Personal responsibility vs policy: The true cost of BEE - Richard J Grant
Key topics:
Personal responsibility, not government, drives individual and societal success.
Work, learning, and skill development are essential; shortcuts harm growth.
Race-based policies like BEE reduce GDP, jobs, and collective productivity.
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By Richard J Grant*
After 30 years it is hard to name any current public policy problem that can be blamed, with any seriousness, on the pre-transition past. None of us began our lives in the same place: different families, different teachers, different cultural surroundings, and different personal aptitudes. Whatever our personal endowments, that is just our starting point. Each of us is personally responsible for how we use our personal talents, how we treat the people around us, and how we face the obstacles in our world.
Most of the problems in our world arise from a failure to take personal responsibility for one’s own actions. Neither your teachers nor your neighbours, and certainly not the government, can make you into a good person. That, ultimately, is your responsibility. Two people from the same neighbourhood, or even the same family, often choose very different paths through life.
Another affliction is the desire to get something for nothing. One of the sillier statements in economics is that “Consumption accounts for 70 percent of economic activity.” Setting aside the fact that the correct number is closer to 100 percent (less waste), the more important question is, “What is produced and for what is it exchanged?” For whatever we consume, someone must find, develop, and produce everything that goes into it, whether material or otherwise. And while I cannot dispute that “the best things in life are free,” everything else requires work – especially those things that keep us alive.
As with everything else in life, work takes time. Instant prosperity is much desired but, for a whole economy, lacking in historical examples. Transcending the act of production, learning how to produce takes time, as does figuring out what to produce. Some things take longer to learn – and some of us learn more quickly than others. But that is how we grow. Without learning we stagnate as individuals, as a society, and as an economy.
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None of us knows everything, but we each know something. Most of what we know we learn from others. In playgrounds and schoolyards we learned from our peers, but the most important things we learned came from our elders. From acculturation we learn how to act, and from apprenticeship (an entry-level job) we learn how to work, to cooperate, and to lead.
In any collective effort, perhaps a business, when the leader retires or cannot continue, the refrain is “Next man up.” We know that it matters who is selected to lead, just as those in responsible positions in any hierarchy are selected for the knowledge, creativity, and personal characteristics that they bring to the endeavor. And when the selection process is subverted or fails, the collective effort fails.
As individuals, we are not interchangeable. Some of us work well together, some of us do not. We, and those we serve in community and in business, are fortunate when we are allowed to choose. Arbitrary restrictions, as imposed by the government, on who may work with whom place limitations on how we cooperate and on how we learn.
However well intended such restrictions might be, benignly named programs such as affirmative action or Black Economic Empowerment (BEE) always come with a cost. Promotion ahead of learning is lost growth, both personally and collectively.
Whether through patronage or through official discrimination, we find out the hard way that not all engineers and managers are equal – and certainly not interchangeable. When public policy experts argue otherwise, and politicians act accordingly, the result is years of load shedding, miles of potholes, economic stagnation, and an endless stream of excuses.
When researchers Morné Malan (Free Market Foundation) and Theuns Du Buisson (Solidarity Research Institute) recently estimated the compliance costs of what is now called Broad-Based BEE, these race-based restrictions shaved 2 to 4 percent off South Africa’s GDP in 2024. That translates to a loss of as much as R290 billion and over 3 million lost jobs.
Predictably, some critics claimed that the researchers overestimated the costs and that, in any event, the benefits are worth that cost. But such statements seem callous in a land where the official unemployment rate is over 30 percent. If anything, Malan and Du Buisson were cautious and underestimated the total burden imposed upon South Africans by these race-based policies. And the loss of learning and productivity compound these losses over time.
The costs are broad-based, but the benefits are not. The cadre of beneficiaries is small compared to the whole population. No one is truly uplifted when the plan is to restrict the relationships of nonblack competitors, whether they be owners, managers, mentors, or new workers.
When supporters of BEE claim that “we must level the playing field,” they fail to distinguish life from a game. Such ideologues see life as a conflict, but in a culture of prosperity we see life as mutually beneficial cooperation.
*Richard J Grant is Professor of Finance and Economics at Cumberland University and a Senior Associate at the Free Market Foundation.