Economist explains why whites earn more | Fin24

White people earning six times more than blacks, screamed the headlines after the release of the 2011 census.

I do not doubt that whites earn more than blacks – although in a way it is too simplistic to state it as such.

The 2011 census provides several reasons why white households earn six times more than black households.

One can explore the reason in two parts. Firstly on an individual basis where whites earn on average about four times more than their fellow black South Africans. The second part has to do with household dynamics and why it is that White households – again on average – earn six times more as households than black household do.

via Economist explains why whites earn more | Fin24.

There is also more to this than the article allows for.

What would be really interesting would be to compare what and black earnings are at the toip and middle management level.

I know of at least one instance where a white person, who was earning a very good salary, left, and was replaced by a black person, who demanded, and got, a salary a third higher than his white predecessor, simply because he was black, not because he was better qualified.

The difference in pay could have funded three entry-level positions for young people, most, or all of whom would probably have been black.

Now this is just one example, and I’m not sure how widespread this is, but economists somewhere perhaps have figures to show what is actually happening.

But I have a suspicion that because of BEE, there is a greater demand for black people in middle and top management than there is for white people, and by the law of supply and demand that means that black people can command higher salaries at that level for the same job.

And that is why BEE is not Black Economic Empowerment, but Black Elite Enrichment, because if the black guy had been satisfied with the same salary as his white counterpart, three more young people could have been employed.

We don’t need a youth wage subsidy, we need less greed in top management.

The problem is not primarily one of race, although that may play a part. It is primarily one of class.

 

 

Youth Wage Subsidy

There has been a proposal for a youth wage subsidy in  some quarters. Those who are touting this idea say that it will help to solve the problem of youth unemployment.

The Congress of South African Trade Unions (Cosatu) opposes the idea, and has set out its reasons in a paper, which I think all who are interested in the topic should read.

I think that this kind of proposal needs to be considered very carefully. History can teach us something here. If the Speenhamland System had a better record, I might say that a youth wage subsidy was worth considering,  but it didn’t. Actually, if one applied the Speenhamland System in South Africa, it would be more akin to a farm labour subsidy. If the striking farm workers at De Doorns, and others in a similar position, were to have their wages subsidised, it would be a closer parallel, and some of the same constraints apply: if the wages of farm labourers are increased, the money must come from somewhere, and the most obvious place for it to come from is an increase in the price of agricultural produce, which would hit the unemployed poor hardest.

The question of a youth wage subsidy is slightly different, especiqally in urban areas.

One of the things that prevents young people being employed in entry positions in many firms and organisaqtions is that the salary bill is heavily weighted towards top management. In other words, if the bosses weren’t overpaid, there would be more money to employ young people at entry-level positions. So what is presented as a proposal for a “youth wage subsidy” could just as easily be seen as a “fat cat management income subsidy”. Mrs Buthelezi at Nkwalini would be  paying 15c in the Rand on her groceries  in part to subidise the six and seven figure salaries of top management in Gauteng.

This is exacerbated by the so-called Black Economic Empowerment (BEE) policy. Among other things, this requires firms to have a certain proportion of black people at top management level. This means that black managers can command (and get) higher remuneration than their white counterparts. So a black person who replaces a white person at top management will be paid more — a lot more — than their predecessor. And that money could have been used to employ several young people at entry level. So BEE could more accurately be termed Black Elite Enrichment.

That does not mean that the white management people were or are underpaid. Far from it. The income disparity between rich and poor in South Africa is one of the biggest in the world, and is still growing, regardless of race. And a youth wage subsidy would simply exacerbate that.

I’m no professional economist, so the views I have expressed are those of an ordinary citizen. Well, a deacon is also supposed to be an “economist” of sorts, and the first deacons practised ekonomia. So I have a proposal.

I would like to see a gathering of Christian economists and Christian theologians getting together to discuss this and other related problems, to try to formulate a possible Christian response. Two that I know personally, who are concered about these things, are Dr Azar Jammine and Prof Tinyiko Maluleke, and I am sure that there are several others. Is there anyone else who thinks such a meeting might be useful?

 

BEE = Black Elite Enrichment = rapacious material accumulation

Some say that the Mangaung Conference later this year will be a battle for the soul of the ANC. I wish it were true, but I think it may be too late for that. The ANC sold its soul long ago, and I suspect that if there is any battle at Mangaung, it will be a battle for the spoils.

In this article Oyama Mabandla puts it in a nutshell The ANC is a vehicle for rapacious material accumulation | City Press:

To say the ANC is at an existential crossroads would be trite. But the tenets and values that defined the gallant organisation of Oliver Tambo and Nelson Mandela are no more.

In their place is a brutal and corrupt ethos, driven by those seeking personal enrichment. The ANC’s new siren song is: it is time to eat.

And Mabandla goes on to say, “The cause of the ANC’s moral implosion, in my view, was its embrace of black economic empowerment (BEE). “Empowerism” is at the core of the organisation’s new identity. Being rich supplanted liberation as the theme and gospel of the new South Africa.”

The real meaning of BEE — Black Elite Enrichment

I disagree with Mabandla on one point, though. BEE was never about black economic empowerment. As this cartoon from Sowetan LIVE shows, it did not and was never intended to empower those living in the shack. It was all about enriching the elite, and the issue at stake at Mangaung is which elite will be enriched.

The problem is, if the ANC has sold out, what is the alternative?

