“Capitalism doesn't know spirits but we know spirits”…

… according to Julius Malema, president of the ANC Youth League, in a recent article. I don’t know how “we” are, but I am hoping he did not mean politicians.

In any case, I have a different take: Malema cares more about his principles than about people.

The article talks about two things. Firstly, Malema says that all mines in South Africa should be nationalised because the Freedom Charter says that mineral resources should be the property of the people. This is a wonderful principle, but if we care about people, we should look at what produces the greatest welfare (happiness). It is far from obvious that ownership by ‘the people’* will result in more happiness than private ownership – even if we are only interested in the welfare of ‘the people’ and not those evil capitalists.

Maybe the evil capitalists will actually be able to invest better, more and organize production in a more efficient way than ‘the people’. Increased productivity will result in better wages for the people.

Secondly, the article talks about how digging has begun in areas where graves are situated. This has been an issue recently in Lesotho, and this is the inspiration for Malema’s comments on spirits.

This could be interpreted as big company versus the rights of the little people to hold certain areas sacred – and this would be an issue all over the world. But those rights are not all that matters – lots of other things contribute to happiness too. For example, employment and the income that results from it; or the provision of publicly-funded good like education, both of which are likely to increase if a mine opens which then employs people and pays taxes.

Economics shows us a way of increasing happiness even if graves are moved – by paying compensation. Wouldn’t it be cold-hearted not to consider that? Surely only someone who cares less about people than their own principles would not consider a way to increase the amount of happiness in the world.

* I will totally ignore the fact here that nationalisation is rarely, in fact, ownership by ‘the people’, but more, control by a political elite, who are often corrupt. This might seem better than control by an evil capitalist elite, but at least the capitalist has an interest in producing things than can be consumed by people and therefore in increasing the size of the pie. The politician tends to have an interest only in grabbing as much of the current pie as possible and not in increasing production leaving less (health, education, roads, food, corrugated iron roofs, transport, fun nights out, sport,…) for everyone to consume.

Hat Tip: Matt Morley (who doesn’t necessarily agree with this perspective)