Monday, February 16, 2009

"Grant" is a Bad Word

My involvement with the Department of Health has exposed me to many of the shenanigans that circulate through the social welfare circles. The current problem I'm dealing with involves the forgery of documents that show HIV test results. But get this: the perpetrators are trying to prove that they're HIV positive so they can get the grant.

My understanding has always been that a grant is meant to serve as a "compensation", but here it clearly works as an "incentive". I was aware of the same problem in Britain, another showcase for handouts. In Scotland, young single women were deliberatly getting pregnant so they could get the single mother grant. The outcome is very much opposite to the intent. I don't doubt the department's good intentions, but they seem to misunderstand human nature.

The Basic Income Grant (BIG) is a hot topic ahead of the elections. Parties are going around promising free money for everyone, effectively, and no doubt those promises are worth some votes. The ACDP investigated the BIG and found a very sizeable problem: the cost of administration was the same as the grant itself. Not only that, but the system is open to huge amounts of fraud. In the end the BIG comes back full circle to where it started, because it requires additional tax income (by "creative" means, as the ANC puts it), so the citizens are simply getting back what they paid in, and forking out for a whole lot of lousy administration in-between.

Grants are nothing more than a plaster. The economy is in trouble, and while most of the other parties go around promising more band-aids, the ACDP is promising to target the source of the problem itself: a bleeding economy. The ANC Minister of Labour spoke on SABC's Interface about sticking with "tried and tested" formulas used by the current government. It's a pity he stopped in the middle of his sentence - he meant to say "tried, tested and failed". History and research show undeniably that socialist and communist economic policies kill off economies, while the ACDP promises the "tried, tested and successful" principles of free market economy, with deregulation, less bureaucracy and smaller government.

I don't doubt that some level of social welfare through grants is necessary, but I argue firstly that the size of grants on offer is counter-productive, and secondly, that you can administer grants in more effective ways. Basically, social welfare works far more effectively when you adopt the mindset of "incentive" rather than "compensation", as I alluded to earlier. In this regard, work-for-food schemes, small business incentives and tax breaks for labour-intensive industry spend less on outflow and gain more in inflow. The object of social welfare is to move its recipient towards self dependency, and I'm sure you share my position that cash handouts fail to do that for the most part. In simple terms, the fear of not having enough to live on drives you to find a job, while earning a grant you can live on creates a crowd of unproductive dependents.

In the end, grants are a form of financial enslavement of the people to a bloated, centralist bureaucracy, the king of all "big business". While the throngs have so often voted for parties that offer short term thrills and spills, maybe you've done enough homework to realise that the solution to South Africa's economic woes is less government and more democracy.

DISCLAIMER: This blog serves as a commentary and the views presented are not necessary the official views of the ACDP. For official statements and contact details, visit: