Elon Musk’s great escape: SA’s loss, USA’s gain

In the hypothetical scenario explored by Andrew Kenny in this article suggests that had Elon Musk remained in his birthplace, the constraints imposed by the ANC’s policies would likely have hindered his ability to achieve the remarkable success he has experienced in the United States. Kenny argues that South Africa’s restrictive labor laws, complex Black Economic Empowerment (BEE) requirements, and challenges posed by organised crime elements, such as the construction Mafia, would have presented significant obstacles for Musk. Furthermore, the author contends that the ANC’s policies have contributed to deindustrialization, contrasting sharply with Musk’s emphasis on promoting industrialisation and technological advancements. Kenny highlights the unique circumstances in the USA that allowed Musk to thrive and suggests that such conditions would not have been present in South Africa under the ANC’s governance.

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If Elon Musk had stayed in South Africa

By Andrew Kenny*

Where would Elon Musk be now if he had not left South Africa? Probable answers: he might be in a prison or in a morgue.

Musk left South Africa, his birthplace, in 1989 at the age of 18. He went first to Canada and then to the USA. There he did things that would have been impossible in South Africa: he started new industries; he employed large numbers of people and developed their skills; he pioneered new technologies; he promoted massive industrialisation; he advanced science and technology on a huge scale; he gave customers a wonderful new range of products and services at competitive prices; he brought new prosperity. The ANC would have fought like a tiger to stop his doing any of these things.

Employing large numbers of people? The ANC has spent 29 years passing laws to make it as difficult and dangerous as possible for a private employer to employ anyone. This is the main reason why we have 42,4% unemployment (including those who have given up looking for work), a rate not only higher than that of any similar developing economy anywhere on Earth but off the scale. The ANC labour laws have made conditions of employment so expensive, complicated, bureaucratic and dangerous that companies are too scared to employ anyone, and so do not expand. Some even close here and move offshore – or never start up in the first place. By contrast, a main reason why the USA has had such a booming, prosperous economy over the last two centuries or more, and why it has been so inventive and productive, is because it is so easy to employ people. A mythical businessman explains in two words why unemployment is so low in America: “You’re fired!” If it is easy to fire people, companies will hire more people. They will keep and develop the majority of workers, who are honest, diligent and hard-working, and fire only the few who are dishonest or lazy. Under the ANC’s labour laws, Elon Musk could not have set up his huge factories, employing large numbers of people.

Read more: SpaceX launches first Starlink satellites for global mobile coverage – Could SA fall further behind?

Starting new industries? In the USA, you are free to do so – encouraged to do so. In South Africa, you are not free to do so. For a start, if you want to set up a new company in South Africa, you must immediately surrender 30% of the wealth of your company to a BEE partner. The BEE partner must have the right skin colour and the right political connections. BEE is exceedingly complicated, with obscure “BEE scorecards”. You will probably need expensive lawyers to make sure you comply. The penalties for failing to comply are draconian. In September 2016, Cyril Ramaphosa, then Deputy President of South Africa, warned that individuals found guilty of BEE fronting could be punished with 10 years in prison. Ramaphosa was very threatening about this. He wanted potential investors to know that South Africa is a dangerous place to do business. Fronting seems to mean appointing to a high position in the company some highly talented, highly promising but unqualified and unknown black person with no links to the rich and powerful in the ANC. Spotting the talent of some humble worker and promoting him to a high position is just the sort of thing Elon Musk would be likely to do. He has made his fortunes by seeing potential where others could not see it. So if Elon Musk had started up a large car factory in South Africa, employing thousands of workers, and if some labour inspector or investigative journalist had discovered that one of his black executives had a humble, working-class background, Musk could have been arrested and thrown in prison for ten years.

In his factories, Musk, like all American entrepreneurs, wants to buy the best factory equipment, such as machine tools, materials and components, at the lowest prices, and he wants to buy them directly through the suppliers. In South Africa this is not allowed. In South Africa, you must buy shoddy goods at high prices through a BEE middleman, who makes a fortune. The whole purpose of BEE is to enrich further the rich cronies of the ANC at the expense of the poor people. Public hospitals, for example, are obliged to buy medical equipment that is often sub-standard at very high prices through a BEE contractor. Public money is squandered and the poor patients at the hospital suffer but the BEE middleman does splendidly. I am sure this is why the ANC is so keen on the NHI: it will provide opportunities for looting on an enormous scale. Deployed cadres at the NHI hospitals will make millions, BEE contractors millions more. Poor, sick black people will die, but that is of no consequence to the ANC. Musk would have refused to operate under these conditions, so his factories could never have started here.

Another danger Musk would have faced here is the construction Mafia. Musk has the reputation of starting up many new factories and industries. If the word got around that he was thinking of building a big manufacturing plant in some poor part of a black township, the construction Mafia would have moved in. When Musk arrived on the new site, he would have been surrounded by men with guns, including AK47s. A gun would have been pointed at his head and he would have been ordered to hand over another 30% of his company to this “business forum” or be murdered. South Africa is becoming a gangster state, and it is becoming increasingly difficult to distinguish between the ruling political party and organised crime. Why did the then Minister of Transport, Fikile Mbalula, refuse to take action against the taxi Mafia, who were attacking Intercape buses going from Cape Town to the Eastern Cape? I do not know. Are elements of the ANC connected to the construction Mafia? I do not know. But I do know that Elon Musk is not the sort of man who would bow to the Mafia and meekly give them a lot of money (as other businessmen have been advised to do). He would have stood up to them. And so he might have ended up in a morgue.

