Common sense is not so common at all.

Since my last entry here there have been many events and changes, and yet the more things change the more they remain the same as the saying goes.

This is very true in many aspects of life, and in South Africa it is no different. So what has happened and what did it change? Just to pick a few momentous events in South Africa:

1) The municipal elections have come and gone, the opposition winning a few more municipalities but not the breakthrough that was hoped for in other major metropolitan area's. Yes there is widespread discontent about the service delivery by the ANC, about the corruption at all levels and about the rampant nepotism. Yet still many of our fellow citizens choose not to trust the Democratic Alliance, simply because the leader is a white woman and still many of the leadership is white. The fact that the party is slowly increasing its black leaders on many levels and that they seem to run the city of Cape Town and the Western Province quite efficiently and cleanly has not been able to persuade the majority to put aside their mistrust. Given the history of the nation it is understandable, yet the inroads made are too little to start cleaning up the mess in many places. Common sense would be to vote out the ruling party and give new blood a chance, but the emotions are clearly overruling common sense here. Lets hope that come 2014 and the national elections the trend will hold and the opposition will be an even more powerful force to be reckoned with. A healthy democracy needs dissent in parliament to keep whomever is in charge on their toes.

2) Finally the ANC has started to take steps against its firebrand leader of their youth wing. Yet it will be a long drawn out process and the outcome is far from certain. Here too common sense and their own rules would see the man expelled, but political dealing could still see him get away with a slap on the wrist again. This maybe a short term gain for the president going into internal party elections, but in the long run the ANC would benefit from enforcing the discipline it used to command. Common sense dictates to go for the long term benefits for the party and the nations economy (which suffers from Malema's ridiculous speeches, even if he is not a policymaker, he scares off investors), yet it is quite possible that the president will opt to serve his own interests first. To the detriment of the nation he has sworn to protect. Again, common sense could well be a victim.

3) In an unrelated case Malema was brought to trial about a 'struggle' song. A song that was sung in the Apartheid days, as a resistance against the oppressing National Party (which has seized to exist). The words of the song seem to instill fear in South African whites, especially a large segment of the Afrikaans speaking community. Malema was convicted of hate speech and the song was banned by the Equality Court.

Now common sense is a victim here on several levels.
First of all freedom of speech is far to valuable to sacrifice it on the altar of irrational fears, yet that is exactly the consequence of this ruling. Common sense would not have a court decide on the song, rather the ANC leadership should discourage its members from singing it because it has no real value or meaning in today's situation. The ANC has been in power for 17 years and the ailments of the nation can no longer just be put on the old regime, evil as it was.
Secondly how can a court expect its ruling to be enforced? Common sense would dictate that the court would shy away from making rulings that it knows cannot be enforced. If you make a ruling knowing it will be ignored, broken and not enforced you make a mockery of the justice system.
Thirdly how can people today still believe societies ills are to be blamed on a small percentage of the population, knowing they haven't had any political power for the last 17 years? And how can that small portion of society be so blinded by the words of the song that they become afraid? This is not Zimbabwe, no matter how much Malema would like it to be. South Africa still has the rule of law, a solid constitution and the ruling party does not have the seats in parliament to change that constitution. And indications are that they will lose more seats in the next national election. So why the fear?

4) Several high level political appointees have been either caught with the hand in the cookie jar or have been seen to be incompetent. Common sense would dictate that these people would be removed from their position, or even better, show judgement and resign. Yet they remain in their cushy jobs, sometimes on 'sick leave' or without any consequences at all. Some get suspended with full pay if the corruption or incompetence was too blatant to ignore. Why? The nation is not the wealthiest in the world yet it has wasted 100 million rand on these people since 2009 according to a report. Common sense would say that this money is better spend on the really poor segment of the population, on service delivery and other very worthy causes this government has to deal with.

