Inequality and poverty will not be fixed by spending

They can only be addressed by growing more.
If the debt trajectory doesn’t change, the government will find it won’t be able to tax more without fully destroying the already cracked golden egg. Image: Bloomberg

Did you know that the countries with the highest inequality in the world have a lot of seemingly unrelated economic indicators in common?

Many of the poorest countries with the lowest economic growth and highest unemployment and tax rates are in southern Africa. I believe the economic factors are related.

Moneyweb Insider INSIDERGOLD

Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

Choose an option:

R63 per month
R630 per year SAVE R126

You will be redirected to a checkout page.
To view all features and options, click here.

A monthly subscription is charged pro rata, based on the day of purchase. This is non-refundable and includes a R5 once-off sign-up fee.
A yearly subscription is refundable within 14 days of purchase and includes a 365-day membership.

Click here for more information.

High unemployment means higher inequality. High tax rates result in firms investing elsewhere resulting in even fewer jobs as the population grows. High taxes also often result in a small part of the population being paid well – the civil service.

These economic indicators are not something mainstream commentators and leaders talk about either.

South Africa has kicked the spending and deficit can far down the road, but the road has come to an end.

The Covid-19 crisis has brought that end closer. The world became more unequal during the pandemic and nothing makes me think that will not be the case in emerging markets too.

Indicators that add to inequality and poverty for emerging markets

Firstly, all the countries with high inequality have a very high unemployment rate in common. All five Southern African Customs Union (SACU) countries are among the 10 states with the highest unemployment rates in the world. These countries find themselves within the top 12 most unequal societies too.

Brazil is also in both, and there is clear evidence across the world that high unemployment is a good indicator for high inequality. For example, Colombia, Malawi and Rwanda have double-digit unemployment rates like most of the other highly unequal countries.

Simply put, too few people working means fewer people with an income.

Selected world inequality rankings
South Africa 1
Namibia 2
Botswana 3
Zambia 4
Lesotho 6
Mozambique 7
Eswatini 8
Brazil 9
Colombia 10
Rwanda 13
Honduras 14
Malawi 18

Source: Economist pocket World Figures 2020 edition. Countries selected on tax and employee compensation data availability.

High tax burdens reduce private fixed investment

A high tax-to-GDP ratio is another factor that many may not see as an inequality indicator, but it is clear that many emerging markets that have high tax burdens also have high levels of inequality. Again, all five SACU countries are in the top 30 highest taxed countries in the world.

Taxes collected as percentage of GDP for emerging markets, 2017

Source: UNU-Wider/economistscoza

Ten of the highest-taxed emerging markets are also in the highest 15 unequal countries in the world.

One would think that with progressive income tax programmes that countries such as SA and Namibia would have lower levels of inequality, but this does not appear to be the case.

The reason becomes quite clear when one looks at the share that government wages takes out of the economy.

High government wages do not lead to more growth or better services

Add a high government wage bill as a percentage of GDP, along with the high tax burden, and one finds the third inequality indicator: emerging countries with a higher total government wage bill as a percentage of GDP have a good correlation with inequality.

Namibia and SA lead the world in the burden of government wages.

Brazil, Eswatini, and Botswana are in the top government compensation countries too. The highest developed market, Sweden, has a lower wage bill than the average for the SACU countries.

Read:

Companies need a level of returns that rewards the risk and pays more than the cost of capital. High tax burdens reduce the returns and often reduce the market size too. This leads to fewer new infrastructure and new employment opportunities.

And when high government wage bill countries spend, much of the new spending ends up in the hands of the few working in government and not in the hands of the average citizen or in extra healthcare or grants.

It goes straight to the pocket of an elite – often a new elite, fewer in number but well-paid.

This reduces the money for government investment in economic infrastructure. With high tax rates, it also means that the private sector is less likely to make up the economic infrastructure shortfall unless it is well compensated. Thus, things like toll and private hospital fees are relatively expensive, resulting in the poor using these services less.

Ten of the 12 emerging markets with the highest wage bills for which we have recent data are also in the top 20 most unequal societies in the world.

This, combined with the high tax burden, means that most of the tax money goes to consumption expenditure and to a small group of citizens getting a large slice of the cake. Again, all SACU countries are in the top 10 and are joined by Brazil, while Zambia and Mozambique are also in the top 20.

