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Why we are in the mess we are in

And why it’s going to get worse before it perhaps gets better….
Blade Nzimande, secretary general of the SA Communist Party. Picture: Supplied

My first ever paid-for activity was handing out leaflets advertising a new hairdressing salon in Orange Grove, Johannesburg. I cannot recall how much I received but I probably was paid in coins, not notes.

My career thereafter really took off as I upgraded to mowing lawns, working in a sport shop on Saturday mornings and then eventually I made it big time: I became a waiter at what was then known as the Blue Room at Park Station in Central Johannesburg.

Yes, dear reader, I also worked for Spoories.

Every day, for about six weeks during the university December break, I would board the municipal bus  with my stupid-looking tunic, complete with bowtie and under-jacket, to do two shifts, lunch time and then dinner .

Dinner was the best shift as that was when the high rollers would arrive who, after a couple of beers or maybe some Bellingham Rosé, would leave a very fat tip — but still in coins, especially if the dinner companion was not the wife.

You could spot them a mile away….

When all was cleared and the dishes washed — and the remains hurriedly scoffed as a late-night snack, it was it back onto the 15B bus to Sandringham, only to do it again the next day. I was giddy with the freedom of movement and the ability to earn some money of my own. For there was no other money coming my way.

It also helped to pay back the bursary for my studies at what was then known as RAU, at the old campus where the Liberty head office stands today.

I also saved up enough to pay R600 cash for an old Hillman Lynx, which for evermore liberated me from the embarrassment of catching the 15B bus in my dark navy Spoories waiter uniform. So much for white privilege.

Have you ever tried chatting up a perky red head while dressed in a Spoories uniform? I have and I can tell you, you have a better chance of winning a Ferrari in a lucky draw.

But if you listen to what Blade Nzimande, secretary general of the SA Communist Party, had to say earlier this week, I should have been outraged back then! I should have been toi-toying up and down President street in my navy blue tunic and bowtie. For I was being exploited by the brutal capitalists who owned (a) the hairdressing salon, (b) sport shop and (c) the restaurant.

I was just too grateful for having a job, a part-time job, that paid me some real money to even consider the toi-toying bit.

My experience was not unique. I meet and talk to many people and almost everyone will tell you a similar story: part-time jobs, second-jobs, low-paid jobs, failed business. This flies in the face of the narrative that all white people come from privilege and were born with the proverbial golden spoon.

Read below what Nzimande had to say last week in a speech to the SA Commercial, Catering and Allied Workers Union National Congress. Read and weep, dear reader, to fully understand the economic mess we are in.

“Private accumulation of wealth on a capitalistic basis is not meant to improve working conditions and workers’ standard of living. The hospitality sector, including hotels and restaurants and the retail sector represent two of the typical examples of the worst forms of exploitation facing workers on a daily basis.

“The capitalist bosses are interested in one thing and one thing only. They are interested in achieving self-enrichment by exploiting workers economically and achieving political and wider social control over society. This has generated social insecurity among workers….”

And there’s more…

He goes on to say:  “In many restaurants, for instance, there are workers who make more money than their wages from tips. The restaurants have been converted into a space where the workers appear like tenants and make a living from, or rely more on tips than on paid work — adequately remunerated. This same phenomenon is found in the retail and wholesale sector, at the malls, where there are car guards who rely exclusively on tips from motorists.”

And from there razor Blade jumps into sexual exploitation, gender-based violence and state capture…forward to a socialist Azania!

But that’s not all, folks. Why waste a long and tedious speech? Why not also offer the following commentary on what went down in Zimbabwe over the past week or so.

“The underlying problems (in Zimbabwe) are economic problems, and they were not entirely created within Zimbabwe after independence. The problems were fundamentally a result of many years of colonial domination by Britain and imperialist exploitation of the people of Zimbabwe and their national wealth. They were also created by the International Monetary Fund and the World Bank.

