Zuma on the Front Foot

2013-10-09 19:11

Zumanomics reared its head in an outburst of indignation at a Trade and Industries talk shop in Midrand recently. Zuma took “fronting” to task, condemning it as unforgivable, when he addressed the first “national summit” on broad-based black economic empowerment (BBBEE) - and announced that there are laws in the pipeline to criminalise it! Indeed, such was the president’s ire that he was quoted repeatedly on radio, on line news, the midday report and in a number of newspapers. When riled, our president certainly takes some stopping does he not?

Clearly he was hurt to the quick at the injustice of fronting, and went about the important business of assuring the nation that something will be done. Bless him - for can one not but imagine the incalculable damage to the fabric of society from “fronting” – an evil practice by businesses bent on securing financial survival and promoting economic growth despite their lack of access to suitably qualified staff of the “right shade"?

For those in business, such racial gerrymandering makes their efforts marginal, sometimes simply not worthwhile to carry on. Indeed, there will be businesses that fold because of the nuisance value of further government interference; our poor economic growth and high unemployment levels do not happen by accident.

But there is another side to the story - from which we can take heart whilst overlooking for a moment the economic vacuousness of BEE. Firstly, despite the most strenuous efforts of Zuma, Cosatu, latter day communists and an assortment of like minded fellow travellers, much of our once booming economy still survives against all odds. Although inefficient and a world adrift of its true potential, it is still standing – for now. That is an achievement bearing testimony to the resilience of many ordinary South Africans - none of them in government.

Secondly we should appreciate the modest growth that we still manage to eke out as a developing economy in areas beyond the reach of government interference – like one man shows, very small (micro) businesses and the IT and services sectors. The flames of enterprise still flicker dimly despite oppressive  bureaucracies, stultifying regulations and the coercion of a growing kleptocracy.

Sadly, these limited successes can never begin to generate much needed jobs (which, in bitter irony the ANC and the trade union movement themselves lament most loudly!) because the very government they "manage" has destroyed vast swathes of job opportunities. They have accomplished this through punitive business legislation, bureaucratic disincentives, inappropriate regulation, a truculent labour movement and cultivating an entitlement ethic beyond anything the economy can sustain.

Their bemusement at job losses is an intriguing example of the Dunning-Kruger Effect - a phenomenon where ignorance and incompetence beget confidence. Closely related to this condition one finds a suite of default settings that relate to our governments relationship with private enterprise – and were on view in Zuma’s rant about fronting.

They are –

> to legislate outcomes according to a predetermined agenda and dogma set by government;

> to coerce compliance with these outcomes irrespective of economic realities and the nation’s need for economic performance and employment; and

> to punish or threaten punishment for deviation

Obviously, the business community is defined, according to the values held dear by the tripartite alliance, as being unjust, exploitative and venal. So - their reasoning goes - it must be regulated and controlled. No way to run an economy.

This is in large part because our decision makers listen to the wrong people for guidance. Clearly Zuma – no economist to be sure - probably listens to his Minister of Trade and Industry, who surely will have learned any skills he pretends to whilst serving in the Communist Party  politburo. T&M minister Davies is known for his addiction to laws and bureaucratic proliferation - as his current campaign to regulate even micro businesses attests. He behaves as one would expect of a communist with some authority - whilst no doubt offering advice to match.

Further, if Zuma did not want to cast his net wide enough to hear what “white” businessmen had to say (as I strongly suspect) – he could have lent his ear to Black businessmen who have made it for their own account. Richard Maponya and Moeletsi Mbeki, both berate BEE as ineffectual, counter-productive and demeaning of those with talent. I am sure there are plenty more like them.

But until the negative intellect permeating the corridors of power is cleansed and the “inequality” myth exorcised in favour of a pervasive national work ethic, the coercive redistribution of limited resources will continue to trump value creation and stymie economic viability.

It is too bad that so many – most notably the millions of unemployed - have to suffer because those in high places, lacking the insights to make an intelligent call on things that count for them, listen to the wrong people.

It also explains why they rant on about the unspeakable felony of “fronting”.

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