Read: Public sector wage bill might catapult the alliance into chaos (Mar 2020)

In fact, for emerging countries, high government wage burdens are a very good indicator of inequality as more often than not civil servants who get the large chunk of GDP are in the top 5% or 10% of earners in those countries.

To illustrate this point, analysing tax data in SA shows that between 37% and 42% of the top 10% of earners are in the broader public service.

(This would include university, agency and all levels of government). So 20% of the formal workforce makes up double that number in the top 10% of earners.

Add the employees of some bigger state-owned entities (SOEs) and we have even more government-related employees in the top 10% of earners.

And with formal sector employees only representing less than 30% of all adults, it is clear that this also breeds inequality.

Furthermore, it means governments do not have much left to pay for medicine, books or roads.

Government wage bill as % of GDP for 2016 or later

Source: IMF/economistscoza

Note: All for central government plus local and other tiers of government apart from Angola, Malawi, Namibia, Nigeria, and Mozambique, which are central government only, while India is local and central excludes state government, and Zambia and Angola exclude local. Honduras seems to be missing local government data.

Government makes debt to pay for the cost of running an extended state

Government debt burdens and government interest payments relative to the size of the economy are also good indicators of stress in an economy.

The burden of government interest payments as a percentage of GDP in SA is the fourth highest of major emerging markets while the government deficit is also one of the highest. Brazil also has a high government deficit as do many Southern African Development Community (SADC) countries.

Government debt is not an obvious indicator of inequality but more of a leg iron for potential growth to close the poverty gaps and the ability of infrastructure to lift growth.

If there is little growth there will be no improvement in poverty and unemployment levels.

Many of the countries with very high inequality have high government debt-to-GDP levels, with the clear exception of Botswana. Interestingly the reverse also seems generally true in that lower debt-to-GDP countries have less inequality, as in the case of Eastern Europe, Turkey and Thailand – with India, and in a sense Argentina, the exceptions in the reverse angle.

Source: IMF/economistscoza

Note: All for general government except Angola, Namibia, Zambia Mozambique, Rwanda, Eswatini, Lesotho, Botswana, Honduras and Malawi, which are central government only

The problem is that some governments and many academics seem to believe that spending more will solve problems of inequality and poverty.

This is pertinently untrue for emerging markets at least, and for most economies. Even reserve currencies will implode at some stage with the debt burdens being imposed.

The real problem is not spending but fixing inefficiencies and crime

SA and southern Africa have generally failed to fix government inefficiencies or badly run SOEs and government functions such as public transport. Instead, corruption has engulfed every facet of life in government and the destruction just continues.

It is downhill from here as the kitty has now run dry. With deficits of over 14% this year and nearly 10% next year it is silly to think government debt will remain below the level of the country’s GDP.

A startling 52% of this year’s non-interest expenditure is financed by debt. That is not even close to sustainable. Over 40% is normally a clear sign of a debt or hyperinflation crisis.

With an extreme tax burden that is crushing growth potential while spending is mostly on consumption by the government, and with our presidency relying on a predominate government and SOE-based trade union federation, it seems unlikely that the country will be able to run a sustainable spending and tax regime.

The hard-left trade-union-inspired government spending and taxation will not be going away easily.

But as debt levels rise to closer to 100% of GDP the room to do things will be crushed. The government will not be able to tax more in a very weak economy without fully destroying the already cracked golden egg.

So far SA has been buying time to avoid this, but with ever louder voices crying for higher wages within SOEs and the public sector, this will be closely watched. It is also a major financial market predictor now, I believe. Investors and traders have woken up to the fact that public wages are just too high in SA and in other SADC countries. (An analyst recently pointed out the mess in Mozambique, saying they pay for an army but got long-distance runners instead).

In short, it’s over if we don’t make massive reforms

If we do not make massive reforms, I can tell you that universities will close, passenger rail agency Prasa and the Gautrain will no longer be around, social grants will become worthless, and hospitals will be empty places that employ doctors who can prescribe but not provide medicine.

Inequality and poverty will rise even more. Unemployment will rush higher too.

Interestingly, all nine of the most unequal countries in the world where unemployment data is available generally have unemployment rates higher than 13%, while the top seven have unemployment rates of about 20% and above.

So government, if it spends more, will at some stage have to tax more – and that will chase away even more potential employers or future employers, which will increase unemployment and create even more pressure for the government to employ more civil servants and raise taxes yet again, while cutting books, medicine and infrastructure spending.