And the worst of all: still people retreat to their racial trenches in case of a conflict of ideas and ideology. Where common sense shows that ideas and ideologies have no racial traits that is exactly what is attributed to them by a large majority on all sides. It is disheartening at times, but then suddenly you see a flash of common sense in the public debate by citizens. I have learned to love twitter. People truly debate and discuss things there. Yes, there too you will find those who are still in the racial trenches, but there are many who dare to come out and actually take a fresh look at things, verbally shake hands with the perceived opponents and find that in the end we are not so different after all. Those moments are precious, and when I see it happen it brings me hope again. In the end we are all human beings, sharing a nation, sharing its problems and adversities, but also its beauty and its potential. We all want the same things, security, safety, prosperity, good education for the children, a healthcare that works, jobs. All those very common things can be achieved if we nurture common sense.

Development for South Africa - How to achieve this and let the locals benefit.

We recently had the World Economic Forum in Cape Town. Lots of things were said there about the current state of development in Africa and the expectations for the future. Now I readily admit I did not watch each and every thing said there, but I cannot escape the feeling that a few things were either left unsaid, not looked at and that relatively simple solutions were not discussed.

I could be wrong off course, I probably am. But that won't stop me from adding my 2 cents to the debate. Not that many people will read this, certainly not the ones in power. But it feels good to get it of my chest anyway.

Fact of the matter is that the local population of South Africa has been getting a raw deal in the past, and it is not any better at the moment. Yes there are exceptions to the rule, but on a whole the country seems to be moving backwards in development rather then forwards. With the result that you get the usual demagogues screaming for nationalization of major industries such as mining and banking. These deluded fools still believe that this will help, all evidence to the contrary that is widely available. Yet they get support from the ones who are at their wits end, trying to make ends meet and who can blame them?

It is hard to see the world go by, see immense wealth and not have the chance to create even a little bit for yourself and your family. In these circumstances it is only too easy to fall into the trap when someone stands up and tells you that you and your fellow citizens could just take it from those that hold the wealth now. It is a dangerous mix this, combined with racial nationalism it can lead to another failed African state.

So how can it be solved? How can the poor and unemployed be uplifted without actually scaring off the much needed foreign investment? A nation as South Africa has incredible potential, massive natural resources and a pretty decent infrastructure. All the pieces of the puzzle are there, so how can it be put together?

In my opinion it can be summed up in one word: joint-ventures. Look at the mineral resources. It gets mined, shipped out as raw material and finished products get imported. per product this is a cash drain and a jobs drain for the nation. Instead of exporting raw materials it seems a better option to build the factories here, make finished products and export those instead. The capital to build those can be found abroad. Let us import both the capital and the knowledge from producers abroad and set up joint-ventures with local business people to build equally owned production facilities.

Foreign producers have the advanced technology and capital needed, we have the resources and manpower. It could be a match made in corporate heaven. We need the training for the people, the jobs and the added income that comes from the added value to exporting finished products. For the foreign investors South Africa is still a country with lower wages then in Europe or North America. True, the Chinese are cheaper, but they lack the resources. Which is why they buy them here, ship them to China and produce there. The cost per unit when imported to South Africa is still lower then when locally produced. But I think it is in the worlds interest as well to develop the continent Africa in this way. It will create a whole new market for their products.

The market potential in Africa is enormous, as long as the people have the capital to spend. This would be solved in this way. So I believe that in the middle to long term it is in the corporates world own interest to step up to the plate and invest in these production facilities on the continent. And South Africa is probably the best place to start, given the existing facilities and infrastructure.

This will be the way to empower the local people as well as the way to increase corporate profits. It will lead to a more equal and balanced world, and therefor a more stable world. So what are you all waiting for? The time is now to stop sending development aid and instead start helping to really develop the nations. Don't give Africa a fish, teach Africa to catch its own fish and provide the boat and nets. Your dinner will be more plentiful for it.

To balance cost and effect: targeted relief for the middle class.

