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Prominent businessman Herman Mashaba says South Africa should do away with race-based transformation to allow the economy to grow. Mashaba argues that the country should pursue free market policies to create opportunities for the majority of black South Africans. He says the current policies pursued by the government promote ‘public slavery’. In his book ‘Capitalist Crusader’, Herman Mashaba calls on South Africans to hold the government to account and be pro-active in the formulation of economic policies.
Well-known businessman, Herman Mashaba joins us to talk about the state of the economy, the legal action that he’s taking against the labour laws of the country, as well as his latest book. He’s here with me. Herman, welcome.
Thank you very much Tim, it’s always such a great pleasure, getting this opportunity to talk to you.
Up front, let me talk about the state of the economy. We cannot ignore this. It has contracted in the second half of the year and it looks as if we’re headed for some difficult times ahead with the unemployment rate remaining very high. What is your reading of the current situation?
In fact, it’s very concerning and very worrying. I read an article yesterday, written by Mike Schussler regarding South Africa’s chance of going into a recession. He talks about us having a 65 percent chance of the next reading where we will actually go into a technical recession. If any South African is not really worried about that, then something is terribly wrong with us as a country. I cannot really see how we as a country, can allow situation that could lead to the destruction of our economy. Yes, I accept that there are international considerations (what’s really happening outside our country), but I strongly believe that 50 percent of the issues are self-inflicted. I.e., where we have legislative framework, actually making it impossible for us as South African businessmen and women to be able to help in taking this economy to the next level.
The point that has been made repeatedly is that the world is going through a difficult time, so it’s just part of the global slump and that’s why we’re in the situation we find ourselves in, that it’s not of our doing.
Absolutely. I can accept that but I can assure you, Tim. You can talk to any economist in this country. More than 50 percent of the issues are self-inflicted. If you look at labour laws in this country, they are busy destroying the economy of this country – small businesses, the ones that should really be responsible for the employment of our people. I’ve really been racing through this country for the last year or so, the one thing that I think we really need to have a serious debate about is that for as long as this country pursues race-based legislation, I cannot see how this country will ever get out of the current situation. Once you run a country on a basis of dividing your nation along racial lines, I cannot see how that economy will ever, really flourish. If we could allow this country to operate based on allowing and giving every South African equal opportunity in the eyes of the law…
These are some of the issues holding our economy back. Yes, education is critical because if you look at how education has failed the majority of our people in the last 21 years… The other day, I read another article where they’re saying that 80 percent of our schools are dysfunctional. You just have to go into our communities and see whether this is true or not but once you start reading those types of issues, you realise that this country’s economic future is at risk. There’s no way you can run a sophisticated, modern economy with illiterate, dysfunctional people. We obviously need education for the long term. For the short term, what we need to do as a country is please, get rid of all race-based legislation. Allow all South Africans to be equal before the eyes of the law. What will happen is once you remove such restrictions is that you will unleash potential. Speaking to economists, this country’s economy should really be growing at a minimum of five percent.
Now, look at the implication of this economy growing at five percent. Government will collect more taxes. We’ll halve our current unemployment situation overnight and government will collect more money if they use it correctly and in an accountable manner. Use it to educate our people long-term; so that 15 or 20 years down the line, we can have a sophisticated, world-educated populace. We cannot operate based on always putting out fires. As a country, and as a people, we need to learn to take long-term views in terms of the issues.
Here’s an argument then, Herman. People would say you couldn’t ignore the past of this country – the economic exclusion of the black majority. You have to have redress and if you don’t have the race-based laws, then you will not be able to bring about the redress.
I think you redress that be allowing the economy to grow. Let the government collect more taxes. Make sure that our people are working. It’s in that process that you will redress the ills of the past. We’ve been trying for the last 10/15 years with race-based legislation. The results are there for anybody to see. It’s not something that we can continue to pursue in the legislative framework when we have empirical evidence of its failure. I’m saying, “Let’s redress the ills of the past by allowing the economy to grow because once you give all South Africans an equal opportunity in the eyes of the law, this economy will grow.” The government will collect more taxes. By collecting more taxes, the government will then be able to really, use this money in educating our people, building infrastructure, and doing all the beautiful things that our people require.