This is a bad cycle and the shouting for a universal basic income grant will threaten those who are currently employed with even more taxes and the richer folk with wealth taxes.

High company tax burdens along with red tape will prohibit more firms and potential employers. Unemployment and poverty will increase.

We are getting closer to this very bad scenario where the country will take crushing measures like changing pension regulations, begging from the International Monetary Fund, or hitting the rich with ever-higher taxes chasing even more job creators away.

I am not a pessimist by any means, but we honestly need to pray that the finance minister can get it right this time as the data mentioned above will kill growth and hope in this economy.

If SA just spends and spends, then many will leave and rather work elsewhere. They do not deserve the burden they will carry for enriching the few at the expense of the many.

We are already seeing ever more young people with an education leave our shores.

South Africa has produced more dollar billionaires outside the country than inside the country – a situation that I think is pretty unique in the world.

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

AUTHOR PROFILE

COMMENTS   49

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Great piece Mike! But who in government will read it and how many of them will grasp it? Your arguments run counter to the ‘localisation’-drive, EWC (which is confiscation), the NHI and the religious belief in the all providing benevolent developmental state which is steadily undermining individual freedom of choice, not to mention a range of other liberties and rights

Is there anywhere in Africa that this is grasped? North of the Sahara probably the only ones.

Our public sector wage bill per GDP is 50% higher than the average for OECD countries. Government employees are overpaid and unproductive compared to the private sector. A large chunk of our taxes disappears into the SADTU black hole where 21% of non-interest government allocations are set aside for basic and higher education, with nothing to show for it. Our social grant scheme, relative to the size of our economy, is one of the largest in the world.

All the SOEs and most of the municipalities were bankrupted by cadre deployment and loaded BEE contracts. All these funds went into consumption and none were spent on sustainable capital projects. Even the most expensive and sophisticated projects, Medupi and Kusile, were used as consumption projects for connected cadres. They are giant heaps of scrap metal now.

The point is this – our taxes are used for consumption. The municipal rates and taxes in combination with the Capital Gains Tax and estate duties turn productive assets like farms, factories, and residential property into consumer spending. We are consuming the assets of the nation. Investments in capital formation create jobs, drives the division and specialization of labour, increases productivity and enables wage increases.

The taxes on capital formation put this process in reverse. It destroys jobs, reverses specialization and productivity gains and shrinks the real tax base.

We are taxing our economically active enterprises to finance consumption. That means we are consuming the productive assets- eating the goose that lays the golden eggs. This is the typical socialist recipe for total economic destruction and it cannot improve under ANC rule.

Communalism and collectivism have economic consequences, and those consequences always come as very nasty surprises.

The Greek people found this out the hard way, after 2009. Greece was also a lavish welfare state, and large-scale corruption and tax evasion was the way their economy operated. Then the 2008 crisis came, and Greece had to be bailed out. This lead to a huge reduction in welfare and also pay cuts for their public servants. The streets of Athens burned as a result, and young Greeks went hungry.

This is SA’s future too. Sooner or later, the IMF will have to step in, and to the IMF, BEE and AA aren’t issues that they will lose sleep over. Many of SA’s public servants will find themselves unemployed and the rest will have their salaries cut. SA’s streets will burn too, but the IMF also doesn’t care about that.

Despicable how the well-to-do Western countries not only hoard jabs, but jobs too!

Or in fact countries such as Vietnam, India and China also seem to hoard jobs. I wonder why.

My comment was firmly tongue in cheek. As a pessimist, I think the worse the situation gets the more ridiculous the excuses and solutions will be from government

i was trying to put more tongue in the cheek

Mike, do you have stats on our relatively high crime rate and your thoughts on its economic impact? Well done on a great article.

Though the IP needed to create our own is freely available.

One should try to keep an informed perspective. There are many positive factors. The main threat is a banking crisis and hyperinflation, but many countries are in the same boat. Social cohesion is the first casualty of economic decay. Economic circumstances produce either a Malema or a Mandela. The circumstances make the man. The hyperinflation of the Reich Mark created the fertile ground for the NAZI party and for Hitler’s rise to power.

We should consider the following statement: “The pessimists got the penthouse and the swimming pool in New York, while the optimists got a bunk in Dachau”. – Holocaust survivor.

