Business must work with Government to Save the Economy

The State President has had an insight into some of the conditions that underlie growth in jobs, taxes, foreign exchange earnings and, presumably, corruption opportunities.  He is now calling on business to cooperate with Government in growing the economy.  It might be instructive to him to learn Lesson 101 in Economic Management of an economy, a lesson which the ANC Government has either forgotten or never learned.

The lesson is simple.  Everything in an economy depends on business:  taxes, exports, jobs, all of economic activity depends on businesses of different sorts and sizes.  They might be multinational companies operating huge industries or mines, employing hundreds of thousands of personnel at all levels, or they might be one-man shows manufacturing bead jewelry.  They all have several factors in common.

A business needs labor at a reasonable cost.  If the cost is too high, the business will close its doors, or find a way to do what it does with fewer or cheaper employees, or relocate to a country in which the cost of labor is more affordable.  The Government’s populist stance in promoting ‘worker rights’, a ‘living wage’, compulsory adherence to trade union enforced wages, the promotion of ‘human rights’ which have no relevance to the real conditions on the ground, and its failure to provide qualified employees, in terms of education, skills training, reliable quality of qualifications and similar factors that gain votes but do not help employees to contribute to the activities of the business are all factors which strangle or kill businesses, and keep foreign investors from making an investment in the country.

A business needs to know that it is welcome in the country.  This does not mean that the President should spout his insincere slogans, while undermining ‘Capitalists’ or, even worse, ‘White Capitalists’ at every Party congress.  It means that the Government must make a thorough evaluation of every law and every policy that might deter businessmen.  It must remove the possibility (probability?) that some Government body will act against the business in order to coerce the owner/shareholder into parting with a slice of it in favor of a Party favorite.  It must remove the silent white anting of the business by requiring placement of cadres in senior positions, where they can set about the process of silencing comment from the business about things that the Government might view as unfavorable to it.  It must remove the corruption practiced by SOEs such as SAA and Eskom in demanding a shareholding in the supplier company in order to gain a supply contract.  It must remove the possibility of large fines or penalties being imposed on a company in order to allow a favored entity to acquire the business at a fire-sale price.  It must ensure that no penalization of the company can occur in its dealings with a Government body for any but the most valid economically-driven reasons.  It must cease holding the view that a business is a legitimate target from which to suck the blood in order to advance Party ends.

A business must believe that the costs of doing business are reasonable in the light of the facilities and benefits offered to it for that cost.  The high fuel levy was intended to ensure the availability of good roads, not to supplement the cost of social grants.  If the policy is that the ‘user pays’, that policy must be implemented even-handedly.  That means that taxis must not be exempted from the road tolls, and that the cost of such tolls must be applied to the specific purpose of the users, not to subsidize the living of Party favorites.  The costs of doing simple things under Government regulation or with Government imposed bodies must be reasonable.  This includes such things as registering a company, submitting returns required by Government or paying the numerous levies, fees, costs and other matters, including the cost of land taxes, electricity, water, rail or road transport, or even employing workers.

A business must believe that the assets that it builds up will continue to be available to it, not to fill gaps left by Government incompetence or corruption, such as the attachment of farm dams to supplement the water supply to the areas in which no provision for continuing water supply has been made, no regulation may be passed to require a farmer to hand over half of his farm to wage employees without any effective compensation.  If there is no such assurance of property rights into the future, the business man will either not invest or withdraw from the investment, to the cost of all.

How does the Government find out what business wants? 

The answer is not that it turns to the Russians or Chinese for advice on how they do it.  The answer is to ask the businessmen!  And the first step to getting a real answer is to ensure that those businessmen trust the Government and the representative of the Government.  It may come as a rude surprise to the dearly beloved President, that businessmen and –women do not trust either the President or the ANC Government.  Most businessmen have experienced the duplicity of Government, the doublespeak and the outright lies.  They have suffered under the campaigns against them to vilify the Whites and the Capitalists in order to curry favor with the trade unions, the SACP and the ‘poorest of the poor’.  Most know that their desires will not really be heeded.  Most know that the speeches that Zuma is now making are no more than lip service, a normal method of sideling the people who are the absolute foundation of the economy while the Government pursues its own desires of enrichment and reelection.

Unfortunately, all businesspeople know from experience that the pious protestations of Zuma are without substance or true intent.  A leopard does not change its spots, and more than the ANC will suddenly put the interests of the people first.