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Lockdown, and the central logic that knows no boundary

We may have police and soldiers enforcing the rules, and tens of thousands new ‘criminals’ on record, but we also have a clear indication of positive evolution.
Trust in government is however a fragile thing, says the author. Image: Getty Images

Locked in sorrowful limbo, one can be forgiven for clutching at straws in the hope of a better future – but there’s one feature of the global and South African response to the Covid-19 pandemic that is much more than a straw and instead a clear and tangible indication of positive evolution: the outpouring and demonstration of human empathy.

Seldom if ever in our lifetime have the two basic instincts of empathy and survival merged so seamlessly to show their absolute co-dependency. It is indeed our capacity to empathise with one another that has made us the dominant species on the planet.

The remarkable feature of what has happened is that while human contact has been massively reduced human connection has blossomed.

It demonstrates a capacity to have empathy with each other beyond physical contact or blood ties and other close relationships.

Of all of the fundamental shifts in our socioeconomic lives brought about by the pandemic, let the most fundamental one be recognition of the power of empathy above survival, of contribution above reward, and of giving above getting.

These attributes cannot be coerced or imposed.

Empathy thrives on freedom, and the true genius of Adam Smith’s invisible hand (which describes the unintended social benefits of an individual’s self-interested actions) was not that it was driven by selfishness and short-term self-gain, but that prosperity flourished in freedom of choice – despite and not because of motive.

Empathy is a state of identifying with others and a willingness to contribute to each other’s lives. Generosity, charity, compassion and philanthropy are reactive expressions of that state.

There is only a small step between turning the war on Covid-19 into a war on the people.

That step will be taken when trust erodes or collapses. We know President Cyril Ramaphosa’s greatest gift is his ability to forge consensus, and for many he is the hero of the day. This has been counterintuitive to the very low level of trust in government prior to the pandemic.

Sweden has shown how valuable a high trust level is. While it is early days to assess their ability to contain the virus, Sweden has introduced lockdown, social distancing and other counter measures that are purely voluntary. It has also taken special measures to protect the vulnerable.

South Africa, by comparison, has been much more heavy handed and invasive. We have police and soldiers enforcing the rules, and tens of thousands of new ‘criminals’ on record.

Trust is easily eroded

While our government has been enjoying some 85% support for the action taken, our trust is still fragile and will be eroded by incoherent and confusing measures, and also by adding other objectives such as radical economic transformation and BEE to the response necessitated by the pandemic.

It is a moot point whether South Africa should qualify for soft global institutional loans if these will be used for purposes other than purely salvaging the economy from the effects of the pandemic.

It is also tempting to use the huge shift in economic thinking and planning to introduce a Soviet-style ‘command’ economy or some other conventional ideological model.

With their unprecedented powers under a state of disaster, bureaucrats may be tempted to hold on to as much power as they can.

The last thing that should happen is to abandon free markets. Rather the fundamental rules of freedom of choice, maximum suppliers, competition and free-moving price discovery and purity should be protected against speculative manipulation, excessive financialisation and debt creation.

It was the latter, I would argue, that has muted wealth creation and the ability to confront the pandemic. Even before the pandemic, such practices had brought the world to the precipice of financial collapse. That threat is still there. It’s a valid question whether we are witnessing the end of excessive financialisation of economic activity.

False economy

Ever since we went off the gold standard, the world has used record levels of debt creation and money supply to stimulate economic growth. And it went much further than countering natural and essential economic cycles to include political and electioneering pressures, and particularly the growing power of the financial elite putting pressure on the monetary authorities to issue more debt and reduce interest rates.

Pure price discovery has been largely destroyed in key markets by a massive overhang of derivatives and speculation.

From a real economic growth point of view, it hasn’t really worked. While some economic growth may have been a spinoff of increased money supply and increased debt, the bulk of extra money creation did not find itself in the hands of the public or even in production capacity, where real value is created. It has instead been with the rentier financial elite, where it has been deployed in reinvesting in assets and causing some big bubbles in stock markets, upmarket property and bonds.

That broadly left us with two economic systems: financial and real, where the former has increasingly become disconnected from the latter.

Tangible wealth creation is in essence an act of empathy, relying as it does on adding value to people’s lives after identifying their needs and wants.

Individual motives, as Smith argues, are irrelevant. Clearly, the ability to see beyond self-gain is far more powerful and consequential in identifying and exploiting opportunities. The measurement of value creation (revenue less outside costs) is the most powerful in accounting. It measures both contribution and reward. There is no other metric that does this. (See The Magnificent Metric here.)

It is scientific proof that contribution and reward are one and the same thing: that empathy and survival are inseparable.

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Jerry’s writings sometimes reminds me of the Hunting of the Snark

“Just the place for a Snark! I have said it twice:
That alone should encourage the crew.
Just the place for a Snark! I have said it thrice:
What I tell you three times is true.”

