Any objective examination of BEE will reveal that it is incapable of transforming the South African economic landscape for the vast majority of poor South Africans. A careful investigation of BEE produces the amazing insight that BEE is based upon the discredited trickle-down policy of Ronald Regan. One must ask how is it possible that the ideologically left leaning ANC can so enthusiastically be adopting the policies of the far right Ronald Regan era?
The basis of BEE (and its offspring BBBEE) is that the active participation by black persons in the acquisition of ownership and management control of business will be to the benefit of the vast majority of poor people living in South Africa. This is the trickle-down policy of Ronald Regan with a twist and which assumes that the poor in the country will benefit by creating a small class of rich black capitalists. Rich black capitalists we are expected to believe are different from rich white capitalists and by creating such rich black capitalists everybody will benefit.
As the very briefest of evidence for my view I present two statistics that we are constantly bombarded with to prove that the economic situation in South Africa has not changed. The first statistic is that the majority of directors of JSE listed companies are white males. How does this illustrate my point? Even if all the directors of companies listed on the JSE were black, this would amount to less than 0.04% of the population and we would have done very little to change the life of the other 50 million people in the country. The assumption appears to be that black capitalists are somehow different from white capitalists and that black directors will be more sympathetic to black people. I, on the other hand, assume that black directors, like white directors, are firstly concerned about their remuneration and perks and only after a long list of other concerns are they vaguely interested in the people who work for them. Evidence and human nature would, I submit, bear me out.
The second statistic that gets bandied about is direct black ownership in companies listed on the JSE. This statistic is meaningless to the vast majority of South Africans, both black and white. Very few people in South Africa own shares directly on the JSE. Very few South Africans are going to own shares directly on the JSE no matter what the government does. Yet millions of South Africans own shares on the JSE via pension funds, provident funds and Unit Trusts. The wellbeing of the vast majority of South Africans (at least those with jobs and pensions) is directly affected by indirect investments made on the JSE. Despite this, we persist in using black direct investment as a measurement. The amount invested by ordinary working class people in the stock market via pension funds and unit trusts should be the measurement, not how much of the stock market is owned by a select few rich black investors. If you believe in the ANCs version of the trickle-down theory all you need to do is make sure that the majority of shares on the JSE are owned by black people (not that the majority of black people own shares on the JSE) and voila the magic of trickle-down theory will do the rest.
Wage earner fund
BEE should be replaced with wage earner funds. Every business should be obliged to set aside 5% of taxable income in an employee wage earner trust fund. The objective of the trust fund will be to promote education and housing for employees and their children. Obviously this will need to be fleshed out with rules etc. A crucial detail to be decided is the earnings threshold for employees to qualify to participate. As a rough indication I would propose that preference be given to employees earning less than 5 times the poverty line and an absolute bar to persons earning more than 10 times the poverty line.
Various funds could be established for small employers who are unable or unwilling to undertake the administration of the wage earner funds or where the wage earner funds are insufficient to warrant a separate trust being set up. Perhaps this function could be outsourced along the lines of medical aid funds or umbrella pension funds?
As a sop to business let’s get rid of the Skills Development levy. The less said about this sad and sorry waste of taxpayers’ money the better. Some of this function will, in any event, be undertaken by the wage earner trust.
The above proposal could see R 36 billion being spent by business on housing and education for employees in the 2015 financial year alone. This money would be spent directly without involving a middle man (Government) and will be managed and controlled by business and labour together. What’s more this money will be spent directly on the working poor and not the middle class or the rich, a dedicated levy for the poor if you like. If we are truly serious about doing something for the poor in this country this would be a good start.
The provision of education and housing by employers for their employees will reduce the demands on the government purse and so enable the government to concentrate on providing for the unemployed poor.
Let’s do something radical and let’s do it now.
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