Verwoerd and Apartheid Aside, How do I tell my kids reversing the past will take decades in this age of abundance?

2015-05-27 14:37

In his reply to the Presidential budget vote, the president said, to reverse our indifferent past as a nation it will take decades. Given it has only been two decades; I am confronted with a serious conundrum. How do I relinquish my knowledge of the abundance of the age I live in and convince my kids that a reversal of Verwoerd and Apartheid won’t happen in their lifetime?

South Africa needs to lift productivity by smartly combining different resources to produce goods and services others wish to purchase. When the right combinations of choices are made, higher production, value, and incomes can be achieved for every hour worked.

Why does productivity matter?

Generally higher productivity in a given country can shape how the country achieves well-being and how dynamic the options within the economy can be. Well-being can include quality healthcare and education, excellent infrastructure, safer communities, stronger support for poor and vulnerable people, and sustainability of the environment. The economic dynamism includes an ability to reduce taxation rates while still providing a level of government services that meets public demand.

 What makes some countries more productive than others?

The right approach to lifting productivity for each country depends on its national circumstances, such as institutional history, natural resources, location, and cultural preferences. International evidence does, however, suggest some important factors for significantly lifting the productivity performance of countries, including:

- respect for the law and property rights, as well as the enforceability of contracts and low levels of corruption;

- open competitive markets for trade of goods and services, domestically and internationally, and the ability to take the best possible advantage from trade (including through proximity and access to key markets)

- improvements in human capability through well directed public and private investment in quality education;

- a high quality low cost regulatory environment, acknowledging that there are important societal benefits from regulation that does not hamper productivity unnecessarily, including the reduction of red tape;

- effective governance and management of organisations – whether government, businesses, community or others – to get the best out of resources available to those organisations; and

- the ease and attractiveness of doing business, recognising the important role of business in creating a high-performing economy (such as through employment and innovation).

National Identity runs through these (and other) factors and is also important to productivity. Similarly, national attitudes toward business, business success and ownership of assets will influence the environment within which to do business and, to some degree, business confidence.

How is productivity lifted?

Lifting productivity takes time, requiring deliberate choices, patience and perseverance, underpinned by concerted analysis of the data, research and other evidence. Even small increases in productivity growth, if sustained, can have a big impact on income and well-being.

Lifting productivity is ultimately the product of individual and organisational decisions about how to generate value. There are multiple determinants of such activity and decision making including:

- the degree of openness and competition in markets, which are generally regarded as central to lifting productivity by improving how and where resources are used and incentivising innovation and performance;

-investment and other strategic choices made by organisations (e.g., using newer and smarter technology), which depend on the quality of governance and management;

-the attitude and effort of employees toward ongoing training, finding business improvements and helping implement beneficial change;

-the quality of education and the attitude of students to the value of learning and skill development;

-the quality of Government (and local government) decisions, in shaping and deciding where public money is spent and where it will come from, and implementing and operating the framework itself; and

-in homes in the aspirations of individuals and families, and the decisions taken to achieve those aspirations.

A country’s productivity performance may also reflect factors that governments cannot do much about, such as size, natural resource endowment and distance from global markets. Successful countries develop policies and strategies to mitigate or accommodate such factors.

Alongside such work, there are some general foundations for improving productivity, such as through ensuring respect for the law and property rights, effective governance arrangements, and an attractive environment for business, including a high-quality low cost regulatory environment. Such core foundations require ongoing attention and continual improvement.

A decade of careful thinking can reverse Apartheid!

No Excuses!

No Blame Games!

Let's all Work!

Be Inspired SA!

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