In that process Tim, who’s going to be the biggest beneficiary – in the event of us doing all these beautiful things – collecting more money and taxes, and using such taxes in a correct manner? Black people are going to be the biggest beneficiaries and we’re not going to benefit because there’s a legislative framework that says we benefit. We’re going to benefit because of our sheer numbers. We are 80 percent of the population of this country, so if we have an accountable government that uses the country’s resources in a proper manner, black people are going to be the biggest beneficiaries. You don’t really need a law to discriminate against anybody.
To make sure that some of the things you are agitating for happens, you have now taken the government to court on specifically, the labour laws. Why is that? That is seen as being anti-progressive. The labour laws are progressive. The unions pushed for them and you say those laws must be reversed or at least, amended. Why?
How can we say we have a progressive labour legislation when it deprives 8.5-million South Africans of employment by destroying small businesses? Tim, as I’m talking to you right now, there are bargaining council inspectors closing down a small businessperson out in Hammanskraal, KwaMashu, and all over the country. Do you really call that ‘progressive’? When this bargaining council closes down businesses, they don’t really give any consideration to the implications. What do they do? They just go around, closing one small business after the other without any consideration whatsoever. What we’re saying is that as a free market foundation, we cannot sit back and allow such a situation to continue. This piece of legislation, Section 32 of the Labour Relations Act, forces the Minister of Labour… I don’t understand how our parliamentarians allowed this piece of legislation to go through their cracks.
They’ve given the bargaining councils the right to force the Minister of Labour to extend these agreements once they’re signed. Big businesses and big trade unions get together on a regular basis. They agree on conditions of employment for their particular sector. As private parties, they will obviously agree on the conditions that suit them. Once these agreements are signed, the Act says these agreements must be given to the Minister, who must then extend these agreements to non-parties. Who are the non-parties? Small businesses that operate in that particular sector and who cannot afford to pay the same salaries and wages as big companies do. At the same time, it discriminates against a small guy in Hammanskraal who really wants to work with the small business. The law says no. Once these agreements are signed, that guy cannot operate by saying, “I have Tim Modise who can afford to pay me two or however many thousand Rands per month. I’m happy to accept that as a salary”.
Then the bargaining council says ‘no. I’m afraid you have to go and stay at home. Go and join the 16-million South Africans who are beneficiaries of social grants’. Can we then really, say this is progressive, when we’re not allowing 8.5-million South Africans to make a decision about the kind of work and salaries they’re prepared to take? I would accept that in a country where we had less than ten percent unemployment. I would even defend it. At the same time, we’re sitting with one of the highest unemployment rates in the world. Our unemployment rate is close to 36 percent I can assure that the next reading we’ll get on unemployment can only be worse. Reading in the media over the last few months, every second company in this country is talking about retrenchment because people are not making money. When you’re not making money, you can’t afford to employ people.
Let me talk about another event that’s taking place as we speak. It’s a labour of love I would like to believe, on your part. You’ve published a book now. It’s called, ‘The Capitalist Crusader’. What are you trying to tell us here? It’s still new. I’m still going to read it, but from the synopsis of the book, what is the message that you are taking to South Africans and the world?
The motivation behind writing this book… In 1994 under the leadership of Mandela, a great opportunity, and a great future was promised to South Africa and embraced by all of us (including the world). However, 21 years down the line, South Africans are still under the impression that this country’s under Mandela’s leadership and I’m just saying to the 50-million South Africans ‘please, let’s take the responsibility personally – each one of us – in ensuring that we don’t take politics for granted’. If you look at successful nations all over the world; for the last 200 years, the only successful nations’ democratic situation are those where citizens take an active role, making sure that political leadership is aware that they’ve been mandated by the vote to go out and serve them. Politicians are not the ultimate. When you’re given that opportunity and that mandate by the voters, it’s to go out there and serve them and for politicians to know that if they don’t deliver, they’re out when the next election comes.
