Use Spotify? Access BizNews podcasts here..Use Apple Podcasts? Access BizNews podcasts here..___STEADY_PAYWALL___.The Austrian antidote to South Africa's decline into serfdom.By Ian Macleod* .Keynes and sunshine-socialism have failed South Africa. It's time for Hayek. For you and me. For the almost magical power of individuals to make markets, and of markets to generate prosperity. Before it is too late….We know the economic and political ideologies that got us into this bloody mess. I'd call it Keynesian interventionism with a dollop of sunshine-socialism. Self-sabotage by racialisation is pervasive. It is highly collectivist. Reliant on big government. Distributive. Disastrous..Now we're seeing a fight-back. The actions we need are no secret. Commentators are shouting for them. Privatise state-owned enterprises (SOEs); cut red tape for business; vanquish BEE; remove the opportunity for the looting of taxes. But we need to bed this in an economic school of thought. Something that can unite our thinking and drive a new social and commercial zeitgeist. Something more precise and robust than "free markets" or "laissez-faire". Something from Austria..If ever there was a time and place for the Austrian school of economic thought to shine, it is now in South Africa. Austrian methods lay bare how governments destroy value. Austrian logic frees individuals to generate prosperity. In short, Austrianism is the antidote to the illness ruining the nation. .Origins.The Austrian school emerged from the University of Vienna in the second half of the 1800s. Carl Menger, who lived from 1840 to 1921, is the godfather. Ludwig von Mises (1881-1973) took Austrianism to America through his time at New York University. His most celebrated student, Friedrich Hayek, born in 1899 and died in 1992, won it hallowed-hall credibility with his Nobel Prize in 1974..Like any great tradition, Austrianism has great foes. The heroes of the Viennese school have fought pitched cerebral battles with Keynesians and socialists for decades. While Austrians recognise that individual action is the unit that creates prosperity, Keynesians – proponents of the work of John Maynard Keynes, who lived from 1883 to 1946 – give special place and power to governments..Hayekians have certainly had their wins over Keynesians. Times and places in the sun. Yet it is Keynes who was a member of the famous Bloomsbury group. Keynes whose dicta dominate speeches. And Keynes whose books apparently line the shelves of treasuries and central banks the world over..However, a search for mentions of the two heavyweight thinkers on Google Ngrams suggest the underdog Austrian might now be coming into his prime. The appearance of "Keynes" in books is falling precipitously from a recent record high. "Hayek" is on the rise. Now the twain have met….The original ubuntu.At its heart, the Austrian school of economics acknowledges that economic and social power lie with the individual. And that raw self-interest produces the best outcomes for us all. Todd G. Buchholz captures the elegance of this basic principle: ."Market competition leads a self-interested person to wake up in the morning, look outside at the earth, and produce from its raw materials, not what he wants, but what others want. Not in the quantities he prefers, but in the quantities his neighbors prefer. Not at the price he dreams of charging, but at a price reflecting how much his neighbors value what he has done.".To this extent, Austrianism is the original ubuntu. Competition is real sustainability. Individualism is the keystone of community..Mainstream mettle.The Austrian school's current nonconformist rep shouldn't suggest a lack of contribution to modern mainstays of economics. Anyone who has taken Econ101 in recent decades learned principles that the school was instrumental in formulating. Remember "utility"? Individuals make decisions based on utility – their subjective tastes. We act on these preferences, always in relation to direct costs and opportunity costs. Together, we make prices by responding to them – cue the old school supply-and-demand curves. These prices are the signals we use to decide what to eat, the sorts of businesses we risk starting, how hard to work. And, as any good textbook will tell you, we consume pizza until the next slice will give us less marginal utility than its marginal cost. If all of that rings bells, you may be more of an Austrian than you thought..Fiscal policy, stupid.The nation state has come to dominate as the social, political, and economic unit of analysis. Government monopoly on money and violence maintains that. State sponsorship of mainstream media makes it easy. Ask people what economics is, and the answer will frequently come back a garbled synonym for fiscal control. Government taking money, doing their secretive and too-complicated analysis, then disgorging money to fix things. This is where Austrian thinking debunks the chief flaw in Keynesianism. A flaw most inescapably displayed in the news circa national budget day..Business bulletins