“These two Bretton Woods institutions usurped Zimbabwe’s economic policy-making sovereignty. In line with their anti-democratic conduct, they imposed a neoliberal economic policy regime that was implemented uncritically and ruined the economy of Zimbabwe.”

At this point, the speech writer must have realised that he was writing absolute rubbish, so this was added: “But related to the economic problems there were organisational and leadership problems as well.”

Leadership problems? Must be the understatement of the century.

Not one word about the disastrous rule by Robert Mugabe, who in 17 years managed to totally destroy a once-flourishing and booming African economy. An unemployment rate of 85% and three million Zimbabweans who have fled the country for financial survival and it is described as “organisational and leadership problems”.

Can he run a spaza shop?

I have to ask: has Nzimande or any of his fellow communists ever had to balance the books of any enterprise of any nature, even a spaza shop in an informal settlement? For even a micro enterprise such as this is subject to the discipline that the free enterprise imposes: you have to make a profit at the end of the month to stay in business for another month, and so on.

You have to have enough cash on hand to buy stock, which you need to on-sell at a profit (“how dare you make a profit; you are exploiting the poor”). You have to make a profit to employ someone, even if it is temporary. There is no safety net, no go-to-bank for a bail out, no government agency to the rescue. Just ask anyone who is self-employed.

Nzimande sees the restaurant industry as a money spinner. Ask anyone who has ever lost money in a restaurant (me!) how tight the margins are; how fickle the clients can be. Many restaurants are seasonal— in the Western Cape, for instance. You simply cannot appoint full time staff and hope to survive.

And for tips… A winemaker once cynically remarked to me that waiters in many restaurants make more on tips serving a bottle of wine than the gross margin on the bottle of wine itself that he has produced. He has transported his bottle of wine over hundreds of kilometers while the waiter transports it perhaps 20 to 30 meters, from the cellar to the table.

And he pays tax on any profits that he makes, unlike tips which do not attract tax.

Socialism destroying the country

It is this socialistic narrative that is permeating almost every aspect of our economy, even in the financial services sector. It has become so pervasive in recent years that many people who ordinarily would describe themselves as free entrepreneurs and capitalists, often fall into the jargon spouted by the likes of Nzimande. Note how often the words such as “rip off, crook, shyster, exploit etc. are used when it comes to describe a wide range of services in our economy.

All of us — socialists, communists, capitalists and free marketeers — survive and prosper because, somewhere, someone made a profit on some kind of economic activity. This applies to the multitude of economic organisms, many millions of them, that make up what we call the economy. Out of that profit comes the tax revenue that feeds the voracious state. Kill the organisms, even a small number of them, and the economy starts withering.

Just look at the current state of our economy.

I would like to suggest that Nzimande and his gang of communists/socialists in government take some time off from their busy schedules this week and read, but thoroughly, the statement put out by S&P Global Ratings over the weekend giving the reasons for downgrading SA’s local and foreign debt into junk territory.

Read: S&P downgrades SA’s local currency debt to junk status

Simply put: it’s the socialist direction we have taken over the past number of years, that has landed us where we are. Our financial situation is now compared to that of basket case Venezuela. The government spends too much money redistributing money from a shrinking base of taxpayers. And you can only tax someone if they have made a profit. No profit, no taxes.

All the ratings agencies have in recent times pointed at SA’s very inflexible labour situation as one of the major contributing factors for low and slowing economic growth — but according to Nzimande, we need more and stricter laws to solve the situation.

S&P (and Moody’s) are not confident that the current trajectory can be turned around very quickly. It sees it getting worse… and then I am the negative one.

There is a misplaced hope that a win by Cyril Ramaphosa as the new ANC leader next month will turn things around. Any such win might bring about a short-term feel good factor but I have not read anything in any of his speeches thus far which fills me with hope. It contains the usual verbiage about radical economic transformation, transfer of land and redistribution of wealth.

Read: Ramaphosa is leading race for ANC presidency

I feel that radical free enterprise is the only hope to get the economy growing again. We must become the Asian Tiger of the African continent. An economy growing at say 5% is the fastest and surest way to ensure radical economic transformation.

