Tuesday, June 23, 2015

Empowerment: a misguided obsession

The effects of not fully understanding this central theme of policy.

If you are going to have an obsession, make sure that you fully understand its true nature. Centre stage of much of what we are doing in South Africa is empowerment of the broad masses.

It is constantly on the lips of populist politicians and has become a major driving force in economic policy with billions being spent on empowerment projects from national, provincial and local budgets. It features in much of our legislation with laws prescribing who, what and where people can be employed and who qualifies for tenders. In turn it has fundamentally shifted organisational activities in the private sector.

Yet it is a moot point whether all of these highly costly, restrictive and disruptive efforts over more than twenty years have achieved their undeniably laudable goals. On the contrary, one could argue that in its key remits of economic growth, employment and reducing income disparities it has failed miserably. One could write an academic thesis on its main fractures, but this is beyond the scope of this article.

I believe that at the root of it all is a simple yet powerful force: a flawed understanding of what true empowerment is. True empowerment is having an ability to take charge of your own destiny and make a meaningful contribution to your social and economic environment. It is not simply about owning, but about doing. Yet, we have seen the primary thrust of our empowerment approach focus on ownership. We see it in the large allocation of wealth through BEE to a favoured few; the facile approach to land transformation by simply changing ownership titles and the appalling state of real developmental efforts such as education and training -- the basis of empowerment.

It explains Trade and Industry Minister, Rob Davies misgivings about Employee Share Ownership Programmes. This was further brought home to me in a response to my article on the issue where a clearly informed reader emphasised that these schemes were about “financial empowerment” and not about employee involvement in the destiny of the company. I stand corrected. I clearly fell for the ESOP spin that argued that it was the prime aim of these schemes.

In a world obsessed with possession it may sound counter-intuitive to argue that possession on its own does not represent power. Ownership that exists purely for self-gain and self-gratification becomes barren as an economic factor, especially so when they are productive assets. Responsible major shareholders know this. And private owners of small and medium enterprises even more so.

The ownership-equals-power assumption rests on a shallow understanding of power itself. Authentic and legitimate power is earned by its contribution to others. When it does not do that it is simply control, which relies either on seduction or coercion.

There are a number of reasons why ownership and possession have become paramount in empowerment thinking.


The right to private ownership is a key tenet of free market philosophy. While private ownership has proved its value in economic history, in the past number of decades there has been a marked shift to ownership becoming an end in itself, existing more for self-gratification and the benefit of owners than for the contribution it can make to others. This is a very seductive message for those seeking instant empowerment, and ironically the anti-capitalist argument has adopted this perversion by championing a transfer of assets either directly to private hands among the broad populace or to government. The problems with the latter are well known, particularly when it is inefficient, inward looking and not customer focussed.

Asset inflation

Massive levels of global debt and monetary stimulation may not have led to consumer price inflation, but they have led to asset inflation. This has deviated money from consumer demand and expansion of productive capacity. It has become far easier to make money passively through speculative investment than to work for it or becoming involved in productive enterprises, in turn impeding the empowerment of many through employment.


It is becoming all too clear that far from encouraging employment, technology is starting to replace many jobs (see article here) and even threatening middle class jobs, an essential rung in economic advancement (see Moneyweb article here). Where technology encourages employment, entry levels require much higher skills and have raised the barrier for empowering large numbers of unemployed.

Socio-economic theory

There has been a popular interpretation among human resource practitioners of Maslow’s hierarchy of needs that assumes that each step from the physiological to self-actualisation have to be met before advancing to the other. It’s a convenient assumption for governments in expanding control and discouraging individuals from empowering themselves. The assumption that one cannot be or even feel empowered in poor circumstances is contradicted by psychology doyen, Viktor Frankl’s work Man’s Search for Meaning.

Commoditisation of labour

The essence of empowerment is in having a sense of purpose beyond simply “earning a living”. We have largely lost that in the workplace, a vacuum that most try to fill by wanting more either in pay or possessions. It is a key to understanding why most ESOP’s fail to harness support for a common externally focussed purpose and encouraging involvement.

Our approach to empowerment is missing a critical point. Empowerment is for the most part a self-defined, self-help and self-developed state which clearly will be encouraged by education, employment and entrepreneurship, and creating the appropriate circumstances and opportunities. Empowerment comes from having something meaningful to do which in turn comes from individual aspirations.

Far from encouraging this spirit, current efforts are most likely doing the opposite. For empowerment will never come from simply transferring assets and ownership, nor from handouts and dependence on others.

It is the old story of being given a fish or learning how to fish. Of course, then there is access to fishing waters and having a rod. But above all, there is the need for wanting to fish.

Monday, June 8, 2015

South Africa’s real fault lines

Assessing the imbalance between expectations, aspirations and reality.

It’s been said that one of the most effective tools in understanding the basic principles of economics is to follow the logic of your own transactional behaviour. At its core, this overwhelmingly important environment is simply what the original Greek word implies: “good housekeeping”.