Very relevant for SA and a good rebuttal to those that sneer at people who emigrate from SA.

Again the economists look at only one side of the equation.

As long as the country produces more people than jobs the poverty will get worse.

Yet another economist that falls for the inequality myth:

You cannot have equality of income and benefits with such a wide inequality of mindset. Take two key issues:

The rich,(basically middle class taxpayers) vote for good government – while millions of the poor vote for large scale corruption and mismanagement.

Also, the rich do not have more children than they can afford – whilst millions of the poor have children they cannot afford.

Jip

Those that vote for a living outnumber those that work for a living

– Sensei

And the serial voters are also the serial baby makers

One of the best articles by this exceptionally capable fellow. Superb factual information and great insight again. Probably the leading guy in the country in his field.

One issue I have-Surely the real issue in South Africa is that we are in fact a dirt poor country-it is the lack of rich people(and this is declining all the time) that is the real problem as rich people spend and employ more . And as a government the ANC rubbishes are discouraging wealthy people from staying here for a multitude of well known reasons ie crime, high taxes, failed SOEs, poor legislation etc.

Poverty and inequality will always be here, just at different levels.

In the perfect world where population equals work opportunities, there will be work for all, but you will still have one person with bigger conjoros than another, who takes the risk goes the extra mile and rises above the rest.

some people are lazy others are hard working.

New title for article: “Poverty and inequality cannot be fixed by stealing.”

Gosh!

Another totally useless article from an upstanding representative of the utterly useless cadre of “Economists”!

It really bothers me that these academics can burrow deep into veritable DUMPSTER loads of “facts”, yet studiously ignore the ELEPHANTS standing right next to them and their beloved dumpsters.

Why so?

Schussler trots out a myriad interesting (but inconsequential!) 0graphs drawn from his favourite dumpsters, but he ignores the ONE graph that explains EVERYTHING….

One has only to Google the chart of SA’s population growth since 1900 to see where the problem is.

And the visibility – and significance thereof – is not even remotely subtle!

It is immediately clear that SA’s problems (every single one of them!) is due to the explosive, out-of-control, population growth of the poor.

It really intrigues me why Economists like Schussler (and seemingly very many others of their trade) so DELIBERATELY avoid ANY discussion of

1. even simply acknowledging this as a problem in the first place,

and…

2. attempting to come up with an economic proposal to fix same.

It also really bothers me that these funds can write lengthy articles “about” their problem du jour, but are WOEFULLY short in proposing a solution.

In my book, you should NOT enter a debate UNLESS you come armed with a proper, well-thought out SOLUTION.

This Schussler has NOT done.

And there very definitely is an answer!

The only two nations I know that have come from behind, and DEFINITIVELY won the fight against poverty and inequality, have been China and Singapore.

Two nations with starkly different, opposing political philosophies.

But in both cases, the road to success began in the same path, and in the same direction…

The AGGRESSIVE implementation of powerful (and effective) incentives to radically REDUCE population growth, AND encourage strong NUCLEAR families. The notion of allowing single women just selfishly having babies by themselves is VERY MUCH frowned upon.

This strategy has been an enormous success.

Singapore is now the most highly educated nation on the planet.

China is now the world’s leading superpower.

And the USA is now in terminal decline precisely BECAUSE of the declining trend of its nuclear families.

SA needs to pay attention to these realities.

So Mike, please explain why you and your fellow Economists here are so studiously “NOT on board” in facing up to the root cause of SA’s problem.

My guess is that he isn’t allowed to say it – if he does then the article won’t be printed. I see he does comment also (see above) so he is certainly reading these comments. Maybe he can sneak in a comment to your comment… Tick tock

A bit harsh but one graph can describe it all; in my view. That is per capita GDP in say USD. If population is increasing or GDP decreasing, this ratio decreases and tells us we are getting poorer; like it or not. A Google shows that SA’s peaked around 2010 and is following a similar trend to Nigeria and Brazil; down.

No doubt excess population is a massive problem, but I don’t think you can attribute the “success” of China or Singapore to population control.

And why not …?

The success of a nation is entirely due to the quality of the “Nuclear family”.

Small, loving, nuclear families generally produce brighter, more conscientious, more law-abiding citizens than their siblings from broken, dysfunctional unions.

The “poor and unequal” are not so just because they lack money or opportunity, so much as they are at a HUGE- and lifelong – competitive disadvantage against their more clever siblings from well-brought up nuclear families.

