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18 April 2012 at 21:31 - Posted by Anonymous

Who is running SA? Ordinary people


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It is testament to the remarkable commitment of ordinary people that this country functions as well as it does. Daily it seems more evident that the so-called leaders in both business and politics have either been on strike for a very long time or on a protracted go-slow.

If South Africa was one of those grim reality television shows we could just press the “loser” button and get rid of them all – with the exception of about five in each camp who are indeed truly exceptional. But reality is not a game show and so we are left with a poorly functioning political system that seems incapable of removing politicians for non-performance as well as a poorly functioning crony-based corporate system that keeps on re-electing dead wood.

You don’t have to go far in this country to find people suffering with some gaping need not being met. In between the pockets of excess are shortages of everything you can imagine – food, clothes, jobs, housing, transport, health, education. So how is it possible that our politicians seem happy to waste their time bickering and jockeying for position? And how can it be, when faced with such huge demand, that business says it won’t invest because of uncertainty?

One reason this dysfunctional system survives is because, unlike us ordinary folk, “leaders” get paid stacks of money just for being in office. Unlike the rest of us, they don’t actually have to “do” stuff. It seems that the definition of a leader these days is somebody whose job is not threatened by non-production.

This not only means politicians have the time to indulge in all manner of machinations to protect their turf, but it also means there is huge incentive for them to do so.

Similarly for business “leaders”; why would they risk investing in anything when it is so easy to persuade their board and investors that they are better off harvesting previous years’ investment and avoiding anything with an element of risk? The most risky option they are likely to pursue is to buy an existing proven business.

Why incur risk associated with job creation when the current system so generously rewards job destruction? Real risk threatens share price performance, which can destroy remuneration packages. It is far easier for a corporate executive to explain to the like-minded members of his remuneration committee and his major investors why he elected not to invest than it is to explain that it might take five to 10 years to see returns on money spent.

These conversations take place in an investment environment dominated by massive returns being earned by the non-productive financial sector where companies essentially bet on other people’s effort and risks. If you can earn the sort of returns enjoyed by the financial sector, why would you actually bother taking a risk and employing people to produce stuff?

The financial community, including the asset managers who control our savings and investments, have destroyed the corporate sector’s capacity to take risks. In this they have been, perhaps unintentionally but very effectively, aided by our politicians.

Of course the global community is not doing much better, not even those countries that have the luxury of long-established political systems. The political and business leaders see nothing but risk around them; their nervousness is reinforced by the daily U-turns on prospects for regional or global economic growth. Have you noticed how one day the outlook is suddenly positive and the next day, equally suddenly, negative? This says as much about economics as a pseudo-science as it does about the crippling uncertainty that pervades a leaderless environment.

Meanwhile it is down to you and me to keep the show on the road.

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