The same principles in keeping your personal business affairs in order, apply equally to a nation. You should not, for example:

· Spend more than you earn (budget deficits and national debt)

· Buy more than you sell (trade deficits)

· Build a mansion in a squatter camp (income disparities)

· Create wealth by printing bank-notes (debt based money creation)

· Recoup a loan at less than the original amount lent (negative interest rates)

Sound familiar? We are doing all of the above globally – and more -- and some nationally. If you did those things as an individual, calamity would surely overtake you. It is pure folly to believe the same will not confront nations. But here are some more: You should not:

· Simply accept the way things are and surrender to events that confront you

· Expect your neighbour to support you as an able-bodied person

· Expect reward without some contribution

These are captured in the triangular prism I wrote about earlier (see article here) of expectations, aspirations and reality. To recap:

· Your Reality is an interpretation of your circumstances

· Expectations are those things that you believe society or others owe you

· Aspirations inspire effort and self-help.

Reflecting on my own life, I cannot think of a more powerful self-developing life skill than doing a personal audit of these three and constantly adjusting or adapting them. Lowering expectations and increasing aspirations is not only the key to contentment but the ultimate driver of achievement.

A factor that most theorists dismiss too lightly is that you cannot separate national behaviour from individual behaviour. Adjusting the latter in averting the dangerous imbalance which I alluded to previously cannot only depend on policies, regulations and decree but rests largely on individual willingness. The promotion of willingness, together with providing means and abilities, is critical and should be the focus of all policies before simply giving in to popular pressure.


A fundamental shift in economics has seen a massive erosion of opportunities for self-improvement. This lies at the heart of what most are experiencing. Technology and the inordinate role of financial instruments in economic growth have seen labour participation rates and the share of labour in Global GDP decline.

This has lifted beyond the reach of millions the first rung of the ladder of success – simply entering the productive environment to obtain skills and experience. The next rung – the middle class -- is being stifled across the globe. Only in pockets such as South Africa, are prospects upbeat for this class, mostly in government service or a corporate ladder.

This overwhelming certainty leaves little room for failure in improving the circumstances of people in this country. In view of the volumes of theoretical and practical suggestions that have occupied columns such as this (see Max Du Preez article here) and the podiums of every “thought leader” from academics to pastors and politicians, I’ll restrict comment to two main thoughts:

The first is to hold government fully accountable to do what it has been empowered to do; what we are paying a President ten times more than the leader of the world’s biggest nation to do; what we are paying one of the world’s largest cabinets to do; what we are paying a civil service more than most others to do; what we are paying 60% of the budget on social services to do; what local authorities gather rates and a large chunk of national revenue to do; and what state owned enterprises have been assigned to do.

The second is a powerful life skill – changing perceptions of reality. Philosophers have for centuries been challenging the very concept of reality, concluding for the most part that there is no such thing – only a perception of it. It’s a tantalising idea that I will frustratingly leave with the simple question: are we not creating reality from perceptions of doom? There’s an old saying that our worst fears become our reality.


Because expectations are unrealistic, they are not necessarily illegitimate. All societies are based on a social contract, either by implication or entrenched in constitutions and law. Thereon rests the legitimacy of government, indeed of every transaction. If expectations are unrealistic then for the largest part they have been made so by the vendor, in this case power hungry politicians who peddle their snake oil under all banners, colours, uniforms and berets. One of the flaws of democracy is that it allows this kind of reckless overselling. But democracy also provides for calling the vendors to account. That’s a responsibility we all have as individuals. There simply is no room for passive consumerism in politics at any level, especially not at the polls.

At an individual level, reducing expectations does not mean not having them. They will always be implied in every transaction or interaction, even those that we believe are unconditional. It simply means not fully relying on your expectations being met and abandoning self-help in the process.


These are by far the most important in uplifting our national spirit. It’s also the only self-empowering tool we have as individuals. Allowing them to be smothered by unfulfilled expectations, or dependence on another is surrendering our own destiny. We oldies glibly tell youngsters of the struggles we had “in our day”, but frankly I do not envy today’s youth, given the diminishing opportunities I mentioned earlier.

Part of the solution lies with labour. South Africa cannot escape the waning role of labour globally and the preservation of its power can no longer rest mostly on confrontation. Job expansion and retention is an essential force in money velocity (rate of circulation) to ensure continued demand for products and services and ultimately economic growth and profits. It will require new and innovative relationships between labour and capital, based on principles of common purpose and common fate.

Promoting national and individual aspirations is fundamental to our future and may require a completely new approach to small and medium enterprises, the decisive incubator of individual aspirations. Simply getting out of their way is a good place to start.

No assessment of South Africa can be complete without taking into account the determined spirit of many in this country. It is the one attribute that fosters optimism and hope for our future. (See BDlive article here)

We simply don’t recognise, applaud and nurture it enough.