-19.

Another example: a regulation that prohibits the sale of KFC because the consumption of large amounts of KFC is fattening and may cause diabetes will not be rationally related to the purpose of slowing or suppressing the spread of Covid-19 and will be invalid.

Second, where a regulation limits one of the rights guaranteed in the Bill of Rights, the regulation will only be constitutionally valid if it is justifiable in terms of the limitation clause. Many of the lockdown regulations do limit rights protected in the Bill of Rights.

The right to equality, dignity, and freedom of movement, and the right to access to food and housing may be of particular importance in the current situation.

In terms of section 36 of the Constitution, the rights in the Bill of Rights may be limited:

only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including (a) the nature of the right; (b) the importance of the purpose of the limitation; (c) the nature and extent of the limitation; (d)  the relation between the limitation and its purpose; and (e) less restrictive means to achieve the purpose.

Once it is established that a regulation limits a right – as many of the lockdown regulations do – the burden to justify the limitation lies with the government, who must provide both factual material and policy considerations that might justify the limitation. In Moise v Greater Germiston Transitional Local Council the Constitutional Court explained this as follows:

The weighing up exercise is ultimately concerned with the proportional assessment of competing interests but, to the extent that justification rests on factual and/or policy considerations, the party contending for justification must put such material before the Court… If the government wishes to defend the particular enactment, it then has the opportunity – indeed an obligation – to do so. The obligation includes not only the submission of legal argument but the placing before Court of the requisite factual material and policy considerations…. [The] failure by government to submit such data and argument may in appropriate cases tip the scales against it and result in the invalidation of the challenged enactment.

Some of the lockdown regulations are likely to run into legal trouble because the government would not be able to provide a plausible factual basis for the assumptions underlying a regulation. Others may run into trouble because there is no obvious link between the regulation and its stated purpose.

But the most serious problem might well be that the purpose of the lockdown could have been achieved by regulations that infringe on the rights of citizens in a less drastic manner. 

As an example, let us look at the curfew which is being imposed from 20:00 each night to 05:00 the next morning. This provision clearly limits the right to freedom of movement guaranteed in section 21 of the Bill of Rights in quite an extreme manner. It is at best unclear that there is a factual basis for this regulation.

Has there been significant movement of people after 20:00 during the lockdown so far? Is there any factual basis that such movement increases the risk of infection? 

Furthermore, other regulations already restrict movement in a radical way, so it is not clear why this rule is necessary. To make things worse, no exception is made to allow individuals to go out for household emergencies like the need to buy electricity or airtime.

It would, therefore, be surprising if a court did not find that this provision limits the right to freedom of movement in a manner not justified by section 36.

The same logic applies to the restriction on exercise to the period from 06:00 to 09:00 in the morning. What is the actual purpose of this rule? I would guess it is aimed at making it easier to police the regulations.

But that does not seem to be a good reason to limit people’s right to freedom of movement as mere convenience will never justify a radical limitation on a constitutional right.

Furthermore, there does not seem to be a factual basis for the assumption that more people will get infected if they exercise after 09:00. Unlike other regulations that enforce physical distancing, there does not seem to be any relation between the limitation and the legitimate purpose of slowing down or suppressing the spread of Covid-19.

Less restrictive means – like strictly enforcing the ban on people exercising together – could surely be employed to achieve the same purpose. 

Here I am not primarily interested in the two regulations used as examples above. Instead, my aim is to show that it is not constitutionally permitted to impose limits on rights, without having a very good reason to do so.

The aim must always be to impose only such limits that are directly linked to the purpose of the lockdown and to limit rights as little as possible. 

We are not living in a state of emergency. Rights have not been suspended.

That means the duty of government ministers to justify the limitation of rights in accordance with the limitation clause have also not been suspended.

Such justifications must not be bizarre and spurious but must be fact-based, rational and truthful.

When no justification is offered, or where the justification appears to be irrational, it erodes trust in government and threatens the efficacy of the lockdown.

It also renders the regulations open to constitutional challenge and invalidation.

Prof Pierre de Vos is the Claude Leon Foundation Chair in Constitutional Governance, Head: Department of Public Law, at the University of Cape Town

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Lies, Damned Lies, and the Ciggie Ban.

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Ms Zuma, Minister for Misery

By John Fraser

I used to be quite good at debating, and alongside my chum Jim White (now a sportswriter for the Telegraph – what a waste), I won our university trophy.

