Skills more important for the economy than splitting fine or frizzy hair: it’s education, not race, that counts

Johannes Wessels (@johannesEOSA1)

A tumult about a shampoo advertisement diverted attention from the biggest economic decline under the ANC government to date. A quarterly GDP figure that confirmed the country is plunging into poverty got less attention than a Clicks advertisement. The deteriorating economy will entrench the country in the bottom half of the Economic Complexity Index (ECI), making it less and less attractive as a destiny for both skills and capital.

Splitting “frizzy and dull” hairs from “fine and flat”, however, is apparently for South Africans far more important than worrying about an additional three million unemployed or thousands of businesses pushed into the abyss of loss and debt. Reading Figure 1 (ECI data) reminds of the typical good-news, bad-news joke: the bad news is that SA has slipped from the top third of countries to the middle third. The good news is that this ranking is far better than where the country is heading for. The ECI, developed by Ricardo Hausmann of Harvard and Cesar Hidalgo of MIT, measures the productive capabilities of large economic systems, whether cities, regions, or countries and is based on the knowledge accumulated in a population that gives expression to the diversity and complexity of economic activities. 

Almost simultaneously with the DA’s embrace of non-racialism as a pillar of their redress strategy that will not use race as a yardstick to address inequality, the 2020 Q2 GDP demolition figure was released. The throttling of the economy by the government’s lockdown strategy made far less ripples than what TREsemmé claims to smoothen out in frizzy hair.

The commentariat treated the DA like TREsemme

It was not only the Twitterati that underplayed the economic news: the same sentiments dominated in serious opinion pieces and radio and TV talk shows. And the commentariat effectively placed the DA in the same box as TREsemmé:

  • Carol Paton, editor at large of Business Live, reckons race will matter forever and lamented the DA’s policy removal of race-based redress “since that will affirm suspicions that the DA is a party whose real agenda is to defend white privilege by denying that such privilege exists at all”. 
  • Stephen Grootes, radio presenter and Maverick columnist, echoed that “firm evidence and the lived experience of South Africans” indicate whites are rich and blacks are poor.

A Coalition of the Offended encompassing inter alia Julius Malema, the Daily Maverick, Justice Malala and Twitters’ @BiancavanWyk16 emerged: all deeply shocked and emotionally wounded, found Clicks’ sacking of an executive and suspension of selling TREsemmé insufficient.

Some called for “attacks” on Clicks stores and the malls that provide rental space for Clicks. Others demanded a sort of #BlackHairMatters kneeling, some were just happy to find something to be unhappy about and some considered the actions of others in the coalition either overboard or underwhelming.

Whilst one can understand that the EFF, the ANC and a plethora of beneficiaries or wannabe-beneficiaries of BEE, are obsessed with affirmative action, expropriation without compensation and preferential procurement mechanisms enabling hiked prices, it remains amazing that leading commentators such as Paton and Grootes ignore the hard evidence that race is not the best proxy for measuring inequality and that the application of race fails to target those really at the bottom of the pit. 

Way back, Census 2011 already provided evidence that education is a far more reliable marker.

Race as a marker for household income inequality weighed and found wanting

Continue reading “Skills more important for the economy than splitting fine or frizzy hair: it’s education, not race, that counts”

Pro-poor LED fails our cities, towns & the poor: Enterprises of the right kind generate city growth

Johannes Wessels
@johannesEOSA1

There is an intriguing symbiosis between cities and towns on the one hand and enterprises on the other. As the world population urbanise, so are business activities.

Physicist Geoffrey West in his “Scale:  The Universal Laws of Life, Growth and Death in Organisms, Cities and Companies” says based on city growth one can state precisely what will happen with the number of businesses in that city: a doubling of population does not require a doubling of grocery stores or filling stations, economies of scale kick in in a predictable manner. The reverse is also true.

Geoffrey West & Scale

Unfortunately, South Africa’s economic and enterprise development policies and strategies ignore these predictable realities. In addition, LED plans by municipalities in the main demonstrate a lack of understanding of what drives development.

Continue reading “Pro-poor LED fails our cities, towns & the poor: Enterprises of the right kind generate city growth”

Cyril on a tight-rope: Paradox, not policy certainty the outcome of the ANC conference

Will the honeymoon breathing space of optimism that the worst corruption is over and that more business-friendly policies and better public spending behaviour be utilised or wasted? With new reports of the ANC’s national executive committee setting wheels in motion to recall Zuma as president, it is important to note that acting against Zuma would still not set enterprise friendly policies in place.

South Africa’s post-apartheid ANC policies and strategies dealing with enterprise development have been largely driven by an increasingly unfriendly framework for established businesses as well as an anti-growth premise. In the final gasps of December 2017, the ANC Conference even took unanimously policy positions that makes mockery of Ramaphosa’s utterances of making growth the priority.

The decisions to endorse Zuma’s announcement on free tertiary education and to change the Constitution to enable expropriation without compensation, provide ample proof the ANC doesn’t understand what is required to ensure growth and to step back from the fiscal cliff.

Continue reading “Cyril on a tight-rope: Paradox, not policy certainty the outcome of the ANC conference”

Ready to choose a San hunter rather than a Sherpa guide for mountaineering? Dlamini-Zuma on Radical Economic Transformation

When Nkosazana Dlamini-Zuma announced her Manifesto for Change, she reminded me somewhat of the stern Mother Abbess singing “Climb every Mountain” for Maria (Julie Andrews) in The Sound of Music.

Definitely not her voice, but her words… Dlamini-Zuma summoned support for Radical Economic Transformation (RET): “We must know which hills to tackle next. …(t)hese are the mountain of economic transformation, the highland of land redistribution and the summit that must see us educating and skilling our people. If not, the negatives will swallow the gains we have made.

Mother Abbess

Marvellous libretto…

Continue reading “Ready to choose a San hunter rather than a Sherpa guide for mountaineering? Dlamini-Zuma on Radical Economic Transformation”

If monopolies are the problem, start dismantling the worst: the State-owned Enterprises

Rating agenciesWith Moody’s soon to announce their assessment of SA’s credit risk, Finance Minister Malusi Gigaba made it clear that a white minority was controlling the economy through a monopoly and that was now to change.  Gigaba, speaking mostly in isiZulu, said “The economy is controlled by a minority; they are a monopoly. There are a lot of companies owned by very few people and the services and products on offer enrich these few people.” (Gigaba: It is time to put us first ).

Addressing an ANC Youth League event in Pinetown, Gigaba remarked that there was an agreement in 1993 that white people would continue to have a say in the economy.  The ANC stayed committed to this, “but now has come a time for change. It is time to put us first.Continue reading “If monopolies are the problem, start dismantling the worst: the State-owned Enterprises”

With Gordhan out of the way Gigaba seems keen to embark on an anti-growth and anti-poor strategy

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Malusi Gigaba (GCIS)

One would expect Malusi Gigaba as new Minister of Finance to consider avoidance of further down-grades by rating agencies as his top priority. Policy confusion and instability coupled with growth unfriendly strategies already caused the Fitch and the Standard & Poor downgrades. However, Gigaba’s comments yesterday indicated that he is more concerned about growing black owned enterprises than about growing the economy or receiving value for public money. Continue reading “With Gordhan out of the way Gigaba seems keen to embark on an anti-growth and anti-poor strategy”