Semantic Fraud - the Main Reason Why We Pay More

2013-07-07 11:05

A short while ago, a well meaning South African returned from overseas and wrote to the local press pointing out that the day to day costs of living in South Africa often match or exceed those in western Europe. I had experienced the very same whilst trolling through European shops and supermarkets and knew this to be true.

But I could not agree with the conclusions she reached to address the problem of economic hardship in South Africa. She suggested that more should be paid to those doing muscle or grunt work in order to achieve “equity” and contribute to what she understood to be social justice. Uh oh, I thought. That all sounds terribly well meaning and noble. But what would be the cost?

So I asked myself a few questions –

• What could she mean by “social justice”?

• How would “social justice” of this nature (paying more for “grunt” work) change our society? and

• What has the pursuit of “social justice” achieved so far for South Africa? We have had nineteen years to find out.

Let’s look at the facts. For a start, “social justice” in South Africa is highly selective, determined by political definition and not accessible to everybody.

The country has an elite corps of employed, largely unionized workers, many of them working for government, the civil service and parastatals - with most earning way beyond their levels of productivity. Meanwhile, millions are quarantined from work opportunities through institutionalised disincentives and dysfunctional laws, which promote income inequality on a grand scale. In the process, scarce resources get allocated inefficiently because freedom of choice is limited and curtails the efforts of those who might be able to make things happen and add value. Thus, paying more for grunt work would be akin to giving a diabetes sufferer a sugar rush rather than administering medication.

That is because the ultimate and more obscure reasons for our economic predicament differ dramatically from the proximate and obvious. To pay still more for labour – already subject to protective legislation, bureaucratic controls and trade union interference – would simply add to our already inflated costs and obscene levels of unemployment.

The poor, the marginalized, the under- and unemployed today reap the harvest of a government and trade union sponsored wage and labour regime that hurts everybody except those securely employed and shielded by the system. Some of the provisions that promote this include labour preferencing (in the form of laws that curtail hiring options for businesses), prescribing minimum wage levels and protecting dead wood from competition from new job entrants. These all cause costs to increase, give South Africa a reputation for being an expensive place to operate and expose our sheltered labour force as hopelessly inefficient.

The solution – if it were possible – would be to allow individuals and employers free choice of where and for how much they are prepared to work, which would simultaneously slash unemployment levels and reduce inflationary pressures. In the absence of such freedom, costs will continue to escalate, unemployment queues will grow longer and prices must continue to increase. Our trajectory is set fair for comprehensive economic failure.

The philosophy underlying our current situation is one of humane arrogance – the conviction that some (typically, elected politicians, trade union officials, party hacks and pseudo intellectuals) know what is best for others, albeit at the expense of their freedoms. The American commentator Thomas Sowell referred to such people interchangeably as the “anointed” or “self anointed” and F. A. Hayek described their attitude as a “fatal conceit”. Hayek went further, dismissing the term “social justice” as semantic fraud, and pointing to how it erodes individual liberties and seeks to place politicians, bureaucrats and others of similar pedigree in charge of others’ lives.

So next time you are confronted with price hikes in your local supermarket, it might be an idea to reflect on what steps could take next time you have a chance to do something important – like casting your vote or supporting a cause that promotes constructive change. To anaesthetise yourself against the outrages of “social injustice” by paying extra for something or reaching for your wallet to alleviate another’s plight might well make you (and them) feel better in the short run, but it is a proximate solution that contributes incrementally to the pain of a misguided nation and an economy in serious trouble.

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