SHAHEEDA MIA: State has to stop taking and start giving
SA is not pulling the right levers to enable growth and allow its citizens to feel safe
I am a huge fan of the work of American organisational psychologist and Wharton professor Adam Grant. Most people will know him as co-author of Sheryl Sandberg’s most recent book, Option B. I have not read this book, but I have read all his previous works and one of my favourites is Give And Take.
Grant’s theory centres on three core types of people in organisations: takers, who strive to get as much as possible from others; matchers, who trade evenly; and givers, who contribute to others without expecting anything in return. He concludes that though givers may get exploited and burn out, in general they are the most successful in the long run.
This theory can be extended to a bigger scenario, that of a country’s economy and the creators (givers) and rent-seekers (takers) one finds operating in that context. Like large business organisations, countries (governments) should not be as complex to run as they are made out to be. A large part of the reason they become complex is due to the clash of the value systems of creators (givers) and rent-seekers (takers).
If we were to borrow from biology, think of a country’s government as a mother’s womb. A womb is meant to support the creation of life (civil society and business) through the provision of nutrients (infrastructure, rule of law, access to education, health care), but the reason the mother (the country) and child (civil society and business) are able to healthily coexist (for nine months in the case of a human gestation period) is that the child does not take more than the mother is able to give.
However, over the last while the government in SA (the mother) has been taking more than it has been giving to civil society (the child). This has played out in many ways, including slowing or almost nonexistent economic growth; a lack of investment; and the slowing of the advancement of the development of the middle class SA so desperately requires, largely due to a failing education system. There is a great deal of focus on the redistribution and extraction of wealth (taking) but not enough on growing (creating) the wealth pie.
We have a low GDP growth rate for a reason — our attention is not sufficiently focused on the levers that drive economic growth. Government policies disincentivise creation that drives real economic growth, punish value creators (taxpayers) with higher taxes, and look likely to punish savers in a country that already has too low a savings rate — hence the constant search for foreign direct investment on the international scene.
As a country we want the spoils of capitalism without proper application of the levers that generate it. For economic growth to take place, real value needs to be created. Otherwise, like all periods of systemic excess or inflated wealth/value not driven by fundamental principles, something eventually gives, just like the sub-prime mortgage crisis of 2007-2008.
It is time to stop getting caught up in a polarised debate on the opposing absolute ideologies of capitalism and socialism, and rather start with where SA is as a country, what is achievable and what will drive it forward. At less than 1% of global GDP, the rest of the world really does not care. Capital investment will flow to where the odds of making a positive return on investment are greatest. Capital certainly does not fish in an empty barrel.
Business is a powerful lever in a free society. It has the capacity to create employment and generate profits that lead to tax revenue and enable a government’s continued existence and ability to deliver services, but it cannot exist healthily in a dysfunctional economy.
Do we need entrepreneurs who build businesses that create value? Absolutely. But what we cannot do is legislate the creation of entrepreneurs. If building Amazon, Google, Shoprite, Capitec, Investec and Discovery, all of which were scaled from scratch, were easy and something everyone had the stomach for, they would not have been able to achieve the scale they have.
So what can and should “the womb” do? It should focus on creating an enabling environment that encourages the birthing of children that have the ability and risk appetite to scale giants like these. People need to feel a certain level of safety to take that kind of long-term risk, and the reality is the average South African does not truly feel safe. We keep waiting for the other shoe to drop, and as such many have adopted a taker mindset or are simply hedging their bets.
• Mia, a chartered accountant based in Cape Town, has worked extensively in the financial services industry.