are less original than rugby captains in post-match interviews. Business is lobbying for more government spending to "create jobs". Analysts are begging for less government spending to limit inflation. Every minister wants more of the pie, and more of some pie they want someone else to start baking. Every individual wants more for themselves. Pundits all assume that government has the panache to perform this exercise in central planning, even if they disagree on implementation. .This is not easy listening for those of us with hearts and minds in Vienna. We shudder at the hubris. To think governments have the data, powers of calculation, and analytical models to manage the economy is unfounded. Imagining they know what is best for us is naïve. Pretending they have our best interests at heart is self-flagellation..Thomas Sowell provides a straightforward framework he suggests can puncture any argument on the economic left. Ask of it three questions: "Compared to what? At what cost? What evidence do you have?".Austrians compare government budgeting to the simple freedom of individuals deciding what to spend their money on, how hard to work, what businesses to enter. Those things are the opportunity cost of Keynesian interventionism. The burden of proof is on whoever tells us that governments can reliably do these things better..In the absence of evidence to the contrary, Austrians go back to freedom of the individual. If the price of something rises, juicy margins emerge. That signal invites more suppliers – rapidly. Entrepreneurs enter the industry and incumbents expand. The same signal causes me to economise as a consumer. It is more expensive, so I use less of product X. I make substitutions. Prices respond..This process plays out billions of times a day. Individuals and price signals combine in a galaxy of interrelated, yet independent decisions so as to limit excess, and allocate time, energy, and goods to their best use at lightning speed. Government is at best using outdated and incomplete information to make decisions based on preferences it doesn't know to make choices that it can't change for a long time. At worst they are plundering..Of course, businesses and people also get things wrong. When they do, they fail. Risk of failure is what makes people do brilliant things. It fires us up..Eskom ought to be subject to market forces. There are private funders and operators who will buy the assets. They will have the fear of failure burning in their chests. They'll have to be brave. Some will fail. Others will excel. Some people will get stupendously wealthy. That will create envy. But even a green-eyed monster is a small price to pay for predictable electricity..The World Bank tells us Eskom is overstaffed by tens of thousands of jobs. Privatisation would definitely cost jobs. But not real jobs. These are positions created by borrowing (and stealing) from Productive Peter to pay Paul. Money saved on those salaries doesn't disappear. It goes to competitive uses. It creates other jobs. Real ones. Work people can be proud of..And now the second question: at what cost? On top of the opportunity lost, there is the gargantuan friction. That is, the bureaucracy needed to centrally plan, tax us, distribute it all. Plus the leaks this necessarily entails. Entire industries that do not produce value – i.e. that the market would not reward were it not forced to. One particular to South Africa is the BEE rating industry. With Austrian school lenses on, that is entirely wasteful. Not one rand should go there..And thirdly, what evidence do Keynesians have to justify central planning and distribution? Well, mostly it seems like it should help. It seems like it is better for the poor person when you take corporate profits to fund low-cost housing. It feels like more government spending has a healthy expansionary effect on the economy. And one's gut feel might even be that rich people aren't pulling their weight.."Seems" and "feels" tend to struggle when reality happens. Social housing has – with exceptions – a longstanding record of producing vast rows of crumbling structures not fit for humans. "Generous" economic policy leads to collapse. Rich people rather often help to generate other peoples' salaries and commit large sums to productive businesses..Monetary policy, stupid.The governor considering inventing money to buy government bonds to "boost the economy"? Keynes. Monetary policy committee pondering a rate rise to rein in inflation? Keynes. Business hoping for "relief" from the US Federal Reserve? John. Maynard. Keynes. But your Austrian sees in all of this a distorted machine that systematically creates boom and bust..Your Keynesian central bank decides to cut repurchase rates in the hope of growing the economy. Banks lower their interest rates in turn. Suddenly, businesses can justify new expenditures that didn't quite make the grade with the old interest rate. Businesses that didn't make sense yesterday now get funded. Factories are built, stores are opened. Sounds good! Almost