Broad-Based Black Economic Empowerment

[TELESPHORE]

on a bit more lighter side:
An economics professor made a statement that he had never failed a single student before but had once failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class on socialism. All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.
The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes the reward away, no one will try or want to succeed.
Could not be any simpler than that.
This profound little paragraph that says it all:

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my friend, is about the end of any nation.”
“You cannot multiply wealth by dividing it." ~ Dr. Adrian Rogers, 1931

 

[WilD_CaT]

on a bit more lighter side:
An economics professor made a statement that he had never failed a single student before but had once failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class on socialism. All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.
The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes the reward away, no one will try or want to succeed.
Could not be any simpler than that.
This profound little paragraph that says it all:

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my friend, is about the end of any nation.”
“You cannot multiply wealth by dividing it." ~ Dr. Adrian Rogers, 1931

+1000000000000

 

[TELESPHORE]

Another part to ponder:
South Africa seems to think it can continue without adequately investing in public infrastructure. That it can continue with inefficient public administration. That it can continue with its inefficient allocation of resources such as affirmative action and BEE.

South Africa seems to think it can each time refer to Malaysia as “the” great (non-Western) successful model in this regard without taking into account that this model in Malaysia is busy unraveling.

South Africa seems to think that it can allow Mugabe to continue in Zim because it actually admires his non-Western model variant without apparently taking note that this model is a total disaster.

South Africa seems to think it can remain internationally competitive with wages that rise at twice to three times the inflation rate.


Professor PDF Strydom:

By Invitation: Professor PDF Strydom [email protected]

28 February 2011


When thinking about South Africa’s growth potential and the presently favoured policy approach, it may assist our understanding by not following conventional channels of systemisation.

The South African government appears to have a clear sense of what the majority of the population wants to see changed. The President’s frequent speeches reflect this, and especially the opening cadences of the Budget Speech by the Minister of Finance last week could not have been clearer.

Yet this doesn’t necessarily mean that there is clarity or general understanding about the economic model to be used in pursuing such national ends.

It may in this respect be helpful to take a closer look at China and its increasing alignment with Africa, and South Africa in particular.
-------------------------
When considering the Chinese tenacity in holding on to their development model of the past three decades, it would appear that the Chinese are actually implementing what appears to be a ‘new’ model of economic development that in principle is anti-Western.

In essence, this is a mercantilist model favouring domestic saving and investment over consumption, using exports as an important growth engine.

It also generates external surpluses, allowing the built up of a strategic global presence.

Thus short-term domestic welfare is progressively sacrificed for greater strategic interests, which is a form of long-term geopolitical investment.

This Chinese approach has specific characteristics such as a fixation with exports, partly with defensive and partly with offensive objectives in mind.

Defensively, it has its origin in their interpretation of the 1998 Asian crisis (and much earlier events stretching back centuries, also taking a leaf out of Japan and Korea’s modern development approaches that preceded China’s modern development).

Offensively, it provides Chinese state companies with capital without apparent limit to invest in emerging Asia, Africa and Latin America.
-----------------------
When we turn to Africa and South Africa specifically, it would appear that our political leadership also wants to adopt an anti-Western development model.

For this reason GEAR is finished, driven as it was by Washington Consensus thinking. Similarly overtaken is ASGISA, Harvard-driven, now being superseded by the New Growth Path with its typical non-Western ideas.

Thus Africa and China probably see themselves as big players in this new world in which they and their fast growth performances gain much global publicity, and now apparently increasingly thinking they can do things their own way.

Co-operation between Africa and China suits both parties as the capital surplus characteristic of China places it in a position to complement Africa’s redistribution emphasis.

It is going very well with these non-Western models. For this reason, South Africa is probably so eager to be seen as a member of the BRICs brotherhood.

Rather than interpreting many of our new development characteristics as being old-fashioned socialistic in nature, our systemization should rather be non-Western.

Even so, the non-Western model is gaining momentum in Africa, with China assisting mightily with this.

So the accumulating impressions of recent times should rather be interpreted as a non-Western approach, with its African variant having a strong redistribution component that looks like socialism (which in fact it is).

But it is not being sold as ‘old’ socialism but rather as a NEW approach – the New Growth Path.

Both these approaches (anti-Western mercantilism and old-fashioned redistribution) hold currently great promise for its intellectual originators, but this doesn’t take account of a changing world.

For China, an export strategy based on an undervalued currency is fast becoming outdated. This is not only a matter of their trading partners refusing to accept such behaviour indefinitely.

Increasingly, such a currency strategy contradicts China’s long-term aims.

China wants to make its Renminbi an international currency, yet also hold on to capital and exchange constraints along with an underdeveloped financial sector.

China wants to be taken serious in the world at large, but suffers a fundamental lack of human freedom at home.

China wants to benefit from credit demand in the countries to which its exports, yet whose financial sectors are changing radically.

Different contradictions can be observed in South Africa.

South Africa seems to think it can continue without adequately investing in public infrastructure. That it can continue with inefficient public administration. That it can continue with its inefficient allocation of resources such as affirmative action and BEE.

South Africa seems to think it can each time refer to Malaysia as “the” great (non-Western) successful model in this regard without taking into account that this model in Malaysia is busy unraveling.

South Africa seems to think that it can allow Mugabe to continue in Zim because it actually admires his non-Western model variant without apparently taking note that this model is a total disaster.

South Africa seems to think it can remain internationally competitive with wages that rise at twice to three times the inflation rate.

South Africa seems to be blind to the failure of its policies, yet happy about the non-Western nature thereof.
-------------------------
Would the Arab World today perhaps tell us a different story about such policy choices?

In country after country in North Africa and the Middle East today, it would seem the population is choosing in favour of a Western development model, rejecting the typical existing non-Western Arab models.

The question in that part of the world is whether Islam will allow it to happen.

What is the real question in our part of the world?

Cees Bruggemans
Chief Economist FNB
[email protected]

Register for free e-mail articles www.fnb.co.za/economics