I say this not to boast, but to suggest that when I am presented with the most outrageous arguments by someone whom we are supposed to respect and trust, I get a bit peeved.

I would fume, but that is now banned in SA.

Cigarette Czarina Nkosazana Clarice Dlamini-Zuma (born 27 January 1949, in case you want to add her to your birthday card list), the Minister of Cooperative Governance and Traditional Affairs, told the nation yesterday (Wed) that an initial recommendation to lift SA’s Covid-19-related ciggie ban was now being reversed.

Some restriction will be relaxed from tomorrow, but the hopes of smokers are disappearing, er, up in smoke.  Or not.   You get my point, anyway.

The health arguments have not changed much as we move from Misery Stage 5 to Misery Stage 4, and there has been no discernible change since President Ramaphosa told us a week ago that it was being proposed – prior to a public consultation – that the ciggie ban would be lifted.

The new factor, we are told, appears to be the 2 000 people who have wailed, gnashed their teeth, and told the minister to ban the un-banning.

The cracks in Ms Zuma’s arguments are obvious.

Firstly, just a few days were allowed for the submission of tens of thousands of reactions to the Misery Level 4 proposals before the rapid gazetting of the new regulations.  Days; not weeks; not months.  Not enough time to seriously assess and seriously ponder all the submissions.

And secondly, it is not surprising that a lot of people objected to the lifting of the ban, and fewer praised it.

The main reaction was to what concerned people, not to what had come as a big relief.

We had been told by Oom Cyril of the proposal to lift the ban and this produced no objection from the pro-smoking, pro-liberty brigade.  They did not see Mme Zuma lurking in the wings.  They lit, held up, and waved their lighters in a moving tribute to our beloved leader.

So those in favour of the relaxation of the rules saw nothing to get excited about.  They would soon be able to buy ciggies, tobacco, to put it all in their pipes and to smoke it.  No excitement, no floods of comments.  No objections, because it appeared there was nothing to which an objection was required.

To judge overall public sentiment from the response of the anti-smokers is therefore deceptive, misleading and irresponsible.

We hear there are tensions within the Cabinet, with Tannie Zuma on the ascendant, and Cyril now in the role of tea-maker, or something less demanding.

It seems that a nasty, dictatorial, intolerant, nanny-state is creeping in,  and not in a nice-nanny way like Mrs Doubtfire or Mary Poppins.

So, let us keep up the pressure to get this absurd ciggie ban lifted, along with the other deeply-damaging ban on booze sales.   These are depriving people of small pleasures during a period of mass misery.

Warn about the health concerns of excess or unsafe consumption, but show some common sense as well.

Don’t deprive the fiscus of desperately-needed taxes at a time when our economy is in the poo-poo, having just been hit by another downgrade:  from junk to garbage.

Let us light the fire on behalf of smokers and drinkers, against these politicians and their weasel words.

A cloud of authoritarian has descended over our rainbow nation.

Common sense must be revived, dusted off, and given a seat at the table.

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Coronavirus: why South Africa needs a wealth tax now

A woman carries a bucket of fresh water to an informal settlement in Khayelitsha, near Cape Town. South Africa has the widest wealth gap in the world.
Photo by RODGER BOSCH/AFP via Getty Images

Aroop Chatterjee, University of the Witwatersrand; Amory Gethin, and Léo Czajka

The consequences of the COVID-19 lockdown are yet to be fully determined and understood. But one thing we can be fairly certain of – in South Africa its impact will be shaped by the country’s inequalities.

Our study reveals that half of the adult population survives with near-zero savings, while 3,500 individuals own 15% of the country’s wealth. The response to the crisis must take this into account to help the most vulnerable while still safeguarding fiscal sustainability.

Based on our new study on wealth inequality in South Africa, we propose a progressive solidarity wealth tax. This would allocate the fiscal burden of current interventions on those most capable of paying. It is in line with the recommendations recently made by the International Monetary Fund to equitably attain fiscal sustainability and better position the economy for post-COVID recovery.

We show that a wealth tax on the richest 354,000 individuals could raise at least R143 billion. That equates to 29% of the announced R500bn fiscal cost of the relief package.

Unequal distribution

A lot of studies show how extreme income inequality is in South Africa, but little has been documented about wealth. Net wealth is the sum of all assets less any debts. Assets include cash, bank deposits, pensions, life insurance, property, bonds and stocks. Debt includes mortgages and other loans such as retail store credit accounts or loans from friends, family and money lenders.

