Friends & Friction: Time to dump outmoded world-views

2014-06-26 12:00

Have you ever gone to a doctor and explained all your ailments, just for him or her to say: “I don’t know what’s wrong with you”? ­

Often, when that happens, the doctor gives you a placebo that delivers psychological relief as opposed to alleviating your physiological condition.

Quite honestly, most of the people who diagnose the problems facing South Africa are wrong, not because our country is peculiar, but because they were trained at a different time, when conditions were very different to those of today.

They were trained using the world-view that money will always be scarce and expensive. But as we speak, companies are sitting on piles of cash and money is cheap, yet companies are not investing in new projects or employing new people.

Before you shout “it’s the politics, stupid”, let me tell you that this is a global problem – just like youth unemployment and many of the other consequences of our past exuberance that led to the ­financial meltdown.

Ratings agencies and most economists are ­prescribing the wrong medication for South Africa, dishing out old nostrums in the age of medical ­genetics.

This country and indeed the whole world are experiencing new “diseases”, which the ­“economic doctors” have never seen before and so must seek new solutions.

It is the old economic principles that got us into this situation and, as ­Albert Einstein observed, we won’t be able to come out of it by applying the same thinking.

In his state of the nation address, President Jacob Zuma promised new institutions of learning and even pegged a date on which the contractors would start working.

Thank goodness, I thought. Finally the doors of learning and culture would open after Kader Asmal’s disastrous closure of teacher training colleges.

It is not the erection of new structures that should excite us, but what those children will learn and how they will learn. Will these institutions produce highly qualified jobseekers and pour them into an already overcrowded job market, or will they create innovators who will create jobs as ­opposed to seeking them?

When Nhlanhla Nene makes his maiden speech as minister of finance, I hope he will pour a substantial amount of money into the teaching of maths and science in African languages in the same way that Afrikaner children, and many other children around the world, learn in their mother tongues. “ROE” should no longer mean Return on Equity alone but also Return On Education.

And if the minister is serious about wanting companies to invest in new projects that will create jobs, then he must first remove the disincentives before he dishes out new incentives.

The greatest disincentive is capital gains tax and it must be scrapped. Companies want to save

money and, directors ask themselves, why must they invest in new projects when they will get taxed the day they sell their assets?

The youth wage subsidy will not help either. It will be a complete waste of time and resources.

Indeed, it will create a two-tier wage system, as labour federation Cosatu has argued, and will encourage more people to lie about their age, something that many models and soccer players are adept at.

Most importantly, it will add a new layer of bureaucracy, which small business cannot afford.

The problems facing this country will not be solved by adhering to outmoded economic thinking, but by the bold and innovative ideas we as South Africans showed at the beginning of our ­democracy.

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