Saturday, August 14, 2010


I was born in clip_image002a shack on a plot in Rhynfield, Benoni, hours before dawn on Saturday, the 22nd of January 1944. The shack was built by my father on the plot that he owned but then lost for not paying land tax. I learned much later from my intensely rivalling three siblings trying to put me in my place as the youngest and inferior, that I was a “mistake” from an intense moment of passion between a “Sapper” on leave from the war, and a spouse deprived of adult company for a number of years. Still grieving about the still birth of her first child and exhausted from the confinement of four in rapid succession, she saw no benefit in bringing another into a world of rations, no running water, no electricity, an outside long drop, and the prospect of being a war widow and Nazi slave. Catholic dogma and a stern lecture from the local priest saved me from being consigned to a paper bag as a foetal blob.

My father’s parents owned a school at Musselkanaal in Northern Holland. That was all they owned, apart from the respect and adulation of a rural community. So when the depression came, my father with the self-help disposition common in those days, decided to emigrate south. He at least had the title deed to a heavily indebted piece of land left by an uncle, and a recollection of whispers in Musselkanaal that this very same departed uncle was a confidante of Paul Kruger and knew where the missing gold was. I don’t know whether he expected to find a clue, if not the gold itself, in the long drop. My mother, also to escape the austerity of a small Amsterdam family bakery, responded to an advert in a lonely hearts column and joined my father after meeting him for the first time at Cape Town harbour. But his dreams were interrupted by a war that he claimed he could not stay out of because the “rot mowwe” had invaded his motherland. My mother probably felt that he would rather run the risk of being killed by a bullet than to face up to his duty to the fruits of his fertility. On his return, dispossessed of the land, and after futile attempts to find an occupation in his first love, farming, he joined the gold mining scramble. So began years of nomadic trekking with his family in tow and with varying degrees of leads and lags, separations, convents, and foster care.

I reflect on those times with no celebration or lamentation; no acclamation or condemnation. It left me simply with a deep appreciation of the value of prudence, and an aversion to elitism. I witnessed how acts of kindness are as likely, if not more so, between people of modest means as in others. I also came to understand that poverty is as much a state of mind as it is a state of wallet. The circumstances were perhaps less relevant than the time itself. It was a generation that was to bridge an age of deprivation and austerity for most with an age of progress and abundance for many. It has become known as the “baby boomer” generation. If I compare my parents with my children, then it is as if they are a different species, not in a physical sense, but certainly in their expectations and aspirations.

My parent’s generation, and those before them, had a certain faith in the concept of progress. They expected that over a lifetime at least, they could experience some improvement in their lot and that of their families. It was perhaps not of the same buoyant kind that was prevalent in America at that time, but it was a sense that drove them with some contentment through their daily efforts. What was clearly understood by that generation was that personal progress was only possible with personal effort. There was an intuitive understanding of the inseparable link between expectations and aspirations: what you could expect out of life, and what you aspired to put into it. This was particularly true of America, which by then was already the engine of the global economy and was domestically driven by a strong tradition of individualism with government intervention only peripheral.

Then someone threw a switch: one that was to turn that balance on its head. Former Central banker, Arthur Burns, has identified that switch as being “the cataclysmic events of the 1930s and 1940’s”. In less than twenty years, with the concept of self help shattered, governments were made accountable for national prosperity and elections were won or lost on promises of better times. It has, according to Burns, built in an “inflationary bias” in all economies, one that will continue to grow as long as populist politics force governments to act contra-cyclically.

There is little point in being drawn into a debate on “systems” again. We are in an age where a rolling back of government is arguably a quixotic cause. Likewise, calling for greater government intervention brings with it incredible dangers of affordability, mounting public debt, stifling of initiative, and authoritarianism which everyone should fear. In any case, governments are increasingly finding themselves at the mercy of global events, and international rules and regulations often blunt the tools of domestic measures.

Nowhere more than in individual expectations do we see the futility of systems, policies and regulations that are not supported by individual behaviour. Classic economics, including John Muth’s theory on rational expectations and a variety of highly authoritative work on inflationary expectations, do not come to grips with the volatility and susceptibility of individual expectations. They certainly cannot quantify their multiple causes and combined impact.

clip_image004When public expectations exceed reality, (Diagram 1) we create public discord, anxiety and discontent. On the other hand, when public expectations are lower than what they experience in life, we create peace and contentment. Nowhere has this been illustrated better than in Denmark which, according to Leicester University has the most contented people in the world. This has at least in part been ascribed to their low level of expectations.

South Africa is a prime example of the effects of rampant expectations. Apart from promoting a general feeling discontent, expectations inevitably become “entitlements” and entitlements become demands. We can see its effect on labour unrest such as the recent and ongoing strikes, service delivery protests, and burgeoning allocations to welfare to the point that it has economists such as Mike Schussler concerned about the size of the “welfare state” and the fact that more people are dependent on tax payers than there are taxpayers to care for them. A little cameo close to home that illustrates this is the case of our part-time housekeeper. From being quite content, she became fairly belligerent shortly before the last elections. She then promptly quit, informing us that she no longer needed the work because she was promised a free house by an electioneering politician visiting her township.

There is no easy answer to containing expectations. Not even the reality of a world recession, it seems, can contain them. They are multi-sourced, elusive and volatile, and you certainly can’t effectively contain them through legislation. It is perhaps one of the faults of democracy which while arguably the best system we know, is dependent on an election process which inflate expectations beyond what is affordable.

It probably starts with the Constitution itself, which enshrines many “rights” but in reality guarantees little more than the “right of redress to court”. The most basic of all, that of the right to life, if flaunted by a murderer, has only about a 20% chance of some form of court outcome. But there are many more: such as comparisons, parenting, schooling, advertising and excessive pay discrepancies. There are also many expectations that are often in conflict, such as shareholder and labour expectations.

Any solution to excessive expectations requires at the very least that it becomes a much more visible scourge, perhaps equal to our awareness of HIV-AIDS. We all intuitively know when we have been subjected to it and when we promote it. Prudence and the value of moderate expectations should be consistently and aggressively taught in homes and schools. Politicians and union leaders simply have to learn to appeal to the nobler qualities of the electorate and their members and not make promises they know cannot be fulfilled. Leadership has to set an example, and certainly not flaunt unseemly wealth in the face of a deprived electorate. The thorny issue of executive pay and excessive bonuses has to be actively addressed beyond media criticism. Business has to become more transparent and consistent in sharing information with staff, and promote concepts such as fortune sharing. You probably have more valid ideas. But they are all non-sclip_image006tarters if we do not recognise expectations as a terrible and fatal economic virus in our midst.

The recent soccer world cup gave South Africans an excellent example of how a nation can be uplifted by high aspirations. Aspirations are things we hope to achieve with effort and not handouts. When they exceed our expectations, (diagram 2) they reflect maturity and promote contentment. The opposite is true when expectations exceed our aspirations. As a nation we have to more clearly define aspirations as against legitimate expectations.

Ultimately it should not be such a difficult message to sell. The reward for low expectations at an individual level is greater peace and contentment; for high aspirations achievement and success. At the very least, a better balance between the two will give us the resilience to cope with whatever lies ahead.

With apologies to John Kennedy: “Ask not what you can expect out of life. Ask rather what life can expect out of you.”

This article can also be seen on moneyweb_logo


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