In our new paper, we combine national accounts statistics, household surveys and exhaustive tax microdata to assess the reliability of available data sources. We also provide the most comprehensive possible picture of the distribution of wealth. This is the first time this has been done in South Africa.

Better data is needed – about direct ownership, capital income and assets held through trusts. Nevertheless, our results give a good sense of the magnitude of the disparities. Three key results are worth mentioning.

Firstly, in 2017, the 10% richest South Africans (all adults with a net worth over R496,000) owned 86% of the wealth, with an average of R2.8 million per adult. In contrast, about 18 million (the poorest 50%) were either in debt or had near-zero savings. With an average net worth of R486 million, the richest 3,500 owned 15% of the wealth. This was more than the 32 million poorest altogether.

Secondly, these extreme inequalities extended to all forms of assets. The richest 10% owned 99.8% of bonds and stock – which accounted for 35% of the wealth. The top decile also owned 60% of housing wealth and 64% of pension assets. Housing wealth amounted to 29% of wealth and pension assets to 33%.

Thirdly, we show that wealth concentration has remained broadly stable since 1993, and may even have increased within top wealth groups. Wealth inequality remains significantly higher than what could be estimated in Russia, China, India, the US or France.

Why wealth inequality matters now more than ever

Our findings are particularly relevant to the current crisis. South Africans are unequally armed to survive the contraction of the economy produced by the lockdown. Our paper helps get a sense of the size of the population likely to be under intense stress in the very short term.

Before the lockdown, about half of the population was already in debt or had near-zero net wealth. Therefore, this crisis will at best sink millions of people further into indebtedness or force them to beg, loot or starve. Conversely, our paper shows that a minority of individuals are in a much less vulnerable situation.

The policy solutions needed to absorb the shock and recover fast must be carefully designed to take these factors into account. Principally, they need to reallocate resources to give everybody equal chances to survive the shock.

In this unprecedented crisis, the government announced a relief package with an R500 billion fiscal cost. One key remaining question is how such a plan will be funded.

The possibility of collecting additional tax revenue from those ablest to contribute has not yet been brought to the table. We believe it should be considered. Our estimation suggests it would raise significant revenues. And it would allow the country to allocate the cost of the national response on the least vulnerable.

In the spirit of solidarity, a wealth tax could be part of the solution to safeguard long-run fiscal sustainability and inclusive growth.

How much could a wealth tax raise?

We propose a progressive wealth tax, which would apply only to South Africans with a net wealth currently superior to R3.6 million, that is the richest 354,000 (1% of the adult population).

The first bracket – all wealth between R3.6 million and R27 million – would be taxed at a 3% rate, the second bracket (R27 million to R119 million) at 5%, and all wealth above R119 million at 7%. Individuals with less than R3.6 million would be exempt. A billionaire would face a 6.7% tax rate: she would pay 3% on the fraction of her wealth higher than R3.6 million but lower than R27 million; 5% on wealth higher than R27 million but lower than R119 million; and 7% of the R821 million she owns above R119 million. This would leave her with a post-tax wealth of R933 million.

Other tax schedules could, of course, be designed. The objective here is to give an order of magnitude of the expected revenues.

Taking into account the recent Johannesburg Stock Exchange All Share Index drop in value and assuming a 30% evasion rate (as available evidence suggests), we simulate that such tax would raise R143 billion.

It would still leave rich individuals with very high levels of wealth: for each of the brackets, post-tax wealth would on average be R9.3 million, R50 million and R376 million respectively.

A realistic policy

Critics of a wealth tax argue that it would be too costly and complex to implement. But South Africa is well-positioned to administer this tax cost-effectively.

Firstly, the tax base we consider covers very few individuals, reducing the administration required.

Secondly, South Africa already has in place third-party reporting by financial intermediaries straight into the South African Revenue Service, providing information on capital income and ownership. Existing municipal valuations could be used to value property assets. This would cover the major components of asset holdings, especially stocks and bonds.

Capital flight, through offshoring or migration, is a potential risk. We account for this by making conservative assumptions about avoidance and evasion, and still project sizeable revenues. There is also markedly more cooperation between tax authorities to clamp down on undeclared incomes and assets in foreign jurisdictions, including tax havens. The premise is not a given. Capital flight implies forfeiting opportunities that considerably enriched them for the sake of avoiding a tax that barely makes an impact on their total wealth. Importantly, the wealthy themselves have said now is the time for solidarity.

