So BusinessDay has started a series of Dialogues aimed mainly at influencing the South African discourse on employment and policy creation. I watched the first instalment of videos as well as read through the short transcript available on their website from the first Dialogue hosted on Friday 28/01/2011.
I must confess, I found the discussion quite intriguing and was able to validate a common notion I came across as an economics student back in 2001; that economics is not a perfect science and economists get it wrong more times than they get it right.
The debate, although it touched on numerous things, deservedly centred around employment creation and how a redistributive tax system as well as higher levels of quality education could contribute towards this discourse. For the most part I agreed with most of what was said, particularly with Chris Malikane, Edward Kieswetter and Jean-Francois Mercier on the soundness and pragmatism of their views. I must say however, that the conspicuous neglect of the role that entrepreneurship could play in the creation of jobs was frighteningly worrying, it just goes to prove that the South African society, economists alike, remains trapped in Keynesian and neo-liberal economics of the 1930s. Furthermore, I find it interesting that in most (if not all) economic debate, the youth who represent the unemployed and who are likely to inherit the country in whatever form or nature are blatantly excluded.
In the South African context, 6 million are unemployed – expended definition, 75% are 34 years old or younger, as many as 60% - 70% have no labour market experience and 95% are effectively uneducated. In this backdrop, there is just no pragmatic way in which all of these people can be absorbed by the labour market. The construct of our economy is biased towards non-primary sector activities with most available jobs requiring skills that are far beyond those offered by the market. Even the Keynesians should understand that oversupply of labour will dampen short-term wages, which in turn will cause long-run structural problems of weak domestic demand, lower real GDP, higher/wider taxes, and all sorts of delivery constraints.
The only real remedies are the promotion, support and incentivisation of self-employment and Great Depression type Government induced domestic demand. This will mean higher short-term fiscal deficits, higher sovereign debts and long-run inflation. However, as seen in the example of post World War II America, this can mean more meaningful higher per capita incomes (reducing inequality), full employment and sustained domestic demand. Both taxes and inflation may be muted as Government expenditure recedes making way for domestic demand and the tax base widens reducing per capital tax obligations to reduce Public Sector debt. Better have fixed capital formation driven Government debt than a growing Social Security obligation as this will increase real long-run taxes.
Overall, the reality is that the private sector has so far been embarrassingly inefficient in job creation, which necessitates that future Government expenditure should be directed towards labour absorptive activities, even if this means allocative inefficiency. Macroeconomic prudence becomes a fallacy and a big fuss in a society in which 5 million tax payers are expected to subsidies a inflatable social grant system (R90bn), which may soon include a Basic Income Grant, National Health Insurance and a Wage Subsidy.
In my opinion, you need to deemphasise the role of big business in the economy and provide overarching support in the promotion and empowerment of small businesses. After all in the industrial world Small businesses employ, on average, more than 80% of the labour force whereas in South Africa this is well below 50%. Trying to solve youth unemployment without involving the youth in charting a growth path for their own generation is tantamount to having a Men only debate about comfortable corsets!
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Tuesday, February 1, 2011
Friday, January 7, 2011
BLOOD, SWEAT & TEARS
“My generation watered the tree of liberation with blood and your generation will have to water the tree of liberation with sweat and tears.” These were the hard-hitting words spat at me by Seth Mazibuko, one of the highly decorated leaders of the 1976 students uprising in Soweto. We met in a chance encounter at a small business awards ceremony held in Soweto almost a year ago and have not had any contact since, but, his pearls of wisdom have haunted my conscience ever since.
Unbeknown to him, I was busy at the time preparing an article on how his generation’s indifference failed my generation’s ambition and perhaps its rite of passage to a new socioeconomic reality. You see, the Nelson Mandela generation had but a single uniting vision to pursue and achieve – liberation from political dominion – and for this many were prepared to and did indeed die. The Thabo Mbeki generation was handed the baton to lead the armed struggle and later on to usher in a new era of democratic rule where all were at liberty to pursue their full measure of success without fear or inhibition.
The generation of 1976, comprised mainly of fed-up high school pupils, was determined to raise the bar in the liberation process as it related to their then context. In 1976, the atmosphere was still mired by political liberation and students impatiently wanting in on the action decided to mobilize and enter the foray by partaking in their own form of demonstrations. Contrary to popular belief, the 1976 uprising was well thought out and at the time became a huge uniting factor for that entire generation, note that many in that generation went on to study overseas and/or in universities outside the then Witwatersrand viz. in KwaZulu Natal, strengthening their connectedness.
Then along came my generation – the pre-democracy generation or the lost generation – as some would prefer upon us. We had absolutely no part in the struggle, born between 1979 and 1989, too young to mix with the 76ers and too old to mix with the “born-frees” who are largely our older/younger siblings and in some cases our parents/children. We had no political mandate, no clear vision uniting us and in many instance we compete toe-to-toe with the 76ers for livelihood, resources and recognition. Many in my generation are well educated, wield quite a bit of brainpower, carry little political baggage and can box with the best of them in any boardroom situation.
Why is it then that many among my peers feel so distant to and disillusioned by the two generations past? During the Napoleonic wars, Gen. Napoleon Bonaparte, easily the greatest military mind that has ever lived, would field his youngest, strongest, fearless forces front and centre to win battles. The strategy was always simple; no-retreat no-surrender, plan A was always to annihilate the enemy and plan B was to reinforce plan A at any and all costs. The most experienced generals were always leading the troops and using their knowledge to dictate the direction of the war, not to run amok showing-off their horse ridding and spear jostling skills to the forces.