In the USA, Musk moved a big manufacturing plant from California to Texas. He did so to escape the onerous taxes and regulations of California, which made it difficult to do business there. Texas had lower taxes and was friendly to business. One of the reasons for the unprecedented prosperity of the USA is the great autonomy given to the different states. They have wide powers for raising taxes and making laws. They compete with each other for business and trade. This is anathema to the ANC. The ANC believes in one highly centralised state, with all business and trade strictly under its control. During negotiations for a new South Africa, the National Party fought feebly for federalism, with considerable powers for the provinces. The ANC fought strongly for one monolithic state. The ANC is horrified at the success of the Western Cape, the only province it does not control, and would love to destroy its very limited autonomy. Musk could not move to another province more friendly to business than the Western Cape. There aren’t any.

Read more: Elon Musk unleashes critique on US financial markets, decries regulatory burden and passive investing

Musk promotes industrialisation, in his new cars, in his astonishingly successful rockets, and elsewhere. (I think electric cars are expensive, fairly bad for the environment, and have a limited future and only in certain niche markets, such as inner city driving, but I cannot deny the enormous commercial success of Musk’s Teslas.) The ANC has spent the last 29 years de-industrialising South Africa. It reversed the strong industrial advance that happened under apartheid. Smelters have been shut down; manufacturing has shrunk; our once booming textile industry has been ravaged; great mining corporations have fled the country; industrial companies are leaving the JSE all the time. The ruin of our once excellent electricity supply and the collapse of our railways has accelerated deindustrialisation. All of this is because of ANC policies. Musk could not have developed industrialisation here – he would not have been allowed to do so.

Most big capitalists are political cowards, bowing to whatever stupid ideology is prevalent. Hitler had no trouble at all into making the big industrial corporations in Germany do whatever he told them to do. Lenin could have done the same if he had wanted to. (Instead he smashed private enterprise in Russia and so caused mass poverty and starvation.) Right now, the big corporations are mainly as woke as readers of the Daily Maverick or the Guardian and believe, or pretend to believe, in the nonsense of climate hysteria and the drivel of DIE (Diversity, Inclusion and Equity). They subscribe to the rubbish of ESG (Environmental, Social and corporate Governance) which, if implemented, would do harm to poor people and the environment but would win applause from human resources departments. Musk seems different. He has publicly questioned some of these silly but destructive ideas. When he took over Twitter, and renamed it X, he struck a blow for freedom of speech, which made him hated by the woke elite, who believe free speech is “right-wing”. The proper left-winger believes in strict censorship by the ruling class. A dramatic instance of Twitter censorship happened in October 2020.

This was a month before the US presidential election, when Joseph Biden was running for the Democratic Party and Donald Trump for the Republican. In October, a story arose about a laptop found abandoned earlier in a Delaware computer shop. The laptop contained emails of a scandalous nature about sex, drug addiction, alcoholism and fraud. The New York Post claimed that the laptop belonged to Hunter Biden, son of the presidential candidate, and contained evidence of very serious political corruption by both Hunter Biden and Joseph Biden. This could have had an important effect on the election a month ahead. It might have lost the election for Joe Biden. But the woke army moved in swiftly to prevent this happening. Almost all the mainstream media, including the New York Times and the Washington Post, dismissed the story as fake news, as Russian disinformation, as right-wing distortion – all that sort of thing. Twitter cancelled the story altogether. It removed it from its screens. It turned out – after the election – that the story was all true. It was Hunter Biden’s laptop. The emails were genuine and came from him. The drug addiction, whoring, impregnation of an exotic dancer, and so on, are of no political consequence. The huge alleged corruption, including massive improper deals with China and the Ukraine, involving both Biden father and son, exploiting the political influence of the father, was of enormous political consequence. I believe Joe Biden is possibly the worst president the USA has ever had and one of the most corrupt. Elon Musk subsequently took over Twitter, renamed it X, and proceeded to end its cancel culture, allowing all to tell their stories. This is probably the main reason he has become so hated among the ruling elite.

Elon Musk is a remarkable man, an astonishing man. I should not have thought it possible to do what he has done with rocketry. SpaceX amazes me. He is one of the great benefactors of our age, a supreme example of what capitalism can achieve. But I’m sure he is not unique. I am sure budding Elon Musks have been born in different countries down the ages; I am sure there are budding black Elon Musks in our midst right now in South Africa. But very few of them are ever born into the right circumstances for them to flourish and invent, for them to make themselves rich and do great good for people everywhere. Our Musk, from Pretoria Boys High, did find the right circumstances in the USA. He would never have found them here, in South Africa, under the ANC.