Economics
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Quotes
As John Maynard Keynes famously said about the econometrician Jan Tinbergen, "He is much more interested in getting on with the job than in spending time in deciding whether the job is worth getting on with."
Employment Equity
Scrapping The Employment Equity Act and all associated racist legislation, may seem unfair at first, but it flies in the face of economic logic and perversely acts against its own goal, namely to create more Jobs for Black South Africans.
There is no doubt that White men still have higher levels of employment that the rest of the South African population groups. However this is not determined by the employees, but rather by the many businesses that choose to employ them. The simple truth of this is that South African Businesses, rightly or wrongly, choose White men because they perceive them to be the most productive members of the work force. Even BEE companies increase employment opportunities for White men.
We won't be the first Government who decide that they know better what Business wants for itself, than Business themselves. The whole central planning debacle of 20th Century Communism is testimony to what happens when you don't let economic agents choose for themselves. Classical Economics always leads to the same conclusion. Mess with the economic agents and you end up with sub optimal solutions, particularly lower growth rate and worse, lower employment levels.
All those supply side arguments about levelling the playing field, categorising Coloured and Indians as more disadvantaged than White women but less disadvantaged than Black men, tenders going to preferred supppliers because they have a higher BEE index, all leads to economic inefficiency.
I know its getting ridiculous, when I am asked by a large super market customer what my BEE Index is. I market Accounting products developed by Black South Africans in competition against International imports. They want me to go on a paid 2 day course to determine my index. I am a one man buinsess! Its a whole lot easier for me to trash it and concentrate on markets where there is no racial prejudice and I don't have to spend my resources explaining myself. This spurious activity, similar to corruption or inflation, messes simple effective business. When you spend the first 20 minutes of every meeting worrying about the race of the guy you are trying to deal with, it acts against the optimization of economic growth. Its gets a whole lot worse when a Bank would rather lend resources to a less efficient business because it has a racial rather than an economic plan.
"But White men still hold more than their fair share of Employment. To scrap affirmative Action means the existing situation will go unchallenged. This is all a result of Apartheid, we have to correct the balance." I can hear all the Socialist "fairplay" arguments just popping to be heard.
If its retribution for Apartheid that you want, then we enter shaky ground. White men consist of three basic Groups. First is those that are under the age of 30 and have never worked in anything other than a Democratic South Africa. To vent any kind of prejudice or blame on them is completely groundless and without logic. To be basing University entrance or entry level Corporate employment on race is to fly against what the whole struggle against what racism was about. This is simple institutionalised racist practice.
The Second Group of White men, is aged 30 to 60 and have spent much of their working life under a democratic Government. This includes people like myself. You may want to blame us, as children, for accepting an Apartheid privileged education or being conscripted into PW Bothas army, but you have to accept that we acquired much of our skill and earning capacity under a Democracy. We also have the distinction of being one of the few Groups in African history that when offered despotic power chose, instead of retaining it, to voluntarily share this with all other groups. I think on moral issues we are about even.
That leaves the White men aged 60 to Death. These are the 'Masters of War' that you are really after. So if it is going to make you feel better dragging them out of their dotage and putting them through reeducation camps - do it, but its not going to buy you any friends or higher Employment. (When I suggested putting Constant Viljoen and PW Botha in Jail for the the two years they made me serve in their army, I was derided as a bitter army veteran). Either way this Group of older White Men has little to do any more with Employment Equity, so we can effectively leave them out of the Employment Equation. It buys us little to punish the sons for the sins of the father. If the goal is optimizing employment for all South Africans then you are going to have to shelve retribution.
This bring me to the simple Guns and Butter type argument that begins by saying that our Economic Aim as South Africans is to make All South Africans Fully Employed. We have two groups, White males, 90% employed and All Other Groups, 50% employed. The demand for White Male Labor is Inelastic with respect to growth rate and the Demand for Employment of all other Groups is Elastic with respect to Growth rate. White males account for around 5% of South Africans. If you took the whole lot and put them in a Gulag detention camp you would hardly increase the Employment of the other Groups. In fact if you follow the logic of the graphs it would in fact lower growth rate and thus lower Employment of All Other Groups!
We have the current Economic Growth rate that results in Employment A. It should be our aim to raize our growth rate to B, not mess with our system and reduce growth rate to C. A move to higher growth rate will cause a great increase in Employment for all Groups and a small increase for the already fully employed White Men. If we created a 100 000 new Jobs tomorrow the vast majority would go to Other Groups and not to White Men who are already close to full employment. An effort to reduce the employment of White Men causes us to move to a lower growth rate C (Less economic efficiency) and actually harms Employment of Groups other than White Males the most!
This is ironic and may seem terribly unfair, but fairness is not our aim as an economy, welfare in particular of Other population Groups is our aim. If you are familiar with the concept of the multiplier or relative advantage, this argument is even more enhanced. Its unfair that Nigeria and Arabia have Oil, yet it would be stupid for us not buy it from them to improve our own Economy. Far from prejudicing White Men via an illogical argument, we should embrace them as very useful Economic agents of our economy, who work for us. We should maximize the use of their productive capacity to the common benefit of all. The fact that they benefit should not offend us.
We should put racists legislation, particularly The Employment Equity Act behind us, appreciate the value that White Men bring to South Africa and get on with Business.
Philip Copeman is Project Leader of the TurboCASH Accounting Open Source Project a program developed by Black South Africans and used by 40 000 small businesses world wide. This is his personal opinion.
