BY GIVING away half of his fortune, mining billionaire Patrice Motsepe has done South Africa an enormous service, and not just in an immediate, physical sense, although that is by no means insubstantial in itself.
His act of generosity demonstrates that the rich do not have to be seen as heedless ogres living the high life, cut off from society, which radical politicians and the trade unions tend to make them out to be. Most wealthy people care deeply about the state of the country and the direction in which it is moving.
And what a great moment to make such an enormous gift. The development of all great societies is punctuated by acts of generosity, both big and small, by people rich and poor. Such generosity is not necessarily measured in monetary terms; it can take the form of a generosity of spirit — take Nelson Mandela’s preparedness to forgive, if not forget, those who took away 27 years of his life, for example.
However, after a year of increasingly frequent and violent service delivery protests, bitter political infighting in the ruling party and angry labour disputes, it is a reminder that the important thing is not how rich you are, but who you are as an individual.
In showing that he is more than just a designer suit and wad of cash, Mr Motsepe has implicitly thrown down the gauntlet to other rich South Africans, particularly black economic empowerment moguls — who were, after all, handed their riches thanks to a special dispensation — to demonstrate their commitment to not only the wellbeing of the poor but also to the long-term development of society.
Wealthy blacks are not alone in bearing this responsibility. The beneficiaries of past "special dispensations", from colonialism to apartheid, have even more of a moral obligation to give back to society. And they have: there is no tradition of ostentatious philanthropy in South Africa, but you don’t have to scratch the surface too deeply to reveal the benign influence wealthy families such as the Oppenheimers and Ruperts have had on society.
One note of caution is in order, however. This commitment cannot always be measured in terms of how much money you give away. Great gifts are always laudable and make for good headlines. But, in some ways, the greatest gift the rich can make is to keep capital engaged in the real economy. The real function of capitalists is to invigorate the commercial process. In doing so, as Adam Smith recognised, by acting ostensibly in their own best interests they inadvertently create the context for ever-greater riches for society as a whole.
There is another aspect of Mr Motsepe’s philanthropy that is worth pondering: is inequality, by definition, bad for the economy? Liberal and left-wing politicians celebrate the gift on the basis that it will help to level income through the society. An innate sense of fairness, justice and morality would support this view.
Yet it is possible to argue from the opposite direction: that spectacular gifts from the rich, like those made by Microsoft founder Bill Gates and celebrity investor Warren Buffett, underline the utility of entrepreneurship, as their gifts to society are rooted in their ability to generate the wealth in the first place. No private person in the Soviet Union ever gave anyone anything of great value; there was nothing to give.
As morally compelling as the notion of a classless society might be, the idea that inequality is necessarily bad for the economy and society is at least questionable. Recently, the two leading left-wing economists of our day, Joseph Stiglitz and Paul Krugman, could not agree on this issue. Prof Stiglitz argues, among other things, that inequality is "squelching" the US economic recovery because the middle class is too weak to support the consumer spending that has historically driven economic growth. In other words, because richer people save more and spend less than poorer people, consumption tends to decline as inequality increases. Prof Krugman counters that, although it i s true that at any given point the rich have far higher savings rates than the poor, it turns out this is a statistical illusion. Consumer spending tends to reflect expected income for an extended period. "Economics is not a morality play," he says.
Yet, in some ways it is. The notion of inequality can be as destabilising as the reality of it. There is an inverse link between income inequality and social cohesion. One easy measure is the murder rate: the correlation between the murder rate and inequality is very high, although other factors are undoubtedly at play too. It seems logical that the more equal a society, the more people are likely to trust each other.
Yet it also seems logical that too flat an income-distribution curve can depress the incentive to grow, and there is some empirical research that suggests growth tends to be shorter and weaker in societies that do not reward innovation sufficiently. It seems a degree of inequality in society is necessary as an incentive to drive entrepreneurship, risk-taking and innovation. But the empirical research is complicated and contradictory.
One thing we do know is that forced redistribution depresses economic growth drastically. That is why voluntary redistribution is so important. Reducing inequality in South Africa needs to happen, but it needs to happen progressively and voluntarily. Mr Motsepe’s gift fits very comfortably into that requirement and that is why he should be lauded for it beyond the gift itself.