Gateway Legislation: How ethical consumerism is the key to tackling corruption and state capture

To understand how best to deal with corruption, we first have to understand the system and its weaknesses.  In SA we have a system where state companies are being privatised and private companies are competing for state tenders.  This kind of system will always be prone to corruption because on the one hand you have companies bargaining for their own benefit, while on the other you have state officials with no stake in the negotiations, except a possible bribe, and who are dealing in billions in other peoples money (the taxpayer’s).

Whenever you have people dealing with money that’s not theirs, that is a weak point for the corrupt to target. As long as we have privatization and tendering, you can be pretty sure there will be corruption of some sort. As history has shown, there is nothing we can do to effectively stop corruption.  It is built into the system.

So what can be done about it?

Instead of trying only to prevent corruption using prohibition, the answer lies in Gateway Legislation.  Gateway legislation ensures government expenditure does what it’s supposed to do, which is to benefit the country as a whole, instead of a few well connected individuals.

Sound far fetched?

Well, what would happen if instead of just trying to ban corruption we also made sure the state, SOEs and any company being privatised or doing business with the state complied with the following?
1) It must be South African owned and staffed.
2) It pays all its workers a living wage and the pay gap in the company between workers and executives is a reasonable multiple (say 1 to 10).  For more on the many benefits of salary gap moderation click here.
3) workers in that company own a reasonable amount of shares and thus share in any gains from state contracts. 

Under the above 3 conditions, any proceeds from government contracts would spread into the communities that need money the most, reducing inequality and creating demand, jobs, economic growth, and the real meaningfull economic transformation that has thus far not occurred.

Our current race based empowerment programs, while necessary, have only been marginally successful.  Workers in companies making billions are still surviving on poverty wages, while CEO’s and shareholders make a fortune.  Its arguable that non-racial Gateway Legislation like salary gap moderation will be much more effective at spreading wealth than race based BEE programs have been.

Another advantage of Gateway Legislation is that by spreading the proceeds of state contracts, you reduce the personal incentive behind corruption, increasing the risk to reward ratio for the actors in state capture, making corruption less attractive, more complicated to organize and more difficult to conceal. So corruption will be reduced, and even when it does still occur, by spreading the proceeds into our poorest communities, it will benefit the entire country.


As the consumer, we citizens have not only the right, but the responsibility to ensure our that our government spends our tax money in ways that benefit our people, our businesses, our economy and our environment. Gateway legislation is a simple, effective way to practice ethical consumerism.

With Gateway Legislation in place, instead of ending up in some tax haven overseas, or some billionaire tendrepreneurs trust fund, the proceeds from any government contract, corrupt or not, would be spread into our poorest communities, stimulating and growing our economy and tax base, and creating demand for the goods and services the rest of us are selling.  What are we waiting for?

This entry was posted in capitalism, cheating, corruption, democracy, economics, entrepreneurs, equality, financial, freedom, government, human rights, inequality, leadership, politics, prosperity, Rand, Reserves, revolution, socialism, South Africa, South African economy, Uncategorized, wealth creation. Bookmark the permalink.

5 Responses to Gateway Legislation: How ethical consumerism is the key to tackling corruption and state capture

  1. Pingback: Gateway Legislation: How to tackle corruption in SA | Buddy Wells' Blog

  2. abookandart says:

    It will never pass because the system as it is represents humanity as it is, behind the facades and masquerades. Being corrupt and corrupting is our quintessential nature, so no amount of legislating is going to change this fundamental flaw within our manifest being. The quick and the clever will find a way to surmount the legislation – that too is within our fundamental nature – the idea of building 10ft walls creates a market for 11 ft ladders.
    We need to get real about our innate nature and our proclivity to trickery, duplicity and false facades – and this has and probably always will be the impossible and insurmountable obstacle. Sadly.

  3. says:

    It’s not a bad idea, but why should it be South African owned and staffed, it just doesn’t make sense? What must they do now? Fire people?

    Secondly, I hope you are going to bring the CEOs salary down and not employees salary up – a living wage is the biggest nonsense ever – either the business can do its job with so many employees at such and such a wage, either it can compete internationally or it can’t. There’s no fantasy world! IT’S BUSINESS. Get it? The USSR collapsed! Duh?

  4. says:

    Do you know how capitalism works?

    1. Lowest electricity costs.
    2. Lowest water costs
    3. Lowest transport costs
    4. Lowest telecommunications costs
    5. Lowest labour costs
    6. Fastest machines
    7. Fastest production
    8. Stable currency
    9. Stable prices
    10. The lowest business taxes
    11. The lowest export duties
    12. The lowest import duties ( in specific products that boosts production such CPUs, Bulldozers etc. )
    13. Good international trade deals.
    14. Best sales offices
    15. Best marketing offices ( that builds your brand )
    16. Most skilled and fastest working employees

    There’s your perfect environment, if you do that 100% and there’s many competitors, then you and other companies compete for labor, then you offer better salaries and attractive benefits to employees – think of business as you think of soccer – you want the star strikers in your team don’t you? So it is competition and businesses doing naturally well that drives wages. Plus keeping costs down. Good sales results.

  5. Wayne Duvenage says:

    Hey Buddy. I think there is merit in what you say, combined with other mechanisms, we should be able to drive something aside from what we currently have. Please let me know where I can contact you to discuss. I’m at Wayneduv on Twitter.

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