Carroll’s inane ramblings may have little relevance in life but ongoing repetition of an important message does. Living in a sea of deceit, our eyes cannot be trespassed.

To summarise: there are two types of people – those that create wealth and those that consume the wealth others have created. If empathy and survival are inseparable so are wealth creation and morality inextricable. Creation of a product or service that can be freely exchanged (willing buyer willing seller at a mutually agreed price) in the real economy is the essence Adam Smith’s free hand. How immoral is it to be a parasite in life? Unfortunately South Africa suffers under a regime that is the antithesis of this message. The odd thing is that experience teaches us that economic freedom is far more important than political freedom in our upliftment. Who better to epitomise this but Adam Smith?

Strangely enough this was not Smith’s greatest contribution to economic theory by far. Most have never heard of socially circulating capital and the doctrine of real bills maturing in gold specie. How consumption can be a powerful source of credit and why there was no structural unemployment prior to the 20th century. The answers are there for those who seek them.

Well, for one, stop blowing smoke up the president’s butt. He folded on the cigarette selling. Then he refused help to white small business owners. Then only the government is allowed to distribute food, but not to ‘everyone’. Let me rather sit on my hands……

Whilst I fully concur with your views Jerry however one should read and understand their current actions with 2 ANC Documents in mind.

Their Freedom Charter and their election manifest.

These are the true aims of establishing the communist state of Azania

All our complaints etc are shrugged off and ignored for the greater “good” of the populous and the edification’s of the leaders.

After all it is a proudly African tradition to masquerade as a democratic and capitalist state — especially when begging from the west !!!

You couldnt have said it better. I decided to read the freedom charter a while ago. Once you read it it becomes clear that all steps taken by the ANC over the last 20 odd years have been in line with the freedom charter. Radical economic transformation, land ownerdhip, education, etc. all policies are stipulated within the charther. The scary part is that the charter was drawn up in 1955, during the height of the soviet era….. but regardless, its stll implemented.

The Police( and calling that cabal of ill disciplined , incapable “Police” is generous-look at their leader-the hat collecting alchophobe) are working selectively…middle class and up market areas are ruthlessly policed while the townships do as they please.

But bravery is not a value of this crowd-locking up a woman with a kid on the beach is easy-try that with some of the hardened Cape Flats gangsters and the cops will leave the scene in coffins-and they know it.

Well you impose a draconian lockdown. 10 Times worse than first world countries you are trying to imitate. (Instruction from a continental friend) It is not effective and even the entire security forces cant enforce social distancing yet you persist.

What makes it worse is you are a poor country that can not afford a lockdown so what you end up with is a lockdown that doesn’t work yet you have the full cost you cant afford.

They will keep on telling us it worked knowing full well nobody really knows how it would have turned out with no lockdown. The medical portion.

What will become clear in time and is measurable is the economic devastation. Different departments of Government puts GDP at minus 4 to 6% while real economists now put it between minus 15 and 20%.

The question is if the Government has the GDP forecast this far wrong what about all the fancy models they are running assisting them in deciding what level of lockdown to employ.

Its a continental $%^&up to have the full cost of lockdown with no benefit.

Let me add to this. Isn’t it interesting how most governments reacted without knowing… well, anything really. All of it was based on non-verified speculation. Isn’t it interesting how most governments reacted in basically the same way? It’s almost as if they read the same score sheet. Isn’t it interesting how the expected deaths due to Covid-19 never seemed to have been weighed up against the expected deaths that will come from the recession that will surely follow? Isn’t it interesting that countries, who value democracy and have respect for its citizens, had a softer approach, compared to countries such as RSA, where democracy is purely an election slogan? Isn’t it interesting that no government, that I know of, admitted that they might have been wrong (or at least misguided), despite evidence pointing that way? Isn’t it interesting how governments are following virtually the same approach to resuscitating the economy with more debt? It’s like world governments put a gun to our collective heads, pulled the trigger and is surprised by the brain matter splattered against the wall. I must admit I also can’t see the benefit.

Please remember we are dealing with Keystone Cops here. No logic or comprehension about unintended consequences.

They are killing their own plan. The question of when, not if, is only whispered in the corridors as no one wants to talk about it. That question is “who is going to tell the masses that the food parcels have finished because lock-down is over”. The table is set.

Great one Jerry! You made a compelling argument.

For his own survival, the farmer is dependent on his workers. Therefore, he treats them with respect, empathy and compassion, while at the same time enforcing strict rules and systems to balance the outcome with economic performance. In my more than 50 years living in a farming community, I have seen those farmers who treat their workers in this way, buying out those farmers who do not. The skilled workers migrate to those employers who provide the best working environment and the workers with the least skills migrate to those owners whose people-skills and emotional IQ are non-existent. The quality and productivity of labour is a function of the emotional IQ of the employer. The entrepreneur who practices respect, empathy and compassion will create a stable working environment and it spreads out to the wider community. He is the ultimate beneficiary of his mindful treatment of others.