It is an indictment upon generations past that the brightest and most talented amongst us have stopped jumping up and down seeking to be fielded; rather, we are focussing on individually reinventing the game so that we may get a chance to participate. Very little inter-generational guidance and mentorship has taken place, instead, a nauseating game of everyman for himself seems to be the order of the day. Almost all successful black businessmen in this country belong to this old boys club, perhaps grouping by identity, trying to break in can be exhausting and many that eventually do seldom share in their newly found banquet of knowledge.
Sad as it may be, it has to be said that black-man, you’re on your own. The gatekeepers have discovered a fortress, it is like many have stumbled upon a minefield and you are certainly uninvited. A generation that has largely had to fend very hard for itself ought to know that they have a collective moral responsibility to keep the doors open and generously share in their acquired wisdom, skills and political capital. After-all, some of the ills of my generation have been inherited from generations past viz. illegal guns, shebeens, parentless-ness, etcetera. I readily concede that economic liberation may very well be a legitimate expectation but it is clearly not a legal right. That said, it is little wonder then why 75% of all unemployed belong to my generation.
It was with this in mind that I took Seth Mazibuko’s words to heart. There is little value in crying foul when the power has been put in your hands. Perhaps my generation is supposed to pursue and indeed die for socioeconomic liberation. It is incumbent upon my peers to foster some sort of unity, conjure up an informal mandate and drip in sweat so as to reign in the plight of the poor among our people. We need to find inventive solutions around job-creation and to triumph over our own piece of the struggle, a new struggle; the economic struggle.
I have seen enough pain and tears as I watched many in my generation succumb to the reality of widespread unemployment, abject poverty and hopelessness. I am convinced that unless something is done, very soon, 1976 may seem like a walk in the park.
Unbeknown to him, I was busy at the time preparing an article on how his generation’s indifference failed my generation’s ambition and perhaps its rite of passage to a new socioeconomic reality. You see, the Nelson Mandela generation had but a single uniting vision to pursue and achieve – liberation from political dominion – and for this many were prepared to and did indeed die. The Thabo Mbeki generation was handed the baton to lead the armed struggle and later on to usher in a new era of democratic rule where all were at liberty to pursue their full measure of success without fear or inhibition.
The generation of 1976, comprised mainly of fed-up high school pupils, was determined to raise the bar in the liberation process as it related to their then context. In 1976, the atmosphere was still mired by political liberation and students impatiently wanting in on the action decided to mobilize and enter the foray by partaking in their own form of demonstrations. Contrary to popular belief, the 1976 uprising was well thought out and at the time became a huge uniting factor for that entire generation, note that many in that generation went on to study overseas and/or in universities outside the then Witwatersrand viz. in KwaZulu Natal, strengthening their connectedness.
Then along came my generation – the pre-democracy generation or the lost generation – as some would prefer upon us. We had absolutely no part in the struggle, born between 1979 and 1989, too young to mix with the 76ers and too old to mix with the “born-frees” who are largely our older/younger siblings and in some cases our parents/children. We had no political mandate, no clear vision uniting us and in many instance we compete toe-to-toe with the 76ers for livelihood, resources and recognition. Many in my generation are well educated, wield quite a bit of brainpower, carry little political baggage and can box with the best of them in any boardroom situation.
Why is it then that many among my peers feel so distant to and disillusioned by the two generations past? During the Napoleonic wars, Gen. Napoleon Bonaparte, easily the greatest military mind that has ever lived, would field his youngest, strongest, fearless forces front and centre to win battles. The strategy was always simple; no-retreat no-surrender, plan A was always to annihilate the enemy and plan B was to reinforce plan A at any and all costs. The most experienced generals were always leading the troops and using their knowledge to dictate the direction of the war, not to run amok showing-off their horse ridding and spear jostling skills to the forces.
It is an indictment upon generations past that the brightest and most talented amongst us have stopped jumping up and down seeking to be fielded; rather, we are focussing on individually reinventing the game so that we may get a chance to participate. Very little inter-generational guidance and mentorship has taken place, instead, a nauseating game of everyman for himself seems to be the order of the day. Almost all successful black businessmen in this country belong to this old boys club, perhaps grouping by identity, trying to break in can be exhausting and many that eventually do seldom share in their newly found banquet of knowledge.
Sad as it may be, it has to be said that black-man, you’re on your own. The gatekeepers have discovered a fortress, it is like many have stumbled upon a minefield and you are certainly uninvited. A generation that has largely had to fend very hard for itself ought to know that they have a collective moral responsibility to keep the doors open and generously share in their acquired wisdom, skills and political capital. After-all, some of the ills of my generation have been inherited from generations past viz. illegal guns, shebeens, parentless-ness, etcetera. I readily concede that economic liberation may very well be a legitimate expectation but it is clearly not a legal right. That said, it is little wonder then why 75% of all unemployed belong to my generation.
It was with this in mind that I took Seth Mazibuko’s words to heart. There is little value in crying foul when the power has been put in your hands. Perhaps my generation is supposed to pursue and indeed die for socioeconomic liberation. It is incumbent upon my peers to foster some sort of unity, conjure up an informal mandate and drip in sweat so as to reign in the plight of the poor among our people. We need to find inventive solutions around job-creation and to triumph over our own piece of the struggle, a new struggle; the economic struggle.
I have seen enough pain and tears as I watched many in my generation succumb to the reality of widespread unemployment, abject poverty and hopelessness. I am convinced that unless something is done, very soon, 1976 may seem like a walk in the park.
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