Katalytik business review magazine,opinion leadership

The Big Idea Business & Society Opinion leadership “LET’S EMBRACE THESE P-WORDS” Simplistic view of Sikonathi Mantshantsha In the Financial mail dated May 3- May 9, 2018, Financial mail deputy editor Sikonathi Mantshantsha penned an article titled “LET’S EMBRACE THESE PWORDS” (https://www.pressreader.com/south-africa/financialmail/20180503/281603831087261)

June 2018

by

Besides not showing respect for the old school’s lessons of avoiding capital offence and stick to lowercase in writing sentences.

The article begins by seriously assaulting socialism and communism for no apparent reason, and political leaders for being drunk in love with this philosophical ideas that are out of touch with realities of the 21st century which led to the lack of urgency to investigate alternative tools that would deliver the “better life for all” mantra we all longing for. According to Sikonathi the best guaranteed alternative we have in delivering society to the “better life for all” is embracing the “P words” in reference to Profit and Privatization.

Tsele Moloi

“Profit is the first tenet that the people must embrace with great enthusiasm. The second is Privatisation” writes Sikonathi The major problem of the article is its simplistic analysis of embracing P words as panacea to complex and deep seated problems faced by society.

Katalytik Business Review Magazine: June 2018

We will begin by deconstructing the first tenet of Profit Sikonathi argue for a simple, linear and conveyor belt analysis and relationship of Profits that lead to taxes which lead to distribution of those taxes to the poor and lead to better life for all. If this relationship was as simple as he puts it, indeed we will all be drowning in jobs and easily relegated poverty into museum.Instead of scapegoating socialism and communism let’s interrogate why Profits does not lead to this happily ever after and romantic scenario painted by Sikonathi.

The problem can be traced back to the 1970 New York Times article penned by Milton Friedman titled “THE SOCIAL RESPONSIBILITY OF BUSINESS IS TO INCREASE ITS PROFITS” yes in Capital letters. In the article Friedman argues, same as Sikonathi to exclusively embrace maximization of profits and anyone not complying with that call should be treated as a corporate delinquent who is opening floodgates for socialism.

The problem of this assertions is it ignores and downplays the pain and suffering within society that comes with excessively embracing profits.

We have all observed what obsession with profits or enthusiastically embracing profit as Sikonathi puts it does to society.

Recently 13 miners were trapped 3 kilometres underground with 7 of them not making it alive at Sibanye-Stillwater mine. We are told that “The seven mineworkers who perished at a Sibanye-Stillwater mine could have been deceived by a manager, who has been slammed for putting company profits first”( IOL, 7 May) some are saying miners were sent to their deaths in pursuit of profits. The other case is Silicosis/TB class action, the less we speak about Marikana massacre the better, the protracted bus strike are but some of the problems brought by enthusiastically embracing profits.

Another problem of profit is the creation chasm between those at the top and the ordinary workers on the shop floor. All the gains of profits are going at the top without trickling down to the shop floor. Evidence is the CEO earning R 69000 a day while there is an impasse on just R3500 minimum wage. Some of the CEO’s taking more than R100 million home while ordinary worker takes less than R2000 home in the name of profits. Professor Imraan Valodia reminds us that because of our excessive enthusiasm of profit, It would take the average worker about 290 years to earn R100 million earned by a CEO in one year, He further reminds us that the top 10% of the population earn about 60% of all income and own 95% of all assets thanks to enthusiastically embracing profits. Excessive enthusiasm of profits indeed lead to winners and losers and there is no price for guessing who the losers are.

On the question of Privatization History has shown that many private companies deemed too big to fail end up in hands of government through bail outs until they are again managed to stand up on their own feet. Take a case of 2008 financial meltdown where many of the American companies such as AIG, JP Morgan chase, Merryl Lynch and many more ended up being bailed out by government.

Immediately after being bailed out they wanted to use that money for bonuses and share buybacks.

Here in South Africa we have African bank as a case in point where government had to intervene through its resources and literally begging consortium of private banks to assist. Then the question becomes if government end up taking over during tough times why do we privatize in the first place? Why Sikonathi is enthusiastically pushing for privatization in the first place especially when we know that private sector has got tendencies of swallowing itself if left unattended, case in point is Steinhoff and African Bank to name but few.

Another question is, don’t we have pocket of excellence within public companies? Telkom is but one that comes to mind, ACSA until recently was another. So instead of throwing the child with the bathtub as Sikonathi suggests, how about we learn from such public companies and start asking tough questions. How do we root out corruption and incompetency in our public companies? How do we find competent, qualified and skilled people? and how do we create new jobs through these public companies?, How do we learn from Apartheid government that brought young South African electrical engineer by the name of Dr HJ van der Bijl while working in the United States to advise the government in the planning of South Africa's industrial development in the end brought to life public companies such as Eskom and Iscor. These should be how we think.

Privatization cannot be forwarded as the first answer that comes to mind, we need to exhaust every avenue, if and only if there are no solution that’s when we start thinking of that as a last resort.

While I argue against Sikonathi’s thesis it should not be interpreted that I do not believe in capitalism but in socialism or communism. I am not in any way advocating for abolishment of capitalism. Donald C Douglas once said “It is just illogical to suggest abolishing capitalism because it has not abolished poverty as it would be to suggest abolishing churches because they have not abolished sins” I truly and genuinely believe in capitalism and the Profit word. However my belief is a different kind of capitalism and not the free-market one that is somehow divorced from the real needs and values of society. I believe in Responsible and human centered Capitalism. I believe that capitalism should be responsible and should use societal values and human values as a decision-making criteria. It should not be about profit at all cost. I believe capitalism done responsibly could be a great locomotive in pulling people out of poverty and lead to wide spread prosperous and harmonious society. The question is how we reform it to include the needs and aspiration of everyone of society instead of the few. This is not what Sikonathi is advocating.

Katalytik Business Review Magazine: June 2018