I think that’s one of the strong messages coming out of this book – requesting South Africans to take personal responsibility because then politicians won’t have the opportunity to abuse us. Secondly, I’d like to say to the current government and future ones, “If you really want this country to be a model of what people want to achieve in terms of success, you have to follow free market principles – less government intervention in the economy”. Over the last few years, we’ve seen more and more government involvement in the economy and unfortunately, that’s hurting us. That’s one of the reasons why our economic performance is currently as dismal as it is. We need to develop a model where we have less state intervention in the economy. We need the politicians to help maintain the rule of law. Anyone in South Africa (or in the world) wants to live in a country where we know our personal safety is guaranteed.
That really should be the rule of government – ensure that we create peace and stability in the country, and not to run our economic lives. Leave our economic lives to us as individuals as long as you give all of us equal opportunity. These are some of the things I’m articulating in the book for people to understand. For me, (and it’s been proven over the last 200 years) it’s been proven that the capitalists are the ones that create jobs and economic growth in the country. They create all these beautiful things. Look at all the NGOs in this country. Who is actually supporting NGOs? Who’s supporting government in getting the taxes they are using to provide all the services? You can’t really create this through the state. You have to allow individuals to operate for as long as they operate within the legal framework in a country.
Briefly, what you are saying may be common sense to you but if that is the case, why are the policymakers not doing what you suggest if it’s for the benefit of the people, is likely to generate the jobs you talk about, and create the growth that we all desire?
Tim, over the last 90-odd years, it has been proven that socialists and communist’s interests are not the people. In fact, what communists and socialists actually want, is public slavery. They want to operate in an environment where the public is totally dependent on them. They can control them, do as they please, and just give them the crumbs. That’s really, what socialist and communist ideology is. It’s not about you and I. It’s not about the millions in the public. They’re happy to have a situation where you have public slavery where, as I say, people are dependent on the state. That’s why, when you have power failure and then you don’t have power failure for two days, they say you must celebrate. That’s what they want. Obviously, if it continues for a long time, it becomes so ingrained that people believe that kind of nonsense. We’re not supposed to have power failure.
If the economy is run properly, we should not have it for one day. We want to live in a democratic system. A capitalist system will not allow leadership to have power failure for one day. If you have power failure for one day, you’re out unless you have a valid reason as to why you have power failure. In our situation though, we want to celebrate. We have 16-million people on Social Grant. Is this a success? It’s a failure. It’s a tragedy because that means you that 16-million of your citizens are unable to support themselves and their families. How can you then, really say, ‘this is success?’ I think success will happen the day we can celebrate by saying ‘last year, we had 16-million people on Social Grant. This year, we have 15-million’. Then you can celebrate. Don’t tell me I must celebrate when we have 16, and when we have 16.5-million we say ‘no, government actually cares’. For me, no one cares. It’s actually a situation where you’re creating public slavery.
One final point is about the Herman Mashaba Public Lecture, which is taking place at the Central University of Technology in the Free State. Just tell me a little bit about it, the concept behind it, and who’s coming.
As you’re aware, I was approached a few years ago. I was given an honorary doctorate by the Central University of Technology in Bloemfontein and a year later, they came out with a concept of starting what they called the Herman Mashaba Entrepreneurial Lecture. Last year, I did the inaugural one and for this year, the university allowed me to look at someone who would espouse and represent the type of feelings I have. Fortunately enough, I happened to know one of the greatest economists from Stanford University – Professor Kurt Leube – who graciously accepted the invitation to come and deliver the second lecture on the 28th of this month, in Bloemfontein. The theme of his presentation is going to be based around the Austrian school of economics. I’m sure you’re aware that the all over the world, the Austrian school of economics has been proven to be about individual freedom. It’s about free market economy, etcetera so he’s coming to share his experiences with South Africa because he’s one of the world-renowned experts in this particular field. I feel that we’re blessed in South Africa, to be able to attract such an individual to come and share his global experience in terms of what free markets can do to society.
Herman Mashaba, thank you very much for talking to us.
Thank you very much, once more, for the opportunity.
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