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Gilbert Samson
 
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What is an economy anyway?

26 May 2014, 15:17

I left South Africa 24 years ago and have been travelling the world since then. Have lived and worked in 11 different countries and have gained a global perspective of economics and political systems. I have left the fish bowl of those that have never had the opportunity of travel and offer a different perspective not tarnished by self interest and fears of those living in the fish bowl.

With all this talk of wealth redistribution and economic freedom we need to get some understanding of basic economics. What is money? Money is a store of value. When we purchase something we exchange money for something we perceive as having value. Why does it have value? It has value because it takes effort to produce, is useful etc. The concept of value is basic to economics. Economic growth is related to hard work and effort. More work/effort being done in a country results in that country’s economy growing. No country is an island in our modern world so the economy of a country overlaps with the world’s economy.

Countries require goods from outside and must sell goods to the rest of the world to finance these purchases. Those countries that have tried the island model where they isolate themselves from the rest of the world and attempt some system driven by an ideology have all failed. We can look at North Korea, Cambodia, Burma etc. as examples. Here we have systems that have caused great suffering and the deaths of millions. Closer to South Africa  we can look to Zimbabwe as a further example of an island economy where policies of so called africanisation/indigenization  of the economy have destroyed the economy and resulted in mass starvation and a failed state. Millions of refugees in South Africa bear testimony to this.

For a country to be successful it needs to increase the useful activities within its borders. It needs to harness all the skills of it peoples. If there are people that are good at farming they need to be encouraged to farm, if there are people who are good managers they need to be encouraged to be managers, if there are creative people they need to be encouraged to create. People need confidence to invest and build business. The children of successful people need to believe in the future and continue growing their business or start new ones.

To grow the economy capital and skills need to be enabled to generate business activity. Any country that seeks to destroy a productive portion of its economy for the sake of some political ideology is doomed to failure. Here we can look at the example of buying productive farms using tax payers money to hand these over to people that will not be able to keep them productive. We use the capital of the country to destroy a productive part of the economy. We can look at having racial discrimination where young candidates with higher levels of skill are not admitted into positions because of the color of their skin in favor of those with lower skills because they have a skin color that does not match the political elite. This is obviously a squandering the skill base of a country.

In the game of economics it is a competition between countries for growth. If a country can sell more of its products it prospers. If not it withers. This system is sink or swim, there are winners and losers. The system does not care about political ideology. The country either has quality goods to sell the world or not. South Africa would do well to bear this in mind when implementing policies that destroy its chance of success. It has a unique history and peoples with skills and abilities. Success is not guaranteed and all efforts should be made to harness the skills of all of its peoples. All of its peoples need to feel they have a valuable part to play. Victimize those with skills and watch your economy shrink. Encourage those with skills to flourish and learn from them and prosper. The world cares not whether the South Africa prospers or not. Your children do, so make the right choices.

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