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No such thing as a free wooden lizard in... Individual pursuit of profit is the true... |
Individual pursuit of profit is the true creator of jobsTHERE have been calls from influential ANC quarters for business to concern itself more with creating jobs than pursuing profits. This reflects a less than perfect grasp of how the world works and is a throwback to the failed beliefs of collectivism. In a market economy, managers are paid not to create jobs but to maximise the return on the assets under their stewardship. Similarly, the entrepreneur, be he a Henry Ford, an Ernest Oppenheimer or a corner grocer, does not go into business to create jobs. These people take risks and work hard to better their situations and those of their families. As a result they create millions of jobs, medical aid schemes, pension funds, share-option plans and so on. Job creation is the result of the pursuit of profit. Without profit, or the expectation of it, jobs cannot be created on the scale that has been experienced during mankind's most explosive growth phase, the past two centuries. The greatest of communism's many fallacies was that the capitalist would demand more and more work from fewer and fewer labourers for lower and lower wages until the masses revolted, seized the means of production and created a proletarian heaven on earth. What this thesis ignores is that it is not possible for profits to be made unless there is a growing market of the gainfully employed to consume the output of the economy. Of course, in a command economy one can conjure up the illusion of gainful employment. A Russian worker was once quoted thus: "We pretend to work and they pretend to pay us." In a command economy the following sort of command can be issued: "Comrade Manager, you will this year create 100 000 jobs. Is this understood?" '"Absolutely Comrade Commissar. It shall be done." This sounds absurd, but it is exactly how it used to happen and we know the economic disaster it wrought. Now it is the legitimate role of the government to see that the system functions within a framework of law, order and ethics. And, as any system of economics is amoral in the sense that it merely provides a method of getting things done, the moral content has to be provided by humanity. This will include a measure of redistribution and the raising of taxes for the conduct of foreign policy, the policing of the streets, the care of the truly indigent, abandoned children and other worthy causes. Of course, the more prosperous the society, the better it can perform these good works. And the most prosperous societies tend to be those in which wealth, and jobs, are created by a market economy. It is also the legitimate role of the state to fashion an environment which encourages the growth of job-creating wealth. Perfection is not available to us here on earth, but there is ample evidence that governments, such as those of the US and the UK, which provide conditions of low taxation, flexible labour markets and fiscal discipline enjoy low rates of unemployment and solid rates of growth. I fear that in South Africa our plethora of labour laws, our emphasis on the siren concepts of affirmative action and employment equity, our punitive levels of taxation and the intrusive nature of our government will together fatally reduce our potential to generate jobs, educate the young, care for the poor and thus avoid the disasters which have needlessly afflicted so many African states. Sustainable, meaningful jobs are created not by government but by the natural drive of individuals to better themselves. Wise governments encourage this instinct rather than smothering it in regulation, red tape and harassment to meet the social engineers' vision. For business, the vision is a nightmare of platoons of bureaucrats checking up on everyone, and of companies burdened with reporting to the state who they employ to do what, when and how. It has all happened before. It is a recipe for disaster.
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