This is EXACTLY what (perhaps even serendipitously) has happened as a NATURAL outcome of China’s original “one-child” policy (now elevated to 3 children).

The kids are doted on by BOTH parents, imbued with strong family values and are able to cope with an intense education.

Contrast that behaviour with what happens in SA – single young girls (far too young and immature to actually responsibly bring up a baby) get pregnant with the nearest Sugar Daddy – or otherwise anyone else in order to get a grant. The father simply abandons all parental responsibility, and disappears into the ether. Twenty years later, the kids have grown up. Boys without fathers grow up violent and undisciplined (the story of almost every male criminal on the streets.

The girls grow up without family values. And repeat the poverty process.

Doesn’t matter which strata of society you look at – squatter townships or filthy-rich Sandton – The difference in the children “success outcomes” (however you want to define that) between strong families and dysfunctional families is Day and Night.

The stats do not support your comments. The total fertility rate in SA in 1955 was 6.0. In 2020 it was 2.4 (live births per female). The minimum rate required to maintain a stable population is 2.1. So SA is just over that and the lowest in sub Saharan Africa. You should check your “facts”.

And you should get out your cubicle and go physically check what is ACTUALLY happening on the streets and in the rural areas. No VISIBLE slowing down in places like the Eastern Cape.

There’s a reason why these areas are crawling with infants and very young children. And why the total poplation of SA is NOT slowing down. And yes, it’s even worse elsewhere in EfriKa. Estimates are that Africa’s population will DOUBLE soon.

No cause for concern???

You make a strong statement and support it with facts. Covid, like diabetes and many forms of cancer, is a lifestyle disease. The fatality risk of covid is ten times higher for individuals who have comorbidities and suffer from metabolic disease. This means we could cure covid by simply banning refined starches and by forcing people to run the comrades.

The reason why medical professionals don’t suggest these actions as the cure for covid is similar to why economists do not suggest a one-child policy to cure unemployment. Both will be effective, but to reap success you will have to infringe upon every human right in the constitution.

We should not forget that famine is the only overriding force that controls the size of the population in collectivist societies. Responsible and frugal behaviour patterns are inherent to capitalist societies, and not common in communalist societies. Communalist societies experience a population explosion when the capitalist system provides them with an abundance of resources. When such a society moves away from capitalism to embrace socialism, a large part of the population will die due to famine and disease as the population size finds equilibrium with the new political system. This is happening in Zimbabwe and Venezuela.

Therefore, the root of the problem is not the birthrate, but rather the right to vote. That is why neither China nor Singapore are democracies in the true sense of the world. China is a one-party state, while some aspects of the political process, civil liberties, and political and human rights are lacking in Singapore.

The problem with a one child policy (as China has started to realise) is that whilst it may be effective in the short term, in the long term it is a disaster as it skews the demographic to the older end and the country ends up with a high proportion of old farts (like myself) who are no longer productive but demand ever more expensive health care etc. Which has to be provided by a diminishing workforce. An interesting thought is that in the future poorly educated African youth may have a future outside Africa rather than in it as developed countries with their birth rates below replacement levels will need immigrants to maintain their economies.

Sensei

We have gone over this fallacious argument of yours many times before.

Your argument self-implodes when you examine the current demise of the USA, and apply your theories there.

Voting rights? Freely available to all in that wunnerfull land!

Not making … one … damn … of … a .. positive contribution!

Yet back in China, the average citizen is actually happier and more fulfilled than his counterpart in the States.

Go figure!

@Expat

This problem is not confined to China. Is even more apparent in Japan (and every other country that now curbs its excessive population).

Its a NECESSARY blip in the life of a nation fixing a very serious – and non-sustainable – problem.

The alternative of NOT doing anything about this problem is too ghastly to contemplate (to borrow BJ Vorster’s famous phrase).

Your solution of exporting the too-plentiful children from Africa to assist all the old farts as they get old in Europe is comical. Only tragically so!

Once all these old farts die off, who will be left holding the keys to the house???

The social grant scheme is nothing more than legalised vote buying on a grand scale. Ever time an election year comes around the ANC announces an increase to grants knowingly to win favour with the poor and employed masses. It is also a powerful electioneering tool – its easy to scare the masses into thinking that if they vote for any other party, it will be the end of their grants and access to free money.