We do have two economic systems as you say. We have one system in which a small minority of people, one per cent actually, own real title deeds to property, and they become wealthy. Then, we have an alternative economic system where the vast majority own fake title deeds to property that does not exist, and they become poor. Real title deeds, like warehouse receipts and silo-certificates, represent real assets such as residential property, agricultural land, shares, bonds, silver, gold, wheat, or a degree certificate even.

This is purely the consequence of the Fiat currency system in combination with the Fractional Reserve banking system. Money originated as a commodity and developed to a system of representative money where the paper is a receipt, or a claim, a title deed, to the underlying commodity. To cut a long story short, fiat currency or paper money is a fake title deed to a property that does not exist. The enigma of “investing” is very simple really. The wealthy investor exchanges his fake title deeds for real title deeds the moment he receives the fake title deeds. In this way, all the fake title deeds end up in the possession of the impoverished. The monetary system is a fraudulent and unjust system that transfers wealth from the owners of fake title deeds to the owners of real title deeds.

Too true Sensei, we are on the exact same page

And the writing is on the wall for those that still possess critical thinking

There will come a time of just 2 sets of people when the system we know it resets – those that are ‘off the grid’ and self sufficient, and those that have ben herded into the ‘SMART’ cities as they all get snared on the lure of UBI / 5G/ working from home ‘convenience’ etc

And the elite will overlord it all…..with even the ‘off gridders’ probably being eventually snuffed out so the elite can reign supreme on the beautiful earth left outside of the walled SMART cities

And if you think this is all wild conjecture, its actually happening already – look into Agenda 21 and Agenda 2030

There will be some price discovery but in certain sectors, like property, the market will try hide the actual price discovery on property valuations for as long as possible. Be wary.

Model of the story – government is a disgrace.

All indications are that the militant and corrupt Zuma faction is still in control. Whats next?

Bottom line : among many owner managed businesses their view is take it back : the government cannot prosecute all of us

It is all becoming clear now. No, you cannot have the NCCC’s deliberation records; they are “classified”. No, you cannot sell booze and smokes, even if the SAB and BAT go bust. No, e-commerce cannot be permitted – it will be unfair competition, even if Takealot folds. And, in an astonishing about turn by Gordhan, carry the SAA a little farther (so that a “new SAA” can rise from what remains after the liquidation of Comair, SAA Express, etc.). What started off as a grand strategy with the good intention of “flattening the curve” in order to prepare for an overburdening of medical facilities, morphed into a gargantuan political subterfuge. When it became apparent that virtually no business will survive the epidemic, why “let a good crisis go to waste”? Scare the bejesus out of everybody with hyped up stories of impending doom; create an unlawful, ANC revolutionary “national coronavirus command control” that excludes opposition parties to bypass parliamentary oversight; paternalistically guide the petrified public into a lockdown, total surrender and deprivation of personal liberties; implement mobility and social media tracking; criminalise the exercise of constitutional rights with unlawful and absurdly overbroad regulations; impose a demonstrably unlawful curfew; unleash the armed forces on the populace to brutally implement the unlawful regulations; let “white controlled” business, large and small, collapse; support “black controlled” businesses with the billions solicited from mostly white benefactors to ensure their survival and eventual take-over of what remains of the “white businesses”; force perceived “white wealth” into poverty; hand out food parcels to the starving politically obeisant to stave off revolution and, voila, the forefathers be praised, “radical economic transformation” on a platter. Ramaphosa the saviour? He who idly sat by and guarded over the plunder of an entire country? This is not an attempt to save lives – it is a nothing less than a slightly more subtle Mugabian styled coup d’état to entrench power in the hands of a thoroughly corrupt political party. And what if thousands die in the process? No problem. Mere collateral damage in pursuit of the revolutionary “socialist” rebirth. After all, in every revolution (read “RET”), the end fully justifies the means, not so? And what if the bootleggers make a massive profit? Much of that is directly or indirectly directed by the loyal cadres in any event and finds its way onto their coffers of the party to enrich the ruling elite. If I were Rupert or Oppenheimer, I’d ask for an immediate return of my donation. But they are probably so embarrassed by the fact that they have been duped and completely hoodwinked, that they will just write it off. The DA, who finally seemed to have found its voice, is correct. The motive is become sinister and if this coup is not ended, the public will have to end it.

Trust is the most important thing in life and in business, and one can’t help but have lingering doubts about the true motives of some politicians.

I was thinking about the Western Cape’s Day Zero (the fabled day that the Western Cape’s dams were supposed to run dry during the last drought). There’s no doubt that the campaign worked in reducing water consumption, but the rains did not come nor did Day Zero.

All of life is a choice, and one should take responsibility for one’s own lot in life and not depend on any government assurances.

I also believe that democracy = meritocracy: How can it be otherwise?

End of comments.

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