So to all those thousands and thousands of people employed part-time/half-time/full time in the hospitality and restaurant industry who might feel exploited, remember this: there is only one thing worse than being exploited by capitalism and that is not being exploited by capitalism. Get it?

*Magnus Heystek is the investment strategist at Brenthurst Wealth. He can be reached at magnus@heystek.co.za for ideas and suggestions.

Please consider contributing as little as R20 in appreciation of our quality independent financial journalism.

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Thanks MH
“A drop of ink may make a million think -Lord Byron”.

On re-reading I thought that many of our younger readers might not know what Spoories means. It refers, of course, to working for SA RAilways/Spoorwee in those days.

Had a few lunches at those restaurants on Cape Town station in the good old days.

ALWAYS excellent service, reasonable prices and good food.

All gone sadly.

Magnus, a comment from a pedantic old petrol-head- was that not Hillman Minx – not Lynx? Can’t fault the gist of the article though!

Magnus, you didnt mention that that arch communist state China had followed a capitalist path and grew its economy in leaps and bounds. THAT is the reality the SACP refuses to acknowledge.

Excellent, excellent article. The reason for South Africa’s economic woes summarized in a single article.

In a nutshell. Thanks Magnus.

Can someone please explain to me what ‘inflexible labour situation’ means in the context of this article.

Thanks in advance.

The state prescribes the agreement between the employer and employee when the labour situation is inflexible. The law dictates that the employee has more rights than the employee. Socialist policies enforce a situation where the employee is the boss, and the employer is merely a tool in the hands of the state.

A flexible labour situation gives the employer and employee the freedom to come to a mutual agreement without the interference of the state.

do not fear – I am near!!! just savouring our 10 wicket cricket victory over the old foe.
I know many people consider MH & moi to be the same side of the coin – but in fact we are opposite sides – altho’ both giving value for money!!! (and remember I get no fees if you happen to follow my suggestions!!)
I took a view in ’86 that the only way that sa was to get rid of apartheid was to have a civil war, as a result I took me, my wife (now sadly passed on at the all too early age of 58) and moved off to aus – WHEN emigration was freely available. the problem was getting used to a new lifestyle away from your closet and dearest and being at the end of every queue – be it for a job or a house.
so what can I say – thankfully sa didn’t have a civil war – altho’ it could be argued that with 20,000 murders a year there is in actual fact a war going on. I have learnt that living in a 1st world country with pensions and free adequate health system is a sina quon non. thankfully we arrived in sydney when houses were affordable and have benfited from that – and that benefit has been and will be passed onto all my children.
I was brought up in poverty (yes there were whites living in poverty) and I have learnt the value of hard work and education. I have also learnt that as the aussies say “give everyone a fair do”. well until the wrongs of apartheid are corrected everyone will not have a fair go in sa. the EFF is the only opposition that promises a fair go and to correct the wrongs of the past.
while the current govt carries on one HAS to get one’s funds off shore – as I have drummed away ad infinitum.
as I said I am the obverse of MH’s coin – until a change of policy changes people’s views – there will be no change!

Hi Rob S. When I read the line below the article’s heading “before it gets better” (comments one frequently come to hear), I distinctly recalled your comment to someone else many moons ago: “..alles sal nie regkom nie” 😉

I don’t see your past & present comment as negative. It’s more HELPFUL than negative. Very few commentators appreciate a person’s comment from an outside perspective (but who also lived in SA, and knows what it’s all about).

The lesson is to “externalize” or rand-hedge as much of your discretionary savings / retirement capital, if one intends to remain in SA (like many do, as people in some professions with scarce skills live like kings in SA, and will find it difficult to enjoy the same standard of living elsewhere in a first world country.) The best fin position to be in for any S’African, is to be self-employed/contracting earning foreign income…the more the ZAR depreciates over time, the wealthier you get, while one’s lifestyle is paid in ZAR/fokololo’s.