People don’t vote for the ANC out of hope for the imrpovement of the country… They vote for the ANC because of the patronage systems it has created and the rent seeking it has in place.

Can we not simply acknowledge that a poorly managed company will perform poorly and eventually go into liquidation and a poorly managed country – SA – will also eventually go into liquidation?

In business if you have a viable product and market, you replace the management. But how on earth do we do this here in this political swamp?

And growing more will never happen with the ANC.

Clearly the fault of apartheid… Assets were meant to be held by a minority and exploit the masses of a country from a structural perspective. There will never be a solution. The apartheid government ensured that education for the masses was crippled for the long term which is sad.

This country needs BEE to prosper and for us to move forward. The only other way is a distribution of assets and capital through interracial marriages… however this will never happen

I promise you if you read all the comments on Moneyweb articles you will think none of these folks actually know that the majority of SA’s population (some 90% of it) was deliberately and structurally alienated from meaningful economic participation for over a century! Colonisation, subjugation,alienation and apartheid never make it into their long winded discussions of the current state of the economy. They will pull out all manner of graphs to have us believe anything other than the structural remnants of colonisation is responsible for the current state of affairs. The entitlement!

Forever a victim. Let’s see how that works out for you in the long run.

You, my friend, are not worthy of shining Thomas Sankara’s shoes.

@Skurwe Brak; an incorrect diagnosis of a problem’s cause leads to incorrect attempts to “solve” the problem. RCA 101. Mike would have us believe that the inequality in SA is between some new bourgeoisie of government and SOE top employees , his so called “new elite” and the masses in poverty. We all know who owns wealth in SA. And it’s no SOE heads! We also know who is poor. It’s no secret where and how both classes came to play those roles. You see it as playing the victim card I see it as a correct diagnosis of the real cause of SA’s inequality.

At least (I assume) we agree on the greatness of Isidore Sankara. A man that had a lot to do for his country and set a new example for African leaders. Our very own Lee Kuan Yew. Until he was assassinated by the French. Go figure!

Johnoxx I presented some facts in support of my comments. If you disagree with me that’s your prerogative but your argument would carry more weight if you also quoted some facts instead of relying on emotion.

Expat, the problem with just blindly accepting the given stats from the government is that sometimes they simply don’t gel with the lived reality.

Take the cost of living, as another example.

Any housewife (or anyone doing regular retail shopping for just the necessities) and paying attention to the ever-increasing prices at the till, will be able to vouch that the so-calling inflation rate posited by Economists staring at computer screens in office cubicles is way out of touch with reality.

Same story with the population growth amongst the poor.

It is NOT coming down in ANY meaningful way.

Take that SA Population Chart on Google (you did actually go look at it? The one showing the growth for the different population groups?)

If the stats you quoted have any credibility, then one would have expected to see a sharp transition in the trajectory of the black growth. And especially so over the long time-frame you refer to.

Instead, not even a tiny blip is visible!

So which to believe?

Your stats that promise the problem doesn’t exist anymore (and is fast disappearing)?

Or – actual fact – a Treasury fast running out of money to keep up with an impossibly rising tide of social grantees??

That chart seems to be a LOT more credible reference point to CORRECTLY describe the problem we have.

In my considered opinion, that chart, and any policy changes that visibly change the gradient is the Gold Standard for measuring the effectiveness of policy.

This Government’s stats on birth-rates? Not so much.

@Jonoxx as they say : practice what you preach.
Perhaps you can start a one child policy in your family?
Tell your children and grandchildren your family will from now on be a one child family, I am eager to read of your progress.

Jonnoxx, even though I get your point, it is never as straight forward as having one solution that will miraculously change everything. In China they not only had less children, they also became much more market orientated, improved education massively, aggressively started eradicating corruption, etc. In other words, it wasn’t only lower birthrates that did the trick. How did the turnaround happen, you might ask? Well, the country as a whole was forced into it… and only because they had their backs against the wall. They had to adopted a different socio-political way of thinking, which led to the implementation of numerous projects, including a cap on children. In SA we’re not there yet. The ANC and their voters are still stuck in an ideology that will lead to disaster (and there’s a good chance it will first have to become a disaster before any changes are made). The role of people like Mike is to try and spread the gospel. What to do first, or second, or third, is not as important as getting the message across. So, will lower birthrates help? Sure, but more importantly will be getting the ANC and their voters to accept a different socio-political outlook.