too good….The great Austrian thinker Mises called this expansion "malinvestment". Businesses and projects made "viable" by artificially low rates are counterfeits. Reality catches up with them. Inflation makes them unaffordable. The central bank may be forced to raise rates again. Businesses previously propped up by a government-sponsored rate go bust. Into recession we go. As Warren Buffet famously warned, "It's only when the tide goes out that you learn who's been swimming naked.".The trouble is that rate cuts by a body that can print money don't stop market forces. Nothing stops market forces. Sure, we alter our actions. Individual tastes and risk appetites, however, are unmoved by the smartest guys in the land pressing a button..There is a cogent argument to be made that the US Fed caused the Great Depression. Murray Rothbard, perhaps the most influential of Austrian school economists of the latter 1900s, argued that the Fed was too loose with monetary policy in the 1920s. Monetarists like Milton Friedman reckon it was too restrictive in the aftermath of the 1929 crash. Centrally planned monetary policy constantly, painstakingly tries to calculate the Goldilocks zone for money supply. It constantly, painfully fails..There is a similarly simple case to be made that the Fed caused the 2007/2008 crash. Many argue that it kept interest rates too low after the 2001 recession, inflating home prices and creating conditions that enabled the sub-prime mortgage disaster..The Austrian will argue that giving Ben Bernanke, who was the Fed chairman from 2006 to 2014, the Nobel Prize earlier this year amounts to thanking the arsonist for putting out his own fire. Famed for his expertise on the Great Depression, Bernanke took the wrong lessons into the global financial crisis. Instead of enabling market forces, he tried to do Keynesianism, again, just "better". .The Austrian model suggests a solution. Quit fiddling with the money supply. The South African Reserve Bank (SARB) is often applauded for its modest interventions. Broadly, it has kept its independence from political forces. Austrian thinking says even the SARB is too hawkish. By its nature it can't manage the economy. It ought not have the power to try, especially as economic and political pressures mount..Things Austrians aren't.We should contrast Austrianism with anarchy. Austrians vary in the degree and nature of government we advocate for. We all appreciate the need for institutions and the rule of law..We favour far more decentralisation than most nation states currently offer. That's why you'll find us endorsing more powers moving to the Western Cape. Even secession. More power to smaller communities. Freedom to move to better governed places is a fundamental freedom – even if for no other reason than that denying it distorts prices..We need criminal justice, delict law, and enforceable contracts. Even Hayek made clear that a government ought to limit free competition by prohibiting the use of dangerous substances in manufacturing and protecting public goods like natural habitats. His general take is that "the state should confine itself to establishing rules applying to general types of situations and should allow the individuals freedom in everything which depends on the circumstances of time and place.".Another frequent dismissal of Austrian economics comes in the accusation that "trickle-down economics has been debunked". That's a red herring. Trickle-down economics is not an economic theory at all. It is political jargon. Thomas Sowell calls it a "non-existent theory… A caricature. Part of a zero-sum conception of the economy." Whatever it is, it is not Austrian economics..Rothbard argued that the state is "the organization of robbery systematized and writ large". Of course, he hadn't seen the results of decades of ANC rule. Rothbard simply knew the principle. The quasi-natural law that no big, central body can be relied on to make our decisions for us..A methodenstreit – battle of economic methods – usually takes decades. We don't have that long. South Africa is grinding into state-led demise. Austrian economics backs the common-sense tactics we know are needed. Sell every SOE. Slash taxation and government spending. Revoke all laws that discriminate based on race. Kill off the potential for the Reserve Bank to be captured by political ideologues, and don't let them anywhere near central bank digital currencies (CBDCs). Decentralise power to smaller communities. Refuse socialised healthcare. Demand property rights..There will be short-term pain. Paraphrasing Winston Churchill on democracy, Austrian school economics isn't a perfect system, it is just the least bad one. Short-term pain buys long-term prosperity..Individual is sovereign.I am frequently told that this analysis makes perfect sense but is a practical fantasy. That I'm more likely to plant Schönbrunn Palace atop Table Mountain than I am to sneak Mises's collected essays into Luthuli House. But to treat our demise as inevitable is not an option. As Hayek said