PLEASE NOTE:

MyNews24 is a user-generated section of News24.com. The stories here come from users.

 
klasvaakie
 
Comments: 12
Article views: 534
 
 
Latest Badges:


 
View all klasvaakie's badges.
 

Economy and state

28 June 2012, 07:14

So...our problems in South Africa are many...and most of them stem from the fact that our government in South Africa came to power, and tried to take on the powerhouses of South African economy and redistribute them (mainly amongst themselves) in order to fight inequality. This was a very bad move to have made purely because it wasted time and resources that could have been spent in a better way. To motivate this statement, I will first explain a few things.

Lets look at economy dumbed down a bit. Basically, you get two types of players in a capitalist economy. They are wealth creators and wealth consumers. A wealth creator is any entity that produces a product or a service. They generate wealth with their profits and spread it amongst the people with salaries and dividents on shares. Then you get wealth consumers. There is only one realy large wealth consumer in any economy, and that is the state. The state spends money, that they take from our taxes for a varied numbers of reasons. Some people may argue that the state also employs people, but the money they pay these people with, come from our taxes, therefore they dont actually create wealth, they take it from the wealth creators to spend it on their various needs. Now, this is in many ways a good thing, if the state remains small enough not to consume too much of the wealth generated by the rest of the economy. The state spends this money on law enforcement, judiciary, defence forces, infrastucture, policies etc. If all these things run well, then it brings about an atmosphere where wealth creators can come in and generate more wealth in the country, which in turn will generate more revenue for the government to keep improving the country.

Now comes the problem South Africa is getting a lot closer to. The state is growing larger and larger. We get new state entities that need to be funded and the only funding that is available for them is from the wealth creators. With the call for nationalisation, if it ever happens, this will mean that the state will have to grow by a large amount, with administrators, employees etc, all being paid for by the state coffers. There is the attitude that the mine's profits will be able to pay for this, but this is false. In all capitalist ventures, profit (wealth creation) is a huge drive to ensure that the venture remains efficient. In a government venture, profit isnt a motivator at all, because the government will keep paying your salary even if no profits are made, and they keep bailing it out because they will have to. This type of event is a huge drain on a economy's wealth generation, eventually leading it to shrink. Because if the state grows so large, that the majority of the economy happens within itself, then the economy will not be able to support the state anymore. So when the government says it wants to play a larger role in the economy, dont expect it to grow.

The answer to all this is to shrink the state, lower taxes and create policies that will enhance wealth generation. Countries that have previously taken this route, have shown amazing economic growth, some as high as 12% a year. Also, with a decrease in taxes and an increase in overall wealth, tax revenue was actually higher than before, purely because there was so much more that could be taxed. The added benifit to this will be the creation of new economic powerhouses. This will lead to newer players being able to come into the field and this includes BEE players. The economy will grow so much larger in just a few years that employers will be forced to look at BEE candidates, because there wont be enough white people to fill the roles required. Lower taxes is also a great incentive for foreign investment, which in turn wil create more wealth and jobs, which in turn will create a higher standard of living for all people. The only real role the govenrment needs to play in an economy is clever expansion and maintenance of infrastructure and policies that make it easier for entrepreneurs to come into the economy and make a success of their enterprises because this will bring about employment and more wealth for the average citizen.

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.
 

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
12 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Submitted by
Godless Heathen
Dead Beat Dad and Poverty continu...

So on Tuesday I published the article and was unable to respond personally, Some of us have to work for a living. A couple of things came up that I want to respond to. Read more...

4 comments 273 views
Submitted by
MkanyaGP
Anyone know of these people? Coul...

My wife got a call from a number this morning (0319405487) she answered and Indian woman was asking her if she has received her golden cards yet and she said no, and the lady apologised. Read more...

13 comments 1615 views
Submitted by
Louis Wolmarans
Proving the Catchphrase “Time = M...

The catchphrase “Time = Money” is used by various business people, movies, and smart arses. However, the truth of the matter is that “Money= Time” Read more...

3 comments 373 views
Submitted by
Adriaan
To those that hate God...

To those that hate God and everything else that goes with it. Read more...

110 comments 924 views
Submitted by
Mark Peach
To my mother, in anticipation of ...

There is a growing distance between us and my mother-in-law. You can see it in her eyes.  Read more...

9 comments 1227 views
Submitted by
Mpho Sindane
Irregular spending a regular fail...

Service delivery protests will continue unabated for as long as our elected representatives fail to manage public finance properly.  Read more...

5 comments 589 views

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Save up to 30% off top fragrances

Get mind blowing savings on selected fragrances. Offer valid while stocks last. Shop now!

Up to 40% off fashion accessories

Save up to 40% on selected handbags, purses, watches, jewellery and more. Offer valid while stocks last. Shop now!

Save up to R2000 on top electronics

Get every day mind bowing savings on top electronics. Offer valid while stocks last. Shop now!

Save up to 50% on Women’s month treats!

Celebrate the awesome women in your life with awesome treats like beauty products, fashion accessories, bestselling books, electronics and more. Offer valid while stocks last. Shop now!

Up to 60% off - clearance sale!

Save up to 60% on appliances, books, electronics, toys, movies and more. Offer valid while stocks last. Shop now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

 

services

E-mail Alerts The latest headlines in your inbox

RSS feeds News delivered really simply.

Mobile News24 on your mobile or PDA

E-mail Newsletters You choose what you want

News24 on your iPhone Get News24 headlines on your iPhone.

SMS Alerts Get breaking news stories via SMS.

Blogs Your opinion on you, me and everyone.

Calais Website keywords automated by OpenCalais.

 
Interactive Advertising Bureau
 
© 2014 24.com. All rights reserved.
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.