Capitalism and free market policies are advanced by people who generally pay more in taxes that what they receive in services from the State. Socialist policies are advanced by those who receive more from the state than what they contribute.

If the majority of citizens in a democratic country receive more from the state than what they contribute, the political environment becomes increasingly more socialistic. The state is the implement to plunder in the hands of the needy majority. When the majority are not taxpayers, they use the legislative process to confiscate an increasing share of the assets of taxpayers.

In an environment where the majority wants to use the legislative process as an instrument to plunder the taxpayer, hopeful presidential candidates must move increasingly to the left. Those who stand for a free market economy and for capitalist policies are dead in the water.

“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”
― Frédéric Bastiat, The Law

*slow clap*
Excellent comment

Superb comment.

This is not only in SA of course which is so much worse entirely due to the usual suspects.

In USA and UK voters no longer vote to be given opportunities to uplift themselves. They now vote to get others to give them money via redistributionist polices. Fortunately in USA many have seen the light but in the UK with so much immigration from those who cannot contribute the voters still favour the free lunch.

Europe also socialist for so long has had an all too small swing to common sense.

In Australia with its so – called highly educated workforce there is still a too strong affinity for the free lunch. Just why does a still developing country have such a high cost of living then? Oz is heading for a very, very big fall.

It is going to take at least a generation, with a number of setbacks between, to rectify the problem.

Tasteless…common. One can wonder your choice of words at a restaurant table.

Oh golly, Dominee Rice is that you ?

What are you even talking about?

Either you are referring to one of the other comments on this piece, in which case we are left guessing which one, or you are referring to the main column, in which case you are a pompous snob.

Quite frankly, MH’s writing is amongst the best on Moneyweb and in the SA financial world in general. I may not always be 100% behind his beliefs, but his writing is clear and concise and unambiguous – which can’t be said for yours.

Oh dear. This was supposed to show as a reply to Tim Rice’s comment below. I don’t know how it ended up here, and apparently it can’t be deleted.

I find it incomprehensible how anybody in this information age where world information is freely available at the press of a button, can still think communism can work. The evidence is there for anybody to see, Venezuela, East and West Germany, etc.

Where is Blade Nzimande’s perceived intelligence? Decide for yourself.

In their cynical manipulation of the emotions of their constituents.

Communism is good for Blade Nzimande, that’s why he is pushing it.

Magnus, your article contains a fatal flaw – do you really think Nzimande and his gang of communists/ socialists can (1) actually read and (2) comprehend what is written?

That’s a cheap shot. They are not stupid, and not illiterate; on the contrary, the union leaders in this country are some of the more intelligent and well-read (if not well educated) people in the country.

What they are, also, though, is cynical and populist. Their words are designed to rabble-rouse and raise their own popularity. They are, in a word, politicians.

Maggie Thatcher, for all her faults, said at least one thing I have to agree with: The trouble with socialism is sooner or later you run out of other people’s money.

One assumes the SA breed of socialist has seen some of the successful socialist models – the Scandinavian countries being the only examples I know of – and think they can make this country run as that well. The problem with that is the vast majority of the people have to have a work ethic that doesn’t involve “gimme gimme gimme”, and that, Mr Mzimande, is where SA falls f-a-a-a-a-a-r short of Sweden.

Thank you Magnus. My little piece goes like this. Congratulations ANC – Junk status proudly brought to you by your own “Ali-Jacob-Baba-ka-duduzane” Zuma and his 40 thieves.
How to recover from this mess? (Shakes head in despair). How did ‘they’ get us into this situation? I am not an expert, not an economist but for what it is worth, here goes. Get rid of (repeal) all those restrictive and NEGATIVE BEE and Beeeee etc, policies. The introduction and continuing enforcement of these policies, however well-intentioned they set out to be, have severely HOBBLED the economy. (Hobbled = tied the feet together). By excluding the majority of skilled white persons and businesses from the economy the ANC have effectively interfered in what once was a healthy and positive free market. The restrictions placed on businesses and entrepreneurs have had a catastrophic negative effect on free trade in OUR country. That and the massive corruption in high places. The consequences are now all too obvious.