in his famous text The Road to Serfdom, "Nothing makes conditions more unbearable than the knowledge that no effort of ours can change them." Our efforts can change conditions..Individually, we each must decide if we stay here or escape. If we stay, the most enticing tactic is that advanced by non-profit business group Sakeliga: state-proof your business. The organisation's chief economist and prominent Austrian thinker, Russell Lamberti, makes the case. "Individual businesses are at the mercy of the failing state. They need to take up their constitutional duty to oppose harmful state actions and policies. Strategic litigation is a powerful way to check abuse of state power.."There are many things we can all do. Start or join a local business chamber and solve real commercial challenges in your town. Formulate a plan to exit BEE. You can even stipulate private commercial dispute resolution in your business contracts.".I polled a friend who was forced to state-proof his family business in recent years: target the end consumer or smaller business clients; get active in your neighbourhood watch ("Police are kak," he explains); get international clients; secure local supplies to avoid reliance on ports; avoid offerings that demand a permit to operate; and hire based on merit ("always!")..This article was first published in the Daily Friend on the 19th of November 2022. The views of the writer are not necessarily the views of the Daily Friend or the IRR. If you like what you have just read, support the Daily Friend. .Ian Macleod studied business science at the University of Cape Town, and journalism at Rhodes University. He completed his MBA at the University of Pretoria's Gordon Institute of Business Science (GIBS) during 2016-2017, penning his thesis on the challenges inherent in private equity investments into family business. During his studies he worked at professional services firm EY in their People Advisory Service (PAS) consulting wing, working primarily on change management. Macleod returned to GIBS shortly after graduating to help launch the school's new Africa centre, the Centre for African Management and Markets (CAMM), and to drive an exploration into the viability of a family business network for Africa housed at GIBS. He combines his interests in journalism, business and academia in his online platform, Investment Narrative (https://www.investmentnarrative.com/). Macleod has run five Comrades Marathons, and once rode his bike 900km off-road from Joburg to Scottburgh in nine days.
Use Spotify? Access BizNews podcasts here..Use Apple Podcasts? Access BizNews podcasts here..___STEADY_PAYWALL___.The Austrian antidote to South Africa's decline into serfdom.By Ian Macleod* .Keynes and sunshine-socialism have failed South Africa. It's time for Hayek. For you and me. For the almost magical power of individuals to make markets, and of markets to generate prosperity. Before it is too late….We know the economic and political ideologies that got us into this bloody mess. I'd call it Keynesian interventionism with a dollop of sunshine-socialism. Self-sabotage by racialisation is pervasive. It is highly collectivist. Reliant on big government. Distributive. Disastrous..Now we're seeing a fight-back. The actions we need are no secret. Commentators are shouting for them. Privatise state-owned enterprises (SOEs); cut red tape for business; vanquish BEE; remove the opportunity for the looting of taxes. But we need to bed this in an economic school of thought. Something that can unite our thinking and drive a new social and commercial zeitgeist. Something more precise and robust than "free markets" or "laissez-faire". Something from Austria..If ever there was a time and place for the Austrian school of economic thought to shine, it is now in South Africa. Austrian methods lay bare how governments destroy value. Austrian logic frees individuals to generate prosperity. In short, Austrianism is the antidote to the illness ruining the nation. .Origins.The Austrian school emerged from the University of Vienna in the second half of the 1800s. Carl Menger, who lived from 1840 to 1921, is the godfather. Ludwig von Mises (1881-1973) took Austrianism to America through his time at New York University. His most celebrated student, Friedrich Hayek, born in 1899 and died in 1992, won it hallowed-hall credibility with his Nobel Prize in 1974..Like any great tradition, Austrianism has great foes. The heroes of the Viennese school have fought pitched cerebral battles with Keynesians and socialists for decades. While Austrians recognise that individual action is the unit that creates prosperity, Keynesians – proponents of the work of John Maynard Keynes, who lived from 1883 to 1946 – give special place and power to governments..Hayekians have certainly had their wins over Keynesians. Times and places in the sun. Yet it is Keynes who was a member of the famous Bloomsbury group. Keynes whose dicta dominate speeches. And Keynes whose books apparently line the shelves of treasuries and central banks the