SA’s path to prosperity through liberal social policies

Eustace Davie is a director of the Free Market FoundationEustace Davie is a director of the Free Market Foundation

A liberal order is one in which there is voluntary exchange between individuals free of third-party intervention. The term “liberal” in this article refers to European classical liberalism and not to American-style liberalism, which has collectivist roots and has compelled American liberals to describe themselves as “libertarians” to overcome the ill effects of the perversion of the use of the word.

The social policy of a truly liberal government consists of liberalising both the economy and civil society to improve social conditions. Liberal social policy covers all aspects of life, attempts to improve conditions for the entire population, and is based on the view that voluntary transfers from individual to individual for value received are the best way to improve the welfare of a nation.

Limiting demands on wealth producers 

A liberal government recognises that it consumes wealth and does not create it, so limits its demands on wealth-producers, allowing them the freedom to create the wealth from which everyone benefits. Most importantly, it refrains from implementing harmful policies that reduce economic growth and increase poverty.

The social policies of non-liberal governments tend to have a much narrower focus, mainly aimed at transferring material resources from the more productive members of the population to the needy. The principal mechanisms are social security systems and the creation of statutory biases that benefit some groups at the expense of others. The policies tend to constrain economic growth and retard the rate of poverty reduction.

A liberal social policy covers all spheres of life

Liberals should view social policy in the light of all the political, economic, and social advantages that result from the application of a truly liberal philosophy. The advantages are that in a liberal order:

  • People are free, independent, and self-supporting.
  • Government confines itself to a limited range of core activities (police, law courts, defence) and aims at a lowest possible budget and commensurately low taxes.
  • The rule of law is followed so that all citizens benefit from equality before the law.
  • Economic freedom prevails and provides the greatest welfare to the greatest number in the shortest time.
  • The society relies on the entrepreneurs in its midst to innovate, risk, and create wealth as rapidly as they can within the confines of a framework of just laws that neither creates barriers to entry for competition nor imposes unnecessary costs on firms.
  • All services, including education and healthcare, are left to efficient competitive private providers to give people the greatest choice and highest quality at the lowest prices.
  • There is a vast network of compassionate individuals who finance, manage and run old age homes, hospices, orphanages and other such institutions, including members of churches and other voluntary associations, caring for the old, the sick, the vulnerable and the destitute.
  • Limited taxpayer resources are used frugally and efficiently to ensure that the core functions of government are properly performed and that no one in real need “falls through the cracks” or is turned away because demand exceeds supply.
  • Social security is organised in a manner that leaves the self-esteem of its beneficiaries intact.

Social policy and its objectives

Charles Murray, the author of Losing Ground: American Social Policy 1950-1980, chronicled the social policy failings in the U.S.A. He then wrote In Pursuit of Happiness and Good Government in which he suggested policy changes that he believed would improve conditions in America. What follows borrows heavily from his comments and proposals, but he is naturally not responsible for the content and especially not for any misinterpretations.

A liberal social policy would recognise that a government cannot make people happy but can create conditions that are favourable for the pursuit of happiness. The object of government is to provide enabling conditions (a framework) in which everyone can pursue happiness – defined by Murray as “lasting and justified satisfaction with one’s life as a whole” – in their own way. (The notion of government adopting policies that will allow people to engage in the “pursuit of happiness” was mentioned in the U.S. Declaration of Independence and has significant relevance for liberals in their search for a social policy that is consistent with liberal principles.

There are many different ways of tackling social problems, and they all have hidden costs

Concern over poverty, crime rates, lack of access to health care and such matters does not automatically provide ready-made government policies for addressing these issues or establishing what government’s end goal should be. Social policy is a relatively new concept that has evolved as countries have become more affluent – the USA had no social policy until well into the twentieth century. All aspects of life are important, including the achievement of safety, self-respect and self-fulfilment, and policy should not concentrate solely on material welfare. It is extremely difficult to measure success in addressing social issues – there can be no certainty that any particular measure is achieving overall desirable results e.g. if taxes are raised in order to alleviate the poverty of some people, it is likely to reduce employment opportunities and cause deprivation elsewhere.

Merely because it is difficult, does not mean that South Africans should not get to know each other better to build a more integrated culture and formulate cohesive plans for the future. There is no reason why peace and goodwill should not reign in this beautiful country of ours.