Meanwhile, Com-rat Cronin commutes in a 1.2 million rand Land Cruiser. That’s one up on Com-rat Nzimande’s 750il Beemer. These people are vile, corrupt advocates of a dead, evil ideology, and they don’t even adhere to it themselves.

Only 3 million zimbabweans ?

Mr Nzimande – running the country is no different to running the average household – the husband provides income and the wife spends it – if both do it well there is harmony and progress.

At national level, business (the husband) provides the taxes and the politicians (the housewives) spend it, if both do it well there is harmony and progress. When the politicians do not do their work they try to shift the blame on to business (or capitalism).

Your rhetoric is so far removed from reality. Come down to earth and address jobs and population growth!

What is so wrong with South Africa being an economic powerhouse? Surely everyone benefits if we succeed economically.

The only reason that Blade has any semblance of credibility in South Africa is because of the rank ignorance of the average man on the street. Magnus tries to present the counter arguments to the SACP policy but is in reality preaching to the choir. Nobody who reads MW seriously believes any of this nonsense. Not even the SACP politburo believe it.

There was a term used by early Marxists: “Useful Idiot”. Basically one who supported the cause but did not understand it nor its consequences. There are millions of them in SA. Certainly the SACP understand a few things about communism. Firstly it is inherently undemocratic. Marxism was always forced on a population from above. Secondly there is a politburo- proletariat structure. Because goods are scarce, the politburo have special stores for them alone. Thirdly, Marxism is a system of coercion and force to achieve the goals of the leaders. It is very hard to reject a Marxist dictatorship.

Blade is a simple rabble rouser. He is selling a violent, cruel and unworkable system that will destroy SA, disguised as workers utopia to those who know no better. As such he advances his own diabolical agenda of totalitarian statist control, never those whom he claims to represent.

my father was a policeman in the apartheid area. He worked hard long dangerous hours for a measly salary while NP minister and presidents raked it all in. Now the same old corrupt nepotistic self enriching system is repeating itself. With hind sight he (and many others ) surely could have participated in strikes. Sadly they where blindly loyal to these NP bloodsuckers. Luckily today we know better.

this is the real reason why we are in this mess…the system……how on earth can things then get better ?

I agree with all of it except where you showed how little you understand about white privilege. You wouldn’t have managed to pass a degree at RAU without a privileged primary and secondary education.

…and perhaps you could also remind us of whether RAU accepted non-white students when you were there.

And whether that waiter job was reserved (formally or informally).

I just can’t understand why you felt the need to add that little sentence into the article at all.

surely most of these commentators/advisers ( me included ) are definitely talking from a point of privilege….but please don’t blame us….we where indoctrinated by bloodsucking NP presidents and ministers. It took me a lifetime to fully realize this,I went through life with “oogklappe” aan. Sadly allot of people are still stuck in this rut. Now a new generation are cunningly indoctrinated, thus another 40 years plus for them to see the light.

And whether when you got home you had to hand over your hard earned money to the family to help clothe and feed your siblings. And whether you took that bus from a white suburb where it was safe to walk the streets. And whether you got up and washed that morning, and whether you actually had running water, and if it was hot. Or electricity.

Shame on you Mr Heystek.

After scrolling through and reading all of the comments, I finally came to one that saw this. WTF thank you for pointing it out……

WTF – You Africans always bring up race and will always want to remain “perpetual victims” as that is the only draw card you lot have. Shame on you!

Always “racism” with you lot… that’s the only card you have.

I am a Hotelier who paid my dues at an earlier age ( late 90’s early 00’s) in food and beverage working in a high end hotel in the middle of Sandhurst – the irony is that the biggest tips came from BEE and political elite that would run up restaurant bill’s
equivalent to a small new car.

