Wednesday, September 18, 2013

This is not the Transformers

I am not now, nor have I ever been of the view that our current policies on Employment Equity and Black Economic Empowerment are without foundation or not born of necessity given the racial history of our country, but I am of the view that the time has come for us to look at the statistics and start to ask some serious questions surrounding the current format of the legislation, because the simple fact of the matter is that the statistics, as compiled by the South African Institute for Race Relations, simply do not tell the whole story. While I will not reiterate my misgivings with regards to the statistics (having already done so on this forum), it must be said that statistics without context can easily be twisted to fit any political agenda one would care to mention. So why does it now become time for us to critically re-evaluate these pieces of Legislation?

The economic question: What are we even talking about?
We are talking about Black Economic Empowerment, Employment Equity and so-called economic freedom, often referred to as Economic Transformation, but while Employment Equity is rather self-explanatory, the other concepts require some further investigation.

As a political theory or buzzword designed to attract votes, then notion that black people who were previously excluded from the business world can be empowered through ownership works brilliantly well, but the inclusion of the word “economic” makes it rather problematic.  In the true text book definition of the word, having ownership of something does not make one empowered, it makes you rich, while true economic empowerment can only come from the skills and knowledge needed to either use your wealth to generate income or in the very least maintain our gotten wealth. Because of this fact, economic power will always flow to the person/people in the economy who are most empowered, i.e. the people who can employ their skills and knowledge the best.

The concept of economic freedom, a buzzword that’s become so popular that it has spawned a brand new political organization, is a rather new concept on our political landscape and it is yet to be defined. As far as I can figure, the political definition of economic freedom entails a system whereby the people (through the proxy of the State) own all the resources (physical and financial) in the country with no private ownership and no excessively wealthy or poor people. In economic terms, this would be called communism, but what does economic freedom mean when one considers the theory? I’ll admit at this point that I am nowhere near educated enough to put forward a full definition of Economic Freedom, but I will state that it entails the “Unhampered pursuit of an individual (and perhaps juristic persons like companies) to obtain the highest levels of education, employment and wealth allowed by his/her potential or ability in an homogenous economic system.

Then we come to the concept of transformation and we can definitely say that you get transformation and transformation. Many a political commentator and economist have highlighted the fact that our systemic economic problem is that it has been built around a small elite that is reaping large scale economic rewards from a large pool of unskilled labour and, while the transformation numbers quoted by the SAIRR and Peet van Aardt do indicate some success in the racial transformation of our economy (more blacks in the elite), there is little indication of the success/failure with regards to the transformation of the systemic economic problem we have mentioned. Incidentally, economists will refer to this transformation as economic development; we develop the skill base of the general population in order to move from a resource based economy towards an economy where manufacturing and the rendering of services play the largest part.

The philosophical question: When does historical redress become racial engineering?
Like I’ve said before, the initial reasoning behind redress legislation is beyond debate, but we have reached the point in time where it becomes a very real possibility that we will start to see “double rounds” of redress taking place when the children of EE or BEE beneficiaries begin to stand in line to receive redress as well. The argument that will doubtlessly be put forward here is that the erstwhile Apartheid System gave its beneficiaries preference for centuries with no regard for double or even ten rounds, with no “sunset clause” in sight. It has been brought to my attention that there is indeed a large knock on effect with current EE and BEE legislation whereby the empowered also use their wealth to empower members of their extended family, but this is certainly not a new or a black only phenomenon. As a matter of fact, the knock on effect from Apartheid legislation is still painfully apparent today, but in today’s political climate and vernacular this often forms part of what is referred to as white privilege.

While what happened before surely does not take anything away from the validity of these arguments, it certainly cannot be called redress when we attempt to ensure the future financial/professional success of a child who has had every opportunity to secure his/her own success in the same, and often better, circumstance as their counterparts. The only success that will be had with such a system is that it will further strengthen the economic elite at the cost of the poor, so ultimately, the possibility and inevitable occurrence of double redress becomes a social question.

The social question: Who is benefitting and who should benefit?
Up until now, and most likely for the foreseeable future, we have not yet seen any indication of who the major beneficiaries of our redress system have been and it is thus impossible to monitor the general success of the policies and legislation. Specifically, we must consider whether the majority of beneficiaries are the politically well-connected or the ordinary “grassroot” people of the townships and while there is certainly nothing wrong with a politically connected person or even an ANC member reaping the benefits of redress legislation, it would simply be wrong for that person to gain those benefits purely because of political connections and it saddens one to state that this does seem to be the case, if we are to take a look at the staggering value and instances of Government corruption, tenderpreneurship and openly practiced policy of cadre deployment. Some people will even go as far as to say that certain members of the ruling party have hijacked this system in order to pay for political favours or support. For those who are interested, here is a report from Business Day on how large scale BEE deals really work.

The simple question we need to answer is whether it would be proper or even moral for us to allow for the continued upliftment of black people on account of being black or if we should rather focus on uplifting people because they are poor and I remind you that cutting a pie into more pieces does nothing to enlarge the pie. I leave you with the concluding paragraph of the SAIRR report.

The report suggests that turning these figures around will depend on the three Es – education, entrepreneurship, and economic growth – the only way in which real empowerment can occur, particularly for those who were disadvantaged by the racial policies of the past. Future progress may therefore come to depend less on racial policies such as Black Economic Empowerment and more on ensuring access to sound education while fostering a climate conducive to economic growth.

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