3 rules to grow South Africa’s economy

Efficient Group founder and chief economist Dawie Roodt said the three pillars of a strong economy are private property rights, free trade, and sound money.

Roodt highlighted that economics is not about graphs, formulas, and exchange rates. It is about one thing only – people.

“Economists use tools like graphs, economic formulas and the like to understand people better,” he said.

He added that economics is straightforward to understand and that there are three important principles for a healthy economy.

Private property rights

Roodt said it is crucial to protect private property rights to facilitate economic growth.

If private property is not protected and looting of shops or expropriation without compensation occurs, the economy will get crushed.

Free trade

Another important component of a healthy economy is to allow people to trade with one another.

People must be allowed to buy and sell goods and services, including labour, without impediment. The state’s role is to facilitate free trade.

Sound money

The third principle for a healthy economy is sound and trusted money.

A trusted currency facilitates free trade. For money to be trusted, there must be low levels of inflation, and it must be suitable to measure the price of things relative to one another.

The combination of these three principles creates a great environment for economic growth and a “free lunch”.

“When you allow two individuals to trade freely with one another, they create a free lunch because they are both better off after the transaction than before it,” he said.

“The more trade we can generate, allow, and facilitate in an economy, the more free launches we create.”

As a result, the economy becomes more successful, and the country becomes wealthier.

However, it is not possible to have free trade between individuals if they do not own things. It is why it is so important to protect private property rights.

“If you implement these three principles, it will guarantee success in an economy,” Roodt said.