world over..However, a search for mentions of the two heavyweight thinkers on Google Ngrams suggest the underdog Austrian might now be coming into his prime. The appearance of "Keynes" in books is falling precipitously from a recent record high. "Hayek" is on the rise. Now the twain have met….The original ubuntu.At its heart, the Austrian school of economics acknowledges that economic and social power lie with the individual. And that raw self-interest produces the best outcomes for us all. Todd G. Buchholz captures the elegance of this basic principle: ."Market competition leads a self-interested person to wake up in the morning, look outside at the earth, and produce from its raw materials, not what he wants, but what others want. Not in the quantities he prefers, but in the quantities his neighbors prefer. Not at the price he dreams of charging, but at a price reflecting how much his neighbors value what he has done.".To this extent, Austrianism is the original ubuntu. Competition is real sustainability. Individualism is the keystone of community..Mainstream mettle.The Austrian school's current nonconformist rep shouldn't suggest a lack of contribution to modern mainstays of economics. Anyone who has taken Econ101 in recent decades learned principles that the school was instrumental in formulating. Remember "utility"? Individuals make decisions based on utility – their subjective tastes. We act on these preferences, always in relation to direct costs and opportunity costs. Together, we make prices by responding to them – cue the old school supply-and-demand curves. These prices are the signals we use to decide what to eat, the sorts of businesses we risk starting, how hard to work. And, as any good textbook will tell you, we consume pizza until the next slice will give us less marginal utility than its marginal cost. If all of that rings bells, you may be more of an Austrian than you thought..Fiscal policy, stupid.The nation state has come to dominate as the social, political, and economic unit of analysis. Government monopoly on money and violence maintains that. State sponsorship of mainstream media makes it easy. Ask people what economics is, and the answer will frequently come back a garbled synonym for fiscal control. Government taking money, doing their secretive and too-complicated analysis, then disgorging money to fix things. This is where Austrian thinking debunks the chief flaw in Keynesianism. A flaw most inescapably displayed in the news circa national budget day..Business bulletins are less original than rugby captains in post-match interviews. Business is lobbying for more government spending to "create jobs". Analysts are begging for less government spending to limit inflation. Every minister wants more of the pie, and more of some pie they want someone else to start baking. Every individual wants more for themselves. Pundits all assume that government has the panache to perform this exercise in central planning, even if they disagree on implementation. .This is not easy listening for those of us with hearts and minds in Vienna. We shudder at the hubris. To think governments have the data, powers of calculation, and analytical models to manage the economy is unfounded. Imagining they know what is best for us is naïve. Pretending they have our best interests at heart is self-flagellation..Thomas Sowell provides a straightforward framework he suggests can puncture any argument on the economic left. Ask of it three questions: "Compared to what? At what cost? What evidence do you have?".Austrians compare government budgeting to the simple freedom of individuals deciding what to spend their money on, how hard to work, what businesses to enter. Those things are the opportunity cost of Keynesian interventionism. The burden of proof is on whoever tells us that governments can reliably do these things better..In the absence of evidence to the contrary, Austrians go back to freedom of the individual. If the price of something rises, juicy margins emerge. That signal invites more suppliers – rapidly. Entrepreneurs enter the industry and incumbents expand. The same signal causes me to economise as a consumer. It is more expensive, so I use less of product X. I make substitutions. Prices respond..This process plays out billions of times a day. Individuals and price signals combine in a galaxy of interrelated, yet independent decisions so as to limit excess, and allocate time, energy, and goods to their best use at lightning speed. Government is at best using outdated and incomplete information to make decisions based on preferences it doesn't know to make choices that it can't change for a long time. At worst they are plundering..Of course, businesses and people also get things wrong. When they do, they fail. Risk of failure is what makes people do brilliant things. It fires us up..Eskom ought to be subject to market forces. There are private funders and operators who will buy the assets. They will have the fear of failure burning in their chests. They'll have to be brave. Some