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The bonsai economy

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

While politicians exalt the mythical splendours of a workers' paradise, the economy they tend produces 35% unemployment.

With meticulous care, our political leaders have tended the South African economy for the past 16 years. They paid attention to every leaf, every branch, every twisting root. However, the efforts to transform the weak and wilted sapling bequeathed by the national socialists from whom we were liberated has not led to a thriving, prosperous economy.

On the contrary, our government is creating for us a bonsai economy.

In his May Day speechification, president Jacob Zuma promised workers that in future, they would labour under even more limitations. He envisioned regulation of casual and contract labour, preventing willing employers and employees from entering into contracts on terms agreeable to both parties, in favour of terms that supposedly protect workers.

The labour unions, for their part, loudly threatened blackmail, extortion and economic sabotage. This is the only way to describe legally protected strikes, since they permit one party to break contract terms without granting the aggrieved party any recourse but to pay a ransom.

Like a shallow pot, scant water and clipped roots, these restrictions find their reflection in the small size and stunted shape of the visible result, the bonsai tree.

More rigid labour laws might appear to protect workers, but in reality they restrict the willingness of companies to hire staff according to their needs. The marginal benefit of employing staff will be lower, as will the company’s ability to adjust rapidly to changes, both upwards and downwards, in market demand. The upshot will be that jobs will be harder for a prospective employee to secure, and if they do, they will probably be paid less, since inflexible labour means less productive and efficient labour.

It is no surprise that our economy has been unable to absorb the large pool of available but unemployed labour, even when world markets were booming. Partly, this symptom is attributable to the most criminal of all apartheid’s legacies: the neglect of education and training. However, that we have for so long continued to suffer high unemployment and anaemic growth rates compared to our emerging market peers is just as much a symptom of our closed and highly regulated market.

Industrial policy has likewise been highly restrictive. By licensing a limited number of operators in many key industries, the number of branches permitted on our economic tree was intentionally kept low. The few companies lucky enough to obtain official consent to carry on trade were burdened with directions concerning the nature of the business in which they could engage, and onerous licence conditions designed to advance what the government believed to be in the social interest.

Like wires wrapped around bonsai branches, our state-sanctioned companies were trained to perform only as the government wished them to.

Even the leaves and budding twigs did not escape the gardener’s merciless attention. Ostensibly encouraged but usually clipped, they cowered and shrank away from the sunlight they sought. There they languish, in a “second economy” of indeterminate size and little property protection. Even the prospect of earning tax revenue has not motivated the government to make it easy and legal to establish and run small businesses for which there is market demand in South Africa.

The result of letting a tree grow as best it can in its environment might be a slow-growing but towering oak. It might be a fast-growing but profitable pine tree. What it shouldn’t be, but what our government has delivered for us, is a fragile little bonsai.

To improve the outward appearance of this sham, it is typically adorned with decorations. Like moss that covers the soil in a bonsai pot like meadow grass, many of these fake landscape elements are designed to fortify the impression of size and maturity.

Many an imperfection is hidden by such sleight-of-hand. A glaring example is the publication of an “official” unemployment rate of only 25%. Shocking though this is, the real rate is much higher. The legerdemain is achieved by just ignoring the 10% or more of working-age adults who have given up looking for work. Such gross injustice to the poor souls which our economy has left to the mercy of family, friends, charity and social welfare is the price we pay to maintain the social myth of a ruling class that extols economic justice for all.

Stones that mimic large rocks, or even water features and elaborate model bridges, complete the spectacle. Pay no attention to the few tiny fruit our bonsai tree produces. Most of it is picked by the gardener anyway. Just blow your vuvuzela in your new multibillion-rand stadium, and forget about the little prison of a garden in which your economy grows. Public works projects contribute not one inch to the vitality or scale of our economic tree. They merely hope to complete the illusion that what we are looking at is the real thing.

It is not. It is a stunted shadow of a vibrant, free, prosperous and durable economy. It is a shame that so much care and attention to detail has been wasted on what is merely a bonsai economy. It is downright criminal to proclaim, from the May Day hustings, that the failure of our bonsai to grow tall and strong is reason to redouble the miniaturisation effort.


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