A wealth tax, contrary to popular opinion, would not necessarily discourage job-creating investments. Maintaining fiscal sustainability while sparing the most vulnerable is more important to ensure a quick recovery and attract investments. Moreover, inherited wealth has a significant role in South Africa: we find high levels of wealth concentration even among 20-year-olds. Diminishing the importance of inherited capital with a wealth tax may actually be a better collective strategy to improve social welfare, including growth.

In light of the lessons learned from the Zondo commission of inquiry into corruption, taxpayers would need guarantees that this special tax will be properly collected and spent. The national treasury already uses ringfencing mechanisms to make revenue and spending for specific projects accountable. To answer potential criticism, the government could build on such rules to generalise more transparent practices.

There may be theoretical implementation challenges of such a wealth tax. But we would argue that South Africa is well placed to overcome these.

When designing the radar for Britain during World War II, Robert Watson-Watt justified his choice of a nonoptimal frequency as follows:

Give them the third best to go on with; the second best comes too late, the best never comes.

This radar was pivotal in allowing Britain to overcome a larger, more sophisticated German air force.

In our situation, we cannot let perfection be the enemy of progress, or in this case, survival.The Conversation

Aroop Chatterjee, Research Manager: Wealth Inequality, Southern Centre for Inequality Studies, University of the Witwatersrand; Amory Gethin, Research Fellow – World Inequality Lab – Paris School of Economics, and Léo Czajka, Research fellow – World Inequality Lab – UCLouvain

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Podcast wine tasting: a White and a Rosé from CanCan

                                            Give it a go go….

By John Fraser

Apologies all round.  With no end in sight to the insane lockdown-linked prohibition in SA, many drinks cabinets are bare, as the Cabinet’s barbarians  seem to think that the virus can be toppled by misery and sobriety.

However, we recorded this podcast in happier days, and hope it will soon be possible for us all to again go out and buy the wines we glugged. 

Michael Olivier was on full guru setting, and introduced us to a White and a Rosé from CanCan, both (in case you hadn’t guessed) in cans.

The reaction was a tad mixed, but on balance it was thought that the packaging was pretty irrelevant, and that the wine was up to standard.

The tasting panel was plucked from a passing prison van.   Malcolm MacDonald from Clientele was joined by analyst Chris Gilmour and brander Jeremy (anyone seen Delilah?) Sampson.

So pull the ring on the top and see what a fine, fun podcast we have in the can: 



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Do also check out:  http://www.michaelolivier.co.za

Time to prohibit prohibition

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Trade, Industry and Competition Minister Ebrahim Patel

 

 

 

 

 

 

 

 

 

 

By John Fraser

Unless there is an outbreak of common sense, South Africa will have an indefinite ban on alcohol sales.

 

Trade, Industry and Competition Minister Ebrahim Patel announced this weekend that, from Friday, the country will move from the current Level 5 lockdown to Level 4.

As they stand, the new rules will prohibit the sale of alcohol, in stores or via e-commerce.

Now I can understand countries like Saudi Arabia banning alcohol, because it is a Moslem state, and some interpretations of the Koran prohibit booze.

However, South African is not a Moslem state, no legislation has been approved by Parliament to ban booze, and nor should it be.

There are, of course, hazards in allowing people to drink alcohol. For some it can lead to violence. There are also health concerns.

And yet, tobacco is being unbanned from Friday.

Now, I do not pretend to be a health expert, but I am pretty sure that – for most people – tobacco is a more dangerous drug than alcohol.

You have to weight up arguments and then to come to a logical conclusion.

However, if seems that there are powerful voices within the Cabinet who are putting their own prejudice against alcohol consumption above their duty to be objective public servants.

Shame on them.

There is no certainty about how many weeks or months it will be before the country can be promoted to Level 3, when it is likely that we will again be able to buy booze.

In the meantime, millions of South Africans – who are already enduring the lockdown, in fear of their jobs, scared about a deadly pandemic – are being deprived of the comfort and pleasure which a few glasses or wine or beer, whisky or cider would bring.

This is an intrusion into our lives and lifestyles, which is based on very disputable logic.

My heart goes out to those in the booze business, in the vineyards and to those retailers who are deprived of part or all of their livelihood.

A civilised pleasure has been banned in South Africa.

I don’t blame the virus; I blame the Cabinet.

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