will fail. Others will excel. Some people will get stupendously wealthy. That will create envy. But even a green-eyed monster is a small price to pay for predictable electricity..The World Bank tells us Eskom is overstaffed by tens of thousands of jobs. Privatisation would definitely cost jobs. But not real jobs. These are positions created by borrowing (and stealing) from Productive Peter to pay Paul. Money saved on those salaries doesn't disappear. It goes to competitive uses. It creates other jobs. Real ones. Work people can be proud of..And now the second question: at what cost? On top of the opportunity lost, there is the gargantuan friction. That is, the bureaucracy needed to centrally plan, tax us, distribute it all. Plus the leaks this necessarily entails. Entire industries that do not produce value – i.e. that the market would not reward were it not forced to. One particular to South Africa is the BEE rating industry. With Austrian school lenses on, that is entirely wasteful. Not one rand should go there..And thirdly, what evidence do Keynesians have to justify central planning and distribution? Well, mostly it seems like it should help. It seems like it is better for the poor person when you take corporate profits to fund low-cost housing. It feels like more government spending has a healthy expansionary effect on the economy. And one's gut feel might even be that rich people aren't pulling their weight.."Seems" and "feels" tend to struggle when reality happens. Social housing has – with exceptions – a longstanding record of producing vast rows of crumbling structures not fit for humans. "Generous" economic policy leads to collapse. Rich people rather often help to generate other peoples' salaries and commit large sums to productive businesses..Monetary policy, stupid.The governor considering inventing money to buy government bonds to "boost the economy"? Keynes. Monetary policy committee pondering a rate rise to rein in inflation? Keynes. Business hoping for "relief" from the US Federal Reserve? John. Maynard. Keynes. But your Austrian sees in all of this a distorted machine that systematically creates boom and bust..Your Keynesian central bank decides to cut repurchase rates in the hope of growing the economy. Banks lower their interest rates in turn. Suddenly, businesses can justify new expenditures that didn't quite make the grade with the old interest rate. Businesses that didn't make sense yesterday now get funded. Factories are built, stores are opened. Sounds good! Almost too good….The great Austrian thinker Mises called this expansion "malinvestment". Businesses and projects made "viable" by artificially low rates are counterfeits. Reality catches up with them. Inflation makes them unaffordable. The central bank may be forced to raise rates again. Businesses previously propped up by a government-sponsored rate go bust. Into recession we go. As Warren Buffet famously warned, "It's only when the tide goes out that you learn who's been swimming naked.".The trouble is that rate cuts by a body that can print money don't stop market forces. Nothing stops market forces. Sure, we alter our actions. Individual tastes and risk appetites, however, are unmoved by the smartest guys in the land pressing a button..There is a cogent argument to be made that the US Fed caused the Great Depression. Murray Rothbard, perhaps the most influential of Austrian school economists of the latter 1900s, argued that the Fed was too loose with monetary policy in the 1920s. Monetarists like Milton Friedman reckon it was too restrictive in the aftermath of the 1929 crash. Centrally planned monetary policy constantly, painstakingly tries to calculate the Goldilocks zone for money supply. It constantly, painfully fails..There is a similarly simple case to be made that the Fed caused the 2007/2008 crash. Many argue that it kept interest rates too low after the 2001 recession, inflating home prices and creating conditions that enabled the sub-prime mortgage disaster..The Austrian will argue that giving Ben Bernanke, who was the Fed chairman from 2006 to 2014, the Nobel Prize earlier this year amounts to thanking the arsonist for putting out his own fire. Famed for his expertise on the Great Depression, Bernanke took the wrong lessons into the global financial crisis. Instead of enabling market forces, he tried to do Keynesianism, again, just "better". .The Austrian model suggests a solution. Quit fiddling with the money supply. The South African Reserve Bank (SARB) is often applauded for its modest interventions. Broadly, it has kept its independence from political forces. Austrian thinking says even the SARB is too hawkish. By its nature it can't manage the economy. It ought not have the power to try, especially as economic and political pressures mount..Things Austrians aren't.We should contrast Austrianism with anarchy. Austrians vary in the degree and nature of government we advocate for. We all appreciate the need for institutions and the rule of law..We favour far more decentralisation