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Home / NEEEF: The implications of legislating the poor into prosperity
NEEEF: The implications of legislating the poor into prosperity
2018-03-07Staff Report 2 With a possible exception of Zimbabwe, Africa has known fewer occasions where white Africans really got involved in how black governments run the affairs of the countries they live in. The only time they get involved is when a particular government is pursuing a policy that threatens their livelihood, especially if it is about wealth re-distribution or land expropriation. We are witnessing polarising and contentious moments in both Namibia and our immediate neighbour, South Africa. While Namibia is pursuing a policy that seeks to re-distribute wealth, which is undeniably and hugely concentrated into the hands of a few white citizens, South Africa is exploring the route of expropriating land without compensation. The Namibian government, with good intentions, is hell-bent on making the New Equitable Economic Empowerment Framework (NEEEF) see the light of day, to the chagrin of white citizens. What is irksome to them, as has been widely reported, is that NEEEF envisages to make it mandatory for white-owned businesses to sell at least 25% of their shares to black Namibians. While ignoring the tragic past that has haunted, for decades, Namibia’s economic turn-around in relation to wealth re-distribution while perpetuating white economic supremacy, a large part of the white community has labelled - and understandably so - this policy as vindictive and a punishment to success. What cannot be denied in modern economies is that there is no way one can make a certain quarter of the population better-off without making another quarter worse-off. The field of economics refers that arrangement to as “Pareto Efficiency”. The apartheid regime pursued policies that resulted in that very kind of “efficiency”, the results of which are still visible in our skewed economy today. Perhaps I should confront the possible consequences which the government needs to be prepared for by implementing NEEEF. I will bring those consequences to the fore by narrating my encounter with a Zimbabwean economics professor that I met five years ago on board a plane from Windhoek to Jo’burg. He made a statement that he had never failed a single student before, but had recently failed an entire class. This, he said, happened because his class had insisted that socialism works better than capitalism, and that no one would be poor and no one would be rich in a socialist state. Socialism is the greatest equaliser, they argued. This resonates with Namibia’s wealth re-distribution attempt. The Professor, apparently, said: “Okay, we will have an experiment in this class on socialism. All grades in your tests will be averaged, and everyone will receive the same grade so that no one will fail and no one will receive an A”. To prove their point, the whole class, apparently, agreed. After the first test, he narrated, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy (free-riding). In the second test, the students who studied little had studied even less, and the ones who studied hard decided they wanted a free ride too so, they too studied little. The second test’s average was a D and no one was happy. When the 3rd test came, the average was an F. As the tests proceeded, the scores never improved as the bickering, blame games and name-calling resulted in hard feelings and no one would study for the benefit of anyone else. To their greatest surprise, all failed and the Professor told them that socialism would also, ultimately, fail because when the reward is great, the effort to succeed is great, but when government takes all the rewards away, no one will try or want to succeed. It is a pity that this class had to learn socialism the hard way. Hypothetical or real, I found the story not only interesting, but also sensible. A few Economic lessons can be deduced from this story in the context of NEEEF: (1) It is impossible to legislate the poor into prosperity without, to some degree, legislating the wealthy out of prosperity; (2) What one person receives without working for, another person must work for without receiving; (3) The government cannot give to anybody anything that it does not first take from somebody else; (4) One cannot multiply wealth by dividing it (capitalist perspective); (5) When half the people get the idea that they do not have to work because the other half will 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 hard for, that is where hard work ends. It is just human nature. Thus, NEEEF, in its finality, must speak to these realities. 2018-03-07Staff Report 2