It is a widely accepted theory that the engine of any economy is the middle classes. They are the ones that drive the spending to fuel the internal economic growth of a nation by both spending on consumer goods as well as increased savings. These savings can help fund capital investments. The longterm savings are for their pensions and short- to mediumterm savings for college funds and the likes. Yet the middle classes are the ones often overlooked by the powers that be.

It is understandable to have this blind spot. Considering the more immediate pressing concerns regarding the plight of the genuinely poor the government will always be drawn to have their attention focussed on bringing relief where it is needed most. And on the other hand the government will seek to create the most favorable conditions for the wealthier people to invest in the economy, logic dictates that they are the ones that can actually free up the funds to have a meaningful impact.

And yet this is, in my opinion, not the right track. Why not? I think that the economic power of the masses is underestimated. A large middleclass will have a combined wealth that will be far greater then those at the top end. It just is not a combined wealth that is easily accessible for investments, unless it gets tied up in longterm investment funds.

To remedy this it needs to be guided into longterm wealth and at the same time encourage spending. These two seem to be contradictory, yet I believe it is achievable through a few measures that state and the financial industry can take and all parties concerned would be better off. I know it sounds like magic, but actually it is a simple trick.

First the government needs to establish what income bracket would be considered middle class. The second step will send conservative fiscalists up the curtains I'm sure. I propose that the government will allow the people to deduct the interest paid on their mortgages up to a maximum to be established. For arguments sake the interest on a mortgage up to 1 million Rand. This would be deductible for the period that the mortgage would run with a maximum time of 30 years.

What would the likely effects be? First of all the home ownership is promoted and made more accessible to the people moving from poor to middleclass. Secondly by freeing up more spendable income in this group it is to be expected that their increased spending on consumer goods will stimulate the economy, thus providing a boost to the business world at all levels. Both the cornershop as well as the larger retail outlets would be beneficiaries and could consequently grow. This means hiring more people. The effect will be multiplied as more people are gainfully employed and more will come out of poverty and into the same middleclass.

For the financial services industry this would mean more mortgages and for longer periods of time. People would rather have a mortgage that runs longer to benefit from the tax deduction and increase their savings for their old age. This is not a theory, it is a tried and tested system. Those in the field will know what I am talking about.

Besides the increased savings and spending another bonus is that the building industry will be booming as well. More accessibility to mortgages will increase the demand for houses. Here as well the flywheel effect will help. More building means more labour needed.

So how will the state pay for this reduced income by allowing this taxdeduction? It seems likely that the increased income through VAT from increased spending, as well as the increased income from a growing labourpool will be sufficient to pay for the whole scheme. And more people that are gainfully employed means less money spend on grants to those that are unemployed.

In my opinion this system will benefit the whole nation on both the short as well as the longterm. It is a tried and tested system and although it has its flaws it still seems a pretty easy way to stimulate the economy and the engine of the nation: the middleclass.

Time for a united effort

Another aspect to the current worrying situation regarding employment in South Africa that I wrote about yesterday is the following. In South Africa, as in many countries the world over, the triumvirate of government, labour organisations and employers seem to have dug themselves in trenches and are sniping at eachother. All in the name of representing their members or voters. If history has taught us anything it is that trenchwarfare is a war of attrition which leaves many unneeded casualties on the field and hardly ever achieves any goal worth achieving.

The government in South Africa is trying very hard to redress the inequalities that were always prevalent in the country and enhanced during the Apartheid era. A commendable cause for sure. The question is if the way they go about it is actually yielding the maximum result possible, and at what cost. The cost is not only in money here, the cost is even greater in the development of the economy, the faith and trust in the government from its people and from the would-be investors, domestic and foreign.

The labour organisations are demanding that their members get a fairer slice of the economic pie. They rightly argue that it is unfair for the employer/business owner/investor to take the lion share of the profits whilst the average worker is still more often then not living in abject poverty.

The employers will strongly, and equally right, argue that to increase the cost of doing business and production will have to lead to a drop in profits for the shareholders, thus reducing the appetite to invest. The return on investment is simply better elsewhere. And in a global economy that is a very real threat.

Labour and employers are also at loggerheads about the increasingly restrictive labour laws, which make hiring anybody a less interesting proposition for the employer. Both are pressing government to change the labour laws, albeit in opposite directions.

Added in this complex mix is the inequality that still exists in the nation with regards to race.

It really seems that even Solomon would have declined to mediate in this situation. It just is too complicated and with too many defensible positions on all sides.

So I would suggest that all the parties stop their sniping at eachother, leave their trenches and start looking at the battlefield. What exactly have you accomplished, what are the casualties and how can this be resolved in everybodies interest? What exactly is the goal you wish to achieve?

I think the starting point will have to be macro-economic. All parties have a vested interest in a strong, vibrant economy that is capable of growth and of creating a certain amount of wealth for all the citizens of the nation. If this assumption is correct then the next step is to ask how this can be accomplished without further deteriorating the position South Africa has on the list of nations that attract foreign investment. This capital is needed to fund the growth of the economy and the well-being of the people.

If there is one thing investors crave (besides good profits) it is predictability of the way a nation will behave with regards to them and their interests. To provide this it would seem reasonable to make multi-year agreements between the three parties I mentioned earlier. These agreements should encompass both wage increases as well as a coherent strategy to redress the inequalities that still exist. However, all parties must realize that their wishes cannot be met within this period of time, and should moderate their wishlist accordingly.

If they are able to actually agree on the issues for a term of lets say 5 years (or 3, whatever is possible) then the agreement should do away with the annual cycles of strikes and lost production time. This alone will increase the productivity to the point that all can have a little bit more on their list fulfilled. And the peace on the labour front as well as the legislative front will entice foreign investors to give the nation another good hard look at least.

In this situation there is no 'silver bullet' that can slay the beast instantly. But working together with common goals can starve the beast to a certain death. The trench warfare needs to be replaced by the negotiating table, attended by parties that realize that ultimately they all have the same common interest: a more prosperous South Africa with a happier and more prosperous workforce.

Maybe Solomon can give a hand at the negotiating table afterall.

The myth of job creation.

In the current political campaigning in South Africa the unemployment has become one of the issues that are being used to gain the support of the electorate. There are clear differences in the way the main contestants in this election would address this problem. The different positions are also representative of the way the antagonists view the world and specifically economic development.
The views are not unique to South Africa. They are the same as the ones that divide political parties the world over.

On the one side there is the view that a government can make society into what it should be in their philosophy. A more equal, balanced and compassionate society then it was in the past, or indeed the present. The view starts by the premise that a the government should re-distribute the wealth through taxation, provide a stable income for the people by giving them work and all the other things needed in a modern functioning society.

On the other side the view is that the government should only provide the services that are needed to provide an environment for people to feel at home in and to minimize the taxation to provide for those services needed for society to function. The jobs and other things that mentioned in the first view will have to be provided by the society at large. In this view the government will only see to it that the equal, balanced and compassionate society is being created through a partnership between government, business and communities as stakeholders, where each has an equally important role to play. Government would create the environment for this and even a little push in the right direction, but not attempt to go it alone.

Both views have their positives and negatives. One could argue that the goals are the same, just the way to get there is radically different. But that would be a fallacy, as both views will eventually end up creating totally different societies as experience and history has shown us.

The first view so far has always ended up with an enormous state apparatus, with near total control over the economy and public life. The second view can end up with just increasing the inequality and an enormous income gap between the poorest and the richest. The operative word in the last sentence was CAN.

