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.

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