Unfortunately these tips were eventually pooled among all hotel staff and taxed as it appeared on you pay slip.

This was implemented and driven by spiteful finance manager who was somewhat peeved that a waiter with a matric would take home more nett cash monthly than himself even though his salary was above market related for his qualifications and experience in finance trade at the time.

How did this happen? the Food & Bev staff made up about a 1/3rd of the general hotel staff so the other 2/3rd wanted in or the share of tips as they deserved it for their contributions: nice garden, clean toilets, working light bulbs all contributed to the guests experience they claimed.

– so it was easy as the majority of staff agreed to the tips policy.

In the end the waiter would realise a small fraction of what was tipped even though the guest was under the impression that it was actually for his or her personal service and the extra miles that were covered to realise a wonderful dining experience.

eventually service become okay not exceptional, Finance manager began questioning and could not fathom why the average bill and general food and beverage revenue dipped so much.

The incentive for waiters to upsell and increase average spend was taken away and moved on to other establishments that has better tip policies that favoured the individual who worked for it.

True story

I have two words for people who espouse Marxist policies: Zimbabwe and Venezuela.

The communists labelled it the 1996 Class Project. They replaced the fiscal prudence of the Manuel/Mbeki era and instead gave us thieving Jacob Zuma and years of budget deficits. For the next few years the deficit is not going away and neither is Zuma. We may as well have a Zim-style revolution now while we still have money.

For all the liberation movements from the “struggle” it was so easy to detonate a bomb or to pull the trigger of an AK-47. It is simple – even a child can do it
and they do. However, to put books in schools and medicines in hospitals, sufficient electricity and water in suburbs, to make the economy grow, to have an effective civil service, an independent judiciary, to plan for droughts etc requires skills, planning and damn hard work. Not exactly something which Africa is world famous for. The whole of Africa is always full of plans like economic development plans and people are always waiting for government to roll out the next big “plan”. These “plans” are always drafted by bureaucrats who have never run a business of their own in their lives. But like they say: “even if it is a mess, it is our mess and you won’t tell us how to fix it!”

I wish people like Nzimande would stop their ideological claptrap and start focussing on building this country.

Thanks Magnus – you say it ‘like it is’.

So glad to have you back Magnus !!!!!!!!!!!!!!!!!!!

To: The Editor
I note that my comment on this article was not published. this is not the first time you censor me. on what basis do you decide what to place and what not? is it that MH and the Clown from Sydney enjoy protection?
kindly advise

Well said. . .very true and sad but well said.

Well said. I can’t remember the last time that I saw a young student working in a restaurant or anywhere for that matter. I do not believe that the mindset will change, therefor I am eternally pessimistic about the future of this country.

It’s amazing how this communist economic rubbish maintains traction! the same old tired arguments and philisophical claptrap offered to gullible folk who are fed the pap of a benevolent political system that provides for all according to their needs and not their contribution. Of course the promise of this nirvana will be very attractive to those who don’t have a clue about economics.
On the other hand the application of unconscionable profit driven business practices is equally deplorable. It has led to the creation of monopolistic corporations, having the effect of consolidating capital in fewer and fewer hands which is leading to social unrest. Conglomerates are negating the ability to exercise true democracy as they are monopolising economic activity and marginalizing small entrepreneurship through the sheer power of capital accumulation. The US proposed Trans Atlantic and Trans Pacific trade treaties seek to replace democratic governments with an oligarchy of interconnected corporate cadres, which will hold economic dominion over countries’ sovereign governments, with no recourse available. The problem that we all face is one of belief in the fiction of the necessity for endless growth and consumptive spending, which depends on expanding populations and is mathematically unsustainable. The conventional titles describing economic models, be they communism, capitalism or any other ism are broken and need radical rethinking. All economic modes need capital to thrive, but the capital has to be created through the production of a fair profit return earned on true productive output in the real economy and not through accounting based smoke and mirrors, as is the case currently.

End of comments.

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