- Jerry Schuitema
The goose and the turkey
A big bird view of an economy and government budgets.
Each time the fiscus engages in a major exercise like a medium term budget, or the annual budget itself, I am prompted to mix some metaphors involving turkeys and geese. They present a perfect picture of how the government, perhaps all of us, view the economy.
Years ago, if you were called a turkey, it could mean anything from being as dumb as they come, to being rather silly. But that’s probably a generational thing, one that would raise the ire of a large number of people whose ancestors created the Ottoman Empire. Today, the overwhelming image of the turkey is one of a rather noisy, ungainly, ugly creature whose sole purpose to humanity is to be fattened for slaughter and fill the plates of a festive table. “Goose” will be remembered by the boykies from Brakpan as a possessive term for female partners. Geese also may have similarly assigned attributes to turkeys, but are not as popular for the pot, have sought after plumage, and of course, are known, according to Aesop’s fables, to occasionally lay golden eggs.
Those rather clumsily concocted images – one of a creature fattened for slaughter, and the other for protection, preservation and nurturing the longevity of golden egg laying, are a fitting analogy for an approach to an economy. By their very nature, governments tend to view all activities in the economy as turkeys, sometimes slaughtering an entire rafter for a massive binge for a few years, at other times struggling to keep them protected from predators from both inside and outside their enclosure. South African Finance Minister, Pravin Gordhan somehow reminds me of a solitary pen protector. But I’m still not sure whether he sees them as turkeys or geese. At the very least, when his income tax coffers are mostly filled by only 10% of the population, from which the rest must feed, he must be painfully aware that he is starting to cull his breeding stock.
But who can blame governments? Is it not a general view we all have of economies and transaction itself -- that they are there for plundering and for maximum self-gain in the shortest time possible? That all people and things – from a close relative to a wild flower in Namaqualand, are there for exploitation and extraction? In behaving that way, we should not be surprised if we feel that way: extracted and exploited – from the double digit increases in medical aid tariffs, toilet roll prices and shoddy service.
To temper that, and to try and ensure some balance in the forces that we ourselves unleash through this twisted understanding of what makes us human, we create governments without having much assurance, apart from a very imperfect franchise system and some watchdog institutions, that they will not become even more predatory than private initiative and free transaction.
That leads to the choice that has occupied great minds for centuries, as well as conflict ridden streets, legislative benches, political party think-tanks and even war trenches. It is a question I sometimes ask my fundamentalist socialists: “who do you trust more to do the right thing? Governments or business?”
I don’t really need a response. Globally, private enterprise by and large is trusted more than government. In this country the gap is 16% trust in government and 60% trust in business. (See article here). It brings to mind a bit of banter I had with a former Finance Minister, in which I argued that in a utopian economy, he would not have a job.
Of course, that is purist mischief. The real world is overwhelmed by so many blemishes, pressures, fault lines, misbehaviours and imbalances, that it renders useless sound, intuitive and experiential knowledge. One of the unfortunate side-effects of this seemingly endless power juggling between state and business, is that gestures like the business leadership support for Gordhan ahead of the mini-budget, is that it is muted, if not ironic for the largest part of voting population – where business by and large is still seen as the “enemy” in the populist rhetoric of the day.
Which brings me to part 2 of my untold story – a story that in itself should go a long way to restoring business credibility and certainly relieve the facile call by so many to take, take, take from the capitalist cow. The first part reminded readers of the benevolent underpinning of private enterprise in providing society with the goods and services that they need, and under long established, ancient rules of legitimate transaction. Therein they add tangible and measurable value which translates into wealth creation. The fact that this process has mostly misguidedly, perhaps even falsely, been defended under a “profit” or self-gain motive, has done irreparable harm to that noble status. It supports a simple resentful refrain that if you are about taking, then I have a right to take from you! And I’ll do it through my big Boet come budget time.
But the indisputable fact demonstrated by centuries of experimentation, is that private enterprise is far better and more efficient in creating wealth than governments are. What is more hotly disputed is whether they are equally efficient at wealth distribution. Perhaps not as equitably as many would like, but still pretty well within the fundamental logic that the primary aim of sensible distribution is to support wealth creation itself. In that it has to meet the legitimate expectations of ALL of the stakeholders, especially the direct contributors of labour, capital and state; and ensure their continued contribution.
This becomes crystal clear when company figures are presented as a Contribution Account, and in my consulting days, in presenting these figures in company workshops, I was always amazed at the attitudinal shift it could effect. These workshops have now been converted into off-the-shelf transferable products that can be viewed here. In the dire need for stakeholder cohesion, and a broader understanding of this precious construct we have, it is unforgivable to maintain such a narrow view of business that attracts an unbearable burden, whether in enmity, perceptions, tax or regulations. The tragedy is that business mostly has itself to blame.
The essence of part two of the untold story is that in the contribution account itself, demonstrated by years of working with it, and at many sites, labour and state (or government) together derive far greater benefit than capital or shareholders. Unpacking the detail each of these categories portrays a splendid narrative of enablement and empowerment. Perhaps the fiscus should add this format, extrapolated into national accounts, into their research.
Along with many South Africans, I fear that the geese may have wedged their way to more promising pastures. They can fly you see. Turkeys not so well.
Will those that remain also take flight, with global credit ratings leading the wedge?
#PravinGordhan #Accountingforcontribution #nationalbudget #midtermbudget #wealthdistribution #wealthcreation