@PJJ

Tsk Tsk …!

If you are unable to make a positive contribution to a debate (like you know, actually putting forward YOUR solution to the problem, and articulating why yours is better than other proposals), better to keep the personal comments to your own company under your nearest rock!

Batman

China was not the only country with their back to the wall. There are many others that have had equally serious problems.

Yes, China has made many tweeks to their culture and system of government.

It is my argument that the SINGLE most powerful change they made was indeed to introduce the one-child policy.

This has had any number of favourable outcomes:

1. It has greatly reduced the impact an increasing population was having on the available natural resources.

There is a FINITE limit to how much deprivation an environment and its ecology can absorb from one of the most toxic and fast-reproducing species around! The Chinese wisely recognized they were up against these limits.

Economists here that argue for an unlimited and perennial growth of a population as the way to save the nation are dangerous fools.

2. The poor are not poor because they have no money. They are poor because they are MORE stupid than their local competitors in the same populace.

When everyone is EQUALLY clever, then inequality does not arise so widely. So in a countries like Finland, or just generally Scandinavia, the general intelligence of the population is quite homogenous – they’re ALL pretty clever. Consequently, the level of inequality is low.

By contrast, in countries which have wildly varying levels of general intelligence, there are indeed also huge increases in inequality. Simply because the clever people can – and do – outsmart the stupid people at almost every turn.

This outcome isn’t rocket science!

3. In my opinion, the most significant outcome of the Chinese One-Child policy was the NATIONAL focus on creating the best possible ‘Nuclear Family” as the CORE of the nation’s future prosperity. The benefits from which NATURALLY produces a markedly better QUALITY of child than the alternatives from dysfunctional unions.

Such children are better able to absorb an intense education, and to adapt to a changing environment and responsibilities.

“Education” CANNOT make stupid children clever.

Education only gains traction with kids bright enough to absorb – and BUILD – on the lessons learned.

The notion that this country can fix the problems of low educability in the populace by just throwing billions at “better teachers, better schools, and better facilities” is completely wrong-headed!

There is no surprise there is pretty much ZERO to show for all this effort after decades of expenditure.

If only this SAME effort and money had FIRST been spent on getting the FAMILY unit right. THEN afterwards, we would be sitting with hordes of bright children backed by their enthusiastic and capable parents, that CAN absorb a sophisticated and demanding education.

There is ZERO recognition of this reality in SA.

In SA, the politicians and Educationists have got the cart before the horse in this regard.

Its a SERIOUS mindset mistake.

And its NOT restricted to just the ANC. Have this same conversation with the DA (Zille, Steenhuisen, Winde) and you’ll find the SAME mindset is endemic there too!

4. “The role of Schussler is to spread the gospel”

Really Batman, What gospel is this guy preaching? Which religion??

There are far too many people marching around banging drums!

When you ask them “Why are you banging your drum and making such a racket?”

The response is “… because we have one helluva problem here!”

Well, people complaining about problems are a dime a dozen!

Ask any of these luminaries (like I did now of Mike), what THEIR solution to the problem would be, and the invariable reply is “I dunno …, I’m just here to give my very pretty, but empty drum, a moer of a klap so that everyone will stop dancing around and look at me. That’s my jol!”

Or so it seems. And with your excited approval too, Batman?

Me? I’m not at all enamored with this army of raucous symbol-clashers and Drum-Bangers. There are too many. And NONE of them have achieved ANY good at all so far.

The world – and SA – needs people whose only talent is to point out a problem – like a hole in the head.

What we desperately need instead, is people laser-focused on prioritizing a SOLUTION to the problems they yell about.

When the Economists (and their fellow-travelers, the aforesaid Politicians!) come to the table with solutions, I will be all ears.

I’m not holding my breath until then, though!

“You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

What one person receives without working for another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation.

You cannot multiply wealth by dividing it.”

― Adrian Rogers

Add “when more people vote for a living than work for a living…”

Has anyone ever researched the link between inequality, poverty and IQ levels?

There’s very good reasons why things are as they are.

Please forward this to all the Socialists you know. You know, the ones who believe that government can centrally plan, tax and spend a country into prosperity.

Mike you need a louder voice!!!

South Africa’s burden is the ANC rot and the massive cost of ANC corruption, mismanagement and growth destructive policies.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles: Advanced Search
Click a Company: