We need an Economic Codesa

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Published Nov 5, 2014

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It is time business people put their case clearly to the government, to labour and to the public, says Allister Sparks.

Cape Town - I was intrigued by my fellow columnist Steven Friedman’s recent assertion that the only way to bring about change in the country’s social and economic direction is by hard, tough negotiations between the government, business and labour. Indabas, he noted, don’t achieve anything because they don’t commit anyone to act.

Friedman pointed out that when our major actors negotiated the deal that gave us democracy, they ducked a key issue – how to tackle the poverty and inequality our past created without damaging the ability to create wealth. That issue should be dealt with now.

I found myself in agreement. Indeed it put me in mind of a suggestion I made three years ago that we needed an Economic Codesa to thrash out an agreed economic road map as we had our national constitution.

But there is a snag with Friedman’s suggestion, just as there was with mine. Who is to do the negotiating?

At the political Codesa all recognised political parties came together to negotiate. All were easily definable participants. Even then it proved difficult, with several breakdowns, and it eventually reached agreement only through the questionable device of “sufficient consensus”.

An Economic Codesa would be much harder. We know who the government is, but should such a negotiating forum not include all opposition parties as well?

And who would represent labour? The labour scene is so fragmented right now that getting them to agree even among themselves seems impossible.

But business poses the biggest problem. Who and what is business?

The collective noun is blithely used as though business were a single entity that can speak and act with one voice. Its infinite diversity is ignored.

The prevailing view on the left seems to be that business is some sort of giant, blood-sucking sea squid, a single malevolent monster that incorporates everything from the spaza shop to the family grocer down the road, and from the successful cattle farmer and small-town supermarket to the giant multinationals.

All get lumped together under the same label of capitalist exploiters. Therefore business, the whole private sector, is bad. It is exploitative because it lives on profit. And profit is bad because it is extracted from you, the struggling consumer.

That simplistic stereotype, I’m afraid, is widespread in the government and perhaps a major part of our electorate.

Moreover, it is understandable. Because through all those years of racial domination and apartheid, business was exploitative. For years farmers and mining companies paid their workers pitiful wages, and white shopkeepers for the most part treated their black customers like dirt.

But now we are trying to create a new South Africa and we have to get ourselves out of the deep freeze of those 19th-century stereotypes. We have to modernise our thinking and our relationships, which brings me back to the question of who represents South African business. The answer is – nobody. There is no representative body. There is no leadership to voice even a generalised opinion, not since Harry Oppenheimer died and his descendants abdicated. Business Unity SA is moribund and Business Leadership SA seems to have gone into hibernation.

So who would put business’s case at a negotiating forum? And what would that case be? Does the general public know? I doubt it. So the stereotype stands unchallenged in the public arena.

We know business confidence is low. So I have no doubt there are small huddles of business people having troubled discussions among themselves all over the country. But the general public has no idea what they think the solution to Friedman’s key question should be.

It is past time they came out of their smoke-filled rooms and put their case clearly to the government, to labour and to the public. For there is a compelling case to be presented. Business, the whole private sector, is what generates the wealth without which the country cannot prosper, poverty cannot be eased nor inequality reduced.

The government makes no money. The state corporations it runs contribute nothing. They are run so badly they are all deeply in the red, surviving on subsidies from the fiscus. So they are the true blood-suckers.

No, the government’s revenue comes entirely from taxes: individual taxes, corporate taxes, VAT, fuel taxes, e-tolls, import duties, estate duties and so on. The taxes the private sector pays, which means we the people, and which Finance Minister Nhlanhla Nene says will have to be raised because the government has become too extravagant and wasteful. Nkandla and stuff like that.

Yet in the name of wanting to create a “developmental state”, the government constantly interferes with the wealth- creating affairs of business. The government wants to control the private sector, to micro-manage business, because it believes business is congenitally bad and needs to be watched.

To that end it has created a vast cobweb of rules, regulations, permits, licences, charters and other obstructions to exercise its control. That hassle factor alone is enough to put off foreign investors, while more and more local companies are frustrated to the point of putting their domestic operations into “care and maintenance”, which means keeping them running as they are while looking abroad, particularly the rest of Africa where growth rates are 5 percent or more, for opportunities to grow.

Which means revenue generation here at home is becoming static while state expenditure balloons.

Individually or in groups, business people should speak out publicly about how this constant interference in their activities is restricting new investment and inhibiting their ability to create the wealth the country so desperately needs. And that without wealth there can be no redistribution, no way of tackling the poverty and inequality of our past.

More than that, instead of being purely reactive to these constant acts of interference, business people should become more proactive and state clearly what they require to enable them to contribute more to the national wealth.

In doing so they need also to be mindful of business’s own past and the image that has created in the minds of many members of the black community. Mindful of its need to offset that image by modernising its relationships with its workers and its responsibilities to the public good.

Let us hear some views of how business leaders feel about introducing supervisory boards and employee share-ownership schemes in their companies. Workers should have a say in the running of the company they work for and enjoy a share in its profits. Image aside, that is the way to boost productivity and reduce strikes.

Let’s hear more about the educational and training schemes big businesses will introduce. And the foundations and scholarships they will establish.

Part of the problem is that business, especially big business, doesn’t like getting into public confrontations with the government. They fear losing those fat government contracts if they do. So however unhappy they are, they feel it is better to cosy up to government and hopefully be able to influence it from the inside.

That was the strategy the old Nationalist verligtes tried for years to influence the Verwoerd, Vorster and PW Botha regimes. It didn’t work then and it won’t work now. All it leads to is a form of co-optation, which results in silence.

And remember, silence means consent.

* Allister Sparks is a veteran journalist and political commentator.

** The views expressed here are not necessariy those of Independent Media.

Cape Times

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