- Jerry Schuitema
Our broken moral compass
And the impact on economic prospects and low levels of trust.
I’m not easily given to making economic forecasts. I invariably get it wrong although perhaps not much more than many economists do, with their battery of analysts backed by volumes of statistics and years of data. Few can do better, however, than the three scenarios outlined by the treasury in the medium term budget. In the end one has to rely as much on experience and intuition as on following closely current events and statistics. Even then, the lens will be distorted by personal bias: in my case a penchant for trying to put a positive spin on things.
This time is different. I have seldom if ever felt this negative and unsure about our economic future. It is based on much more than the stock market pessimism we have been experiencing. The past few weeks have been filled with headline grabbing economic events. Against the dark clouds defined in the MTBPS of lower economic growth; deepening deficits; the unemployment crisis; corruption and dysfunctional SOE’S, we have had colourful Rhamaphoric balloons floating from investment conferences, job summits and other events promising billions of investment in the next five years; a shift in government spending priorities to more productive projects; repairing the SOE’s and getting an even tighter grip on corruption.
All of that can turn into mere vapour by events happening under our nose; only briefly covered in the first treasury scenario, and which received scant attention in the media as we were primarily focused on our own affairs. And that is the financial storm clouds brewing abroad. For many it has been seen simply as a straight line between increasing US interest rates strengthening the dollar, shaking Wall Street, and a rush out of riskier emerging markets like South Africa.
But it could be much more than that (see article here). The bursting of a $40 trillion corporate bond market bubble in the United States and the reversal of the decades long low interest cycle go to the very heart of the excessive financialisation of developed economies, strongly impacting on currency integrity, burgeoning debt, asset inflation, wealth inequality and economic growth. As one fringe commentator put it: “We could see the unravelling of the world’s greatest Ponzi scheme”. Outspoken veteran stock-broker, Peter Schiff, widely accredited with predicting the 2008 collapse, is even gloomier. (See article here).
It’s enough to make one’s head spin, but does not quite explain my own sense of doom and perhaps that of many others. I’m reminded of those finger-spinning gadgets that were the rave a few years ago, where the three arms of the spinner are anchored by a finger grip. The three arms could be likened to the three pillars of democracy, or the social contract defined centuries ago of liberty, equality and fraternity. What is the real anchor that prevents the whole lot from spinning out of control?
I would argue that it is trust at an individual and personal level. This is different from confidence which, although strongly and mutually influenced by personal trust, can be held in society as a whole and its institutions. My own mood has at least in part been affected by being defrauded by a trusted partner at a personally vulnerable time. One knows of thousands of others being regularly scammed through modern technology. And then there are the high profile cases of corruption and malfeasance, showing on the one hand that the scoundrels are at last being exposed and brought to book, but on the other hand the extent of the outrageous behaviour in our society.
One’s thoughts turn to those thousands of souls deprived of income and means by the collapse of the VBS mutual bank. And the countless numbers who have been victims of crime, of gender violence, or know of someone close to them that were.
It’s not too much of an exaggeration to say that millions of people daily are prey to predators, leaving them distrusting and unconvinced by the colourful balloons being floated to boost confidence. It’s no longer simply “dog eats dog” but rather lions amongst lambs. One also has to add the biggest trust destroyer of all: the loss of hope by those millions trudging the streets daily to find meaningful work. The level of distrust at a personal level must be profoundly deep and wide, and can never be fully captured in Business and Consumer confidence indices; nor even in regular trust barometers. It is too varied and volatile, triggering widely differing responses.
While trust between individuals is ultimately what holds our society together, it in turn has to be reinforced by morality. As clichéd as this may sound we have to place sound moral values at the heart of everything we do. We accept too lightly that politics is a “dirty game” and “one is innocent until proven guilty” in a court of law. What rot! The risk of occupying a high profile position is exactly the opposite: one steps down until one’s innocence can be demonstrated beyond a shadow of a doubt. The position and the trust it requires take precedence over personal rights.
Sound values are also as much an economic health issue as a social one … perhaps even more so. Business, especially those wearing corporate crowns, can do far more for the health of the economy by getting down to customer level, understanding their needs and wants and ensuring the best product and service here and abroad; than flaunting their power by waving investment wallets around at pretentious summits
So we can float all the colourful balloons we want, but too many will remain unconvinced. Because frankly, our moral compass is broken.