Struggle Dummies and the Mealie-Mouthed Mindset

2014-08-27 06:13

An intriguing article by South African economist Nicoli Natrass on the subject of government sponsored joblessness in the clothing industry (Politicsweb, 19th August) caused me an “Aha” moment. It was no smoking gun - for the cause of our unemployment and poor economic performance are plain to all – but it did scratch a surface beneath which dark ideological currents lurk and worse prospects loom.

For ours is a government that, amongst other bizarre things, sponsors and promotes unemployment if the work available is not in line with its ideological focus. Individuals’ sovereignty, personal preferences and the freedom to choose are subservient considerations. Government seeks to mislead ordinary people by exercising power over them that determines how they might make a living.

Both the ANC and trade unions assumes a position of omnipotence over the individual’s right to make a living and seek to close down options consistent with personal freedom: consider, for example the issues of labour brokers, bilaterally agreed wage levels and the lack of scope for consensus between employers and employees. The result is predictable. On account of a broad based intellectual deficit and the dubious authority of their leaders, citizens never get to hold anyone to account - and most importantly - seldom find work! A case study of one such absurdity occurred circa 2009 when BOTH employees and employers in Newcastle, KZN and Phuthaditjhaba in Qua Qua, sought to have legislated minimum wages and “wage determinations” set aside (the aspiring workers asked that the laws making it impossible for them to be hired for work be disregarded by mutual consent between employer and employee) so that they could find employment. There was no suggestion of worker exploitation by employers - merely a request to shelve dysfunctional laws. The upshot was a temporary respite, followed by renewed government coercion, further job losses and factory closures.

One can only think of political figures who thus motivate and implement their actions as a supremely arrogant class of being who feel at liberty to direct the ignorant and the gullible according to their (eminently questionable) convictions. I think of these as “Struggle Dummies”, who sell the notion of favourable outcomes with no clue as to how such outcomes are achieved.

Natrass’ analysis speaks, perhaps almost inadvertently, to a far wider issue than unemployment and highlights the root cause of most of our bad economics, poor public ethics and sub-optimal achievements in the public domain. It casts the spotlight on an ideology that has morphed into a threat to democracy and its attendant institutions; one with an easily adapted script and remoteness from common sense and reason. It qualifies as a religion or creed, speaking with authority, yet devoid of anylogic. Thus, “the Struggle” has become the fountainhead of South African political ideology, and constitutes the nation’s most serious threat because it is impervious to reality.

Of course, “the Struggle” started life with its roots in anti apartheid times, when a genuine “struggle” prevailed and garnered credibility. But it has since become a barrier to logic, a hazard to democracy and a clarion call to all potential “counter revolutionaries” (those breaking ranks by thinking for themselves).

Natrass’ article addresses government’s abandonment of labour-intensive economic growth post-1994, by asking why “in a country beset with unemployment, is there so little concern with the labour-intensity of economic production and growth?” Instead, government pursued high tech, low-employment solutions to avoid Chinese competition - which it felt (with considerable justification) it could not compete with. So instead of facing the music – and with overpriced and unproductive South African labour the real problem – it adopted a doomed model for the textile industry. And unemployment grew. And grew. And grew.

It is in recognising the foolhardy approach to such issues that the depth our problems are revealed. The inability – or unwillingness – to recognize causation and draw conclusions is both an intellectual and cultural issue that allows the irrational and the fanciful to prevail in matters of importance. “Faith” trumps reason and intellect.

Some examples. Let’s start with “minimum wages”.

The notion of a minimum wage is an economic joke – especially in an environment of high unemployment, because someone else has to pay the premium. And that puts people out of work. The “minimum wage” is a political catch-phrase to build populist support, whilst creating unemployment. And the reason is absurdly simple. There is only so much to go round! If you pay more to Peter, Paul will not be able to find work. And what does that mean for Paul?

Unemployment. And that means that Paul will join the grant recipient’ queue so the taxpayer picks up the tab. But uh oh! There is another problem here. Business is not making the bucks it should because so many are unemployed - so tax receipts are down. And so we head for bankruptcy.

Even the hardest of trade union cynics understand the principle - which is why the glitzy paraphernalia for Cosatu pageants is all made in China – see Thoughleader article “ANC’s ideological arteriosclerosis throttles job growth” on August 23rd. In Natrass’ words again "Decent work" for the few (however that might be defined) was achieved in the clothing industry through rising capital-intensity and job destruction and if decent work ceased to be available then – as Cosatu has demonstrated through both its words and deeds - no work is a better option! Let the tax payer pick up the bill.

So – in an environment where ideology trumps common sense; where balancing the books is an unrecognized necessity and where the cultural and cognitive shortcomings of politicians and citizenry alike prohibit any improvement, what can intelligent people do to make a difference? The answer is simple - keep government coffers as dry as possible.

A critical look at the RSA economy tells us that nothing of any real significance will happen until the money runs out. Skid row is the only way forward.

hen that point is reached, all sorts of things could happen. The tripartite alliance could fold; anarchists might increase their influence (look at parliament last week); patronage loyalties will change and a lot of backs will get stabbed in political bloodletting.

But in the long term the nation has to pay its way, and we can all do our bit to secure that the day of reckoning is hastened. Taxpayers hold the key and choking off financial support to government is the only means available for responsible citizens to force compliance with decent values, promote the sovereignty of the individual and sideline idiotic ideologies. This is the challenge facing thinking people.

To some extent this process is already in motion as a result of state coercion and the ubiquitous “unexpected outcomes” acknowledged by government whenever it makes a hash of something new. On account of affirmative action, “BEE”” and a plethora of regulations ensuring redistribution and systemic inefficiency, ethnic minorities have sought economic survival through the development of their own personal capital.

Unrecognised for their talents in the public sectors and falling prey to government interference in corporate markets, they have subverted the state’s authority by trading, innovating and creating value to sustain themselves without dealing the treasury in on the spoils. It is highly lucrative for many. Such entrepreneurs avoid employing people whom they would sooner avoid – who, for example, might have trade union leanings; may expect preferential treatment on account of their ethnicity or are likely trouble makers – with good results. Racial profiling can come in handy too!

Needless to say such businesses are also run tax efficiently – so that as little as possible goes to the state and - to the chagrin of the ruling establishment - all is legal. For no one can be commanded to work harder or create more jobs so that unemployment can be addresses or more tax receipts generated.

So my suggestion is - be efficient in your value creation, be generous in rewarding yourself and parsimonious when paying taxes. As Milton Friedman, the monetarist economist used to say - no one can spend one’s money as effectively as he who has earned it - and the worst possible thing you can do with is give it to government to spend on your behalf!

If we all remember that, we could turn this nation around by replacing dummies with individuals.


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