It will come as no surprise to those that know me or my ramblings online, that I support the second path. The state that is being created by following the first view inevitably leads to a state that can not generate enough income through the taxation system to foot the bills for its needs. In the end, be it long or short lived, the state apparatus will decline in both quality and in the capability to provide the jobs for the people it is meant to serve. I am yet to see any state that follows this system to become a success. In fact the ones that had this system have now all but abandoned this economic model, and have traded it in for one that allows more functions of society to be fulfilled by the previously demonised 'free market'.

The second view has its failures and impending failures as well, but it also has its success stories, unlike the first. The key to success seems to be moderation in the application of the principle.

After this lengthy introduction to my musings I come to the bones of it. The myth of job creation. Both views claim that their path will lead to more jobs, more income and hence more wealth for the people, especially the currently unemployed. Now this is a powerful lure for those who seek gainful employment. Surely the one who can guarantee that they will have a job deserves their vote the most? Funnily the answer is, in my view, no. Why you may ask. Let me try to explain my reasoning before you run away and declare me a complete fool.

In my view only the ones that hold the first idea of a society that can be made into their ideal will have the capability to deliver on the jobs promise in the short term. They can simply hire all and the job has been delivered as promised. The ones supporting the second idea will simply have to wait and see if they are capable of creating an environment conducive to an increase in business and if those businesses are willing and able to employ all those who seek employment.

Yet the second one is more likely to succeed in the long run. You see, government cannot create jobs. It can employ people, but that is not the same. A job is created by the need for a service or product desired by society. A job will only be sustainable over a longer period of time if it actually adds to the economic activity and the GDP of a nation. Employment by the government is only useful as so far as it meets the needs of a service to be provided by the government.

Anybody hired to do a job by government will need to realize that it is only in the fulfilling of a need of the society that it actually adds to the society. If the job does not fulfill such a need it is nothing but hidden unemployment. A social security cheque with the added demand of having to be somewhere at some time.

Government does not create wealth or income for the nation. Government is there to make it possible for a society to grow and exist in as much freedom as possible, whilst ensuring that the law of the land is upheld. I do not propose a "Night Watchman State", one where the state only provides security in the form of a defense against threats from abroad or domestic origin. No, that has proven to be an open invitation to gross misuse and abuse by the haves of the have-nots. It is an outdated and unworkable concept in this modern day and age and has no place in this world. Government has the duty to provide security to its people and that includes security from the ravages of poverty. This is where the moderation of the second world view comes into play.

So the government will have to employ people to provide the basic services to its people. Those are real jobs, meeting a very real demand. And government will need to make sure that those jobs are being done in the most cost efficient way without skimping on the quality thereof. By doing this the taxation can be as moderate as possible. Mind you, it will never be low cost or cheap, government is not there to compete on cost but only on quality. Services that can be done cheaper or more cost efficient should be outsourced, but only if the quality remains of the same high standard. The outsourcing should also be a totally transparent matter for the people to keep an eye out for their own interest. We all know of examples where this has not been the case. In this case the jobs are still very real jobs, meeting a demand in society.

In short one can conclude that the only jobs being created are the ones that society creates by its own demands. There are examples where a demand was not in existence (or better not commonly realized) before a product was created.

Think of everyday products and services we use. The telephone, internet, computers, cars, banking, etc. All are products or services conceived by a few very smart people that identified a need in society and made a product or service to meet that need. And hardly ever was this done by a government. So government should get out of the way of the ones that will actually create real jobs and stick to its core-business: providing the basic needs for a society to function and thrive. As soon as the state starts to interfere in the free flow of ideas and development of new concepts outside of its mandate it inevitably leads to a grinding halt of the economy and the development of society.

A government that provides the framework of laws that protect the people, enforces those laws and seeks to remedy excesses that are unwanted is usually the most successful one. Laws that protect people are also things as government grants, they provide security; medical assistance through state hospitals also provide security: against illness or its effects. Those are some examples that I do not think about a narrow field when I speak of government limitations. But government has no business in operating companies that run better without their interference. In South Africa things like mines and banks come to mind.

But job creation is the most prevalent in an open, vibrant and economically free society where government limits itself. Hence the support for this view may not be the short term solution for many, but the only solution for all in the long term.

Help, I am becoming a local.

I have just come to the realisation that I am starting to integrate in South Africa. I was shocked and disappointed in myself....

The Provincial super rugby team (Stormers) was going to start another match and I was actually looking forward to watching the game.. ME! Watch a rugby match! I am probably in need of some serious medication. I never watched rugby before I moved here. Never liked it, never understood it (well that hasn't changed much) and most certainly never enjoyed watching a game or look forward to it.

And now I catch myself watching the games, yelling at the screen as if I am watching a proper sport, you know football or cricket, instead of a bunch of guys throwing and kicking an egg about that they dare call a ball. I am afraid that this is a serious matter and might be irreversible.

But at least I manage to hold on to my love for football and cricket here. But why the South Africans call football soccer is a mystery to me. The national football organisation is called SAFA: South African FOOTBAL Organisation. Yet in the press and the public at large the term soccer is rife. Soccer! A term invented by Americans because they allready have a sport called football. You know, the one that has absolutely nothing to do with playing a ball (also an egg) with ones feet, except when they kick off or take a penalty.

Now why on earth would any selfrespecting South African use that name for the sport that is the most popular in the country? The most popular league on tv here (besides the local league) is the english Premier League. In England it is called football, why not here? Eish (as they say here), those South Africans are very confusing. What worries me is that on occasion they actually make sense to me. I must be slipping. Another 2 years here and I will understand them even better, this is a worrying curve.

Ah well, as the saying goes: if you can't beat them, join them. TV here I come: STORMERS!!!!!

Political growing pains.

South Africa is a nation that is confusing to the outsider. The people are generally the friendliest, politest and funniest I have met in my life. Individually they are great. But there is this funny thing when it comes to the political landscape. For some unfathomable reason (to the outsider that is) inevitably the race card is still pulled. I thought that era ended in 1994.

The most intelligent people seem to slide back into this us versus them mentality. When I try to argue the merits of the case it gets shot down with: You wouldn't understand this, you are white/from Europe or any other reason that comes to mind of the person in question. As I said: confusing.

They are probably right. I was priviliged to grow up in a family and in a culture that thrived on a good political debate where the ideas are the targets, but not the people that hold them. It all drives home the notion that democracy is not innate to human nature. It is a concept that needs to be taught, learned and nurtured. It is a fragile idea that needs to be protected with vigour, for it is easy to forget the reason why one would uphold it when faced with people who disagree with you. And yet that is precisely why it needs to be protected. A democracy means there has to be dissent. People are not all the same, that is what makes them so interesting.

The same applies to that other great pillar of democracy: freedom of speech. You hear people saying: you can't say that, it offends people. But that is exactly why you need to have freedom of speech. It is easy to have this freedom for those that agree with you and don't offend you. Everybody will agree that this should be allowed. No need to protect the right to agree with me. What needs to be protected is the right to disagree, even to offend. I may disagree with what you say, but I will defend your right to say it.

Now, less then one month before the local election in South Africa it all is under tremendous strain. Courtcases to decide what is and what is not allowed to sing. Policebrutality that resulted in the death of a protestor. The ugly side of humanity rears its head in the political pressure cooker that is South Africa. Indeed they are right when they say: "You wouldn't understand'. And you know what: I am glad I don't.

I do know that this nation has a long way to go in growing up into a true democracy. There are signs though that give reason for hope. On social networks the people mix readily, agree, disagree, argue etc. All the healthy things that are part of the growing up of the nation.

I am glad to be part of it and to watch this baby develop into a self assured and strong nation. It may stumble and fall on occasion, but with help from the ones that can it will come to the point where it is able to walk alone. I still have faith in these people.

You would too if you knew them.