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?