South Africa's Neo-Communists and Jurassic Economics

2013-11-18 06:23

I am bemused at the vacuous arguments offered by the Minister of Trade and Industry, Rob Davies, in support of his and government’s legislative “empowerment” proposals. Although controversially channeled through parliament they have a sense of having been handed down by a grand soviet from the last century.

Let’s start at the beginning.

Two types of economic models have characterised modern times. There is the free market model where the emphasis is on growth, individual liberty and freedom to make choices, very limited government involvement and the free exchange of goods and services including peoples’ labour and talent.

Then there is the centrally planned or “command” economy in which government directs things, makes the rules and only allows the exchange of goods, services etc. subject to its own regulation and oversight.

The former emphasises growth and value creation – which leads to both inequality and prosperity, whilst the latter is preoccupied with redistributing what already exists - all in the name of fair play and social justice; Churchill referred to it as the equal distribution of misery.

Some 50 years ago the modern world was ideologically split between these two systems. Then the latter collapsed, having proved itself to be unsustainable because it denied the innate human drive for self-improvement; personal liberty; progress and innovation; and much more besides.

Instead, it caused long term poverty and misery and was ultimately rejected by the citizens of a multitude of nations where it had been tried. Today it survives only in dictatorships.

A time after its demise, the “New South Africa” was born amid ideological conflict since the numerically superior victors in “the struggle” had subscribed to the model that had just gone under. So grudgingly our new ruling politicians accepted some of the elements of a “free” economy (often erroneously associated with the doctrine of apartheid – which was in fact highly socialistic), but diluted them with anti-business legislation, the most inflexible labour market provisions on the planet and a powerful and destructive trade union movement.

The results have been predictable. Among them are:

> poor economic growth;

> high unemployment:

> growing inequality, and

> arguably, the worst state education system in the world

Whilst one might have anticipated that by now changes would be introduced to fix education and promote a growing economy to reverse the rot, precisely the reverse is happening.

Our Minister of Trade and Industries is on record as saying: "Black economic empowerment is not just a social and political imperative. We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of the society in the same way the political space does. That’s why we are saying BEE remains an economic imperative. We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of the society."

This is a clear call for central planning (a command economy) which in current times is recognized as coercive drivel. But - ever the communist - Davies holds stubbornly to the view, long disproven, that economic success has nothing to do with individual enterprise and the exercise of free choice. To him and his ruling party it is about engineering predetermined outcomes.

So he backs government to do all the thinking, planning and regulating – which is decidedly odd and scarcely reasonable in a country where government is pervasively incompetent and makes a hash of almost everything it touches.

Moving on to the purported need for ethnic representivity, Davies is similarly clueless.

It is widely known that certain ethnic, national, religious, cultural and racial identities are associated with success in various theatres of endeavour. Thus, for example - the Lebanese dominated trade in West Africa; Jews have been associated with the textile industry for a long time; the English have a strong history in banking. And beyond commerce, the Germans played a key role in developing agriculture in Russia; the Chinese a major role in the economic advancement of the Philippines and Malaysian economies, Native Americans are great at working on high rise building sites, Kenyans run marathons very well - and so on.

Bottom line is - people are not the same - so knowing that someone is of a given nationality, race or persuasion often goes a long way to defining their probable levels of initiative, acumen or propensity for given occupations.

So I am going to dissect Davies’ castigation and see if it stands up to scrutiny. Is it consistent with a free society serving all South Africans?

Let us look firstly at We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of the society”.

I doubt that there has ever been an examples throughout economic history where there has not been a bias towards one or other ethnic group, nationality or religion in any given area of endeavour. And it is obscenely naïve to suggest that there should be. Let us look at an everyday example.

If I happened to like Italian food, I think I might - with some justification - prefer an Italian white male in the kitchen of my chosen restaurant. You see, I am likely to be much happier if a Mr Castalucci prepares my cannelloni, than if an ethnically sanctioned Mr Cetshwayo, Clarke or Conradie does so, just because there happen to be more of them.  Where do you eat out, Mr Davies?

Such perceptions of ethnic competence are shared universally – and validly so. It is human nature to not push water up hill and gamble on unlikely outcomes.

But there is more to come:  like the other ideological dinosaurs in your camp, Mr Davies, your next delusion is more ridiculous than the first.

You state - “We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of the society.”

My question to you is - What are you smoking?

You should know that banking on our minorities is about the only chance we will ever have of growing and developing the country economically. And that is totally logical; the leadership of any nation, polity, tribe or clan is – by definition – in the hands of a small minority of society.  Otherwise they would not be the leaders, would they?

Possibly you should entertain the notion that it should be in the hands of the smartest, best qualified or most meritorious minority without regard to skin colour? Because in bygone times - even when our economy was in the hands “a small minority of the society” under apartheid - it fired for the most part on all cylinders.

That is not to say that it was a just society – it plainly was not. But it worked efficiently. That has all changed.

Control of the state has been removed from that small minority, and now - far more representative of the population at large – no longer fires on all cylinders. The state of our public health, policing, education and the economy all bear testimony to this.

So ethnicity as a basis for making appointments would seem, Mr Davies, to be about as dumb a criterion as one could hope for.

Given your Jurassic world view, that does not surprise me at all; this regime is all about learning over again through bitter experience rather than through study, reason and intelligent application. But what I find profoundly disturbing is that – knowing better, as you surely should - you seek to hold the economic fortunes of the nation hostage in your prehistoric cognitive swamp.

It is something I hope you will be called to account for when the meteorite strikes.

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