than most nation states currently offer. That's why you'll find us endorsing more powers moving to the Western Cape. Even secession. More power to smaller communities. Freedom to move to better governed places is a fundamental freedom – even if for no other reason than that denying it distorts prices..We need criminal justice, delict law, and enforceable contracts. Even Hayek made clear that a government ought to limit free competition by prohibiting the use of dangerous substances in manufacturing and protecting public goods like natural habitats. His general take is that "the state should confine itself to establishing rules applying to general types of situations and should allow the individuals freedom in everything which depends on the circumstances of time and place.".Another frequent dismissal of Austrian economics comes in the accusation that "trickle-down economics has been debunked". That's a red herring. Trickle-down economics is not an economic theory at all. It is political jargon. Thomas Sowell calls it a "non-existent theory… A caricature. Part of a zero-sum conception of the economy." Whatever it is, it is not Austrian economics..Rothbard argued that the state is "the organization of robbery systematized and writ large". Of course, he hadn't seen the results of decades of ANC rule. Rothbard simply knew the principle. The quasi-natural law that no big, central body can be relied on to make our decisions for us..A methodenstreit – battle of economic methods – usually takes decades. We don't have that long. South Africa is grinding into state-led demise. Austrian economics backs the common-sense tactics we know are needed. Sell every SOE. Slash taxation and government spending. Revoke all laws that discriminate based on race. Kill off the potential for the Reserve Bank to be captured by political ideologues, and don't let them anywhere near central bank digital currencies (CBDCs). Decentralise power to smaller communities. Refuse socialised healthcare. Demand property rights..There will be short-term pain. Paraphrasing Winston Churchill on democracy, Austrian school economics isn't a perfect system, it is just the least bad one. Short-term pain buys long-term prosperity..Individual is sovereign.I am frequently told that this analysis makes perfect sense but is a practical fantasy. That I'm more likely to plant Schönbrunn Palace atop Table Mountain than I am to sneak Mises's collected essays into Luthuli House. But to treat our demise as inevitable is not an option. As Hayek said in his famous text The Road to Serfdom, "Nothing makes conditions more unbearable than the knowledge that no effort of ours can change them." Our efforts can change conditions..Individually, we each must decide if we stay here or escape. If we stay, the most enticing tactic is that advanced by non-profit business group Sakeliga: state-proof your business. The organisation's chief economist and prominent Austrian thinker, Russell Lamberti, makes the case. "Individual businesses are at the mercy of the failing state. They need to take up their constitutional duty to oppose harmful state actions and policies. Strategic litigation is a powerful way to check abuse of state power.."There are many things we can all do. Start or join a local business chamber and solve real commercial challenges in your town. Formulate a plan to exit BEE. You can even stipulate private commercial dispute resolution in your business contracts.".I polled a friend who was forced to state-proof his family business in recent years: target the end consumer or smaller business clients; get active in your neighbourhood watch ("Police are kak," he explains); get international clients; secure local supplies to avoid reliance on ports; avoid offerings that demand a permit to operate; and hire based on merit ("always!")..This article was first published in the Daily Friend on the 19th of November 2022. The views of the writer are not necessarily the views of the Daily Friend or the IRR. If you like what you have just read, support the Daily Friend. .Ian Macleod studied business science at the University of Cape Town, and journalism at Rhodes University. He completed his MBA at the University of Pretoria's Gordon Institute of Business Science (GIBS) during 2016-2017, penning his thesis on the challenges inherent in private equity investments into family business. During his studies he worked at professional services firm EY in their People Advisory Service (PAS) consulting wing, working primarily on change management. Macleod returned to GIBS shortly after graduating to help launch the school's new Africa centre, the Centre for African Management and Markets (CAMM), and to drive an exploration into the viability of a family business network for Africa housed at GIBS. He combines his interests in journalism, business and academia in his online platform, Investment Narrative (https://www.investmentnarrative.com/). Macleod has run five Comrades Marathons, and once rode his bike 900km off-road from Joburg to Scottburgh in nine days.