The second biggest party in parliament is the Democratic Alliance, which was formed as an alliance of the Democratic Party and the right-wing rump of the New National Party, which was in turn the rump of the old National Party which had introduced the discredited apartheid policy. In the 1999 general election the Democratic Party made an unabashed bid for the support of the white right. After five years of democracy they appealed to voters who were gatvol (fed up) with democracy to vote for them, and to “fight back”. They succeeded in that aim, outstripped and absorbed the New National Party, and introduced the undemocratic system of crosstitution to cement their alliance, and then complained about it afterwards when it worked to their disadvantage.

For a while I had some hopes for the Independent Democrats, but then they sold out to the DA.

Perhaps the most desirable thing would be for Cosatu (the Congress of South African Trade Unions) to break from their tripartite alliance with the ANC, and form a Labour Party of sorts, that would be a left opposition to the Thatcherist ANC.

But one only has to look north over the Limpopo to see the dangers of that — the MDC in Zimbabwe has much the same class roots as Cosatu in South Africa, but Zanu-PF has managed to neutralise them by intimidation bordering on terrorism, rigging elections and the like.

And as elections draw near, the Cosatu leaders fall back into line, and go back to supporting the status quo.

But in recent months a left opposition has begun to emerge, and it opposes Cosatu as much as it opposes theb Thatherism of the ANC. Vavi warns socialists behind strike wave | City Press:

The organisation coordinating strikes across South Africa’s mining sector, the Democratic Socialist Movement (DSM), is preparing to form a political party.

The organisation, run by a five-member executive committee, is building what one of its leaders calls a “mass workers’ party”.

And if its work in the past few months has been part of its preparations to hit the campaign trail, the organisation seems to be gaining ground.

If that gets going, it will be too late for Cosatu, because the new movement will probably draw away much of Cosatu’s traditional support, which will drive them to cling even more tightly to the skirts of the ANC. But one could still support the DSM, couldn’t one?

Yes, but…

The DSM seems to be a bit of a mengelmoes of Trotskyist movements, and Trotskyists have a tendency to crawl into their cocoons and then emerge as full-fledged neocons.

Perhaps the real hope for the future lies in local politics. If all the people engaged in service delivery protests would pool their resources and work together to contest local elections as independents, they might be able to make a real difference. The ANC was undermined by people who saw that local party branch committees were the way to lucrative business deals if the ANC controlled the local municipality (Thabo Mbeki expressed concern about this at the Polokwane conference four years ago, and it was those very people who deposed him). But if local people would contest local elections as independents, they could take back the municipalities and fix the service delivery problems themselves. And they would be more accountable to the people who elected them.

But I doubt whether it will happen in my lifetime.

Whatever happened to Liberation Theology?

Up to 1994 many Christian groups in South Africa were in the forefront of the struggle against apartheid. Some took an interest in Liberation Theology and used some of the ideas of Liberation Theology as a spur to action in the struggle against apartheid.

But since 1994 these very same Christian bodies seem to have lost their way. There seems to be a lack of cohesive vision, and I’ve sometimes wondered whether we actually need a common enemy to give it to us. Is it easier to unite around a common enemy than a common Lord?

I was reminded of this when I read a blog post in which Mike’s Bursell muses about: Liberation theology — challenging

I’ve just been reading Gorringe, who cites Segundo talking about the bottom line commitment for liberation theology is the option for the poor. I think the thing I’m trying to come to terms with is that although I absolutely accept the enormous inequalities – unchristian inequalities – that riddle our society, and the impact that has on the poorest in society, I’m not sure that I’m ready to take on board what seems to be the central tenet of liberation theology: that our first and foremost task must always be the reconstituting of society in such a way as to alleviate – and remove – economic poverty.

And that in turn reminded me of what a friend of mine, Shirley Davies, used to say back in the 1960s — that when South Africa solved the problem of the black and the white, it would come face to face with the real problem: the problem of the haves and the have-nots.

And that has in fact happened, as can be seen, for example, in the Abahlali baseMjondolo movement, and the harassing of the homeless by the police and government officials. Of 1500 homeless people and refugees arrested recently at the Central Methodist Church in Johannesburg only 15 were eventually charged with being illegal immigrants. As in the bad old days of pass raids, most of those arrested were not allowed to fetch their documents to show that they were in the country legally.

I’ve written about liberation theology before, in Christianity – North and South, and Orthodoxy and liberation theology, so I will try not to repeat too much of what I have said before here.

In 1994 we had our first democratic and nonracial elections, and it was a vast improvement on what went before. We have free and democratic political institutions and a start was made on the dismantling of apartheid.

But though there was a lot of political rhetoric about the poor, and jobs, and things like that, very little was actually done. The Reconstruction and Development Programme (RDP) which was supposed to deal with some of these problems was abandoned within a year. Instead there was “Black Economic Empowerment” (BEE), which might more accurately be described as Black Elite Enrichment. It was a preferential option for the rich. My wife worked for a BEE company for a while, and met many people, both in the company and those it did business with, whose sole motivation appeared to be greed. They didn’t just want to be rich, they wanted to be inordinately and excessively rich. And in part that is because we live in a society that espouses and accepts those values. This is not unique to South Africa. But it is something to think about when we talk of “moral regeneration”.

Before 1994 a lot of money flowed in to South Africa to NGOs, both faith-based and secular, that were involved in trying to improve the lot of the poor. After 1994 such funding went to the government. That might have been a good thing, if the government had followed through on the RDP, but it didn’t. It abandoned the RDP.

Back in the 1970s some Christian groups in Zululand were anxious to do something about community development. They brought in a community development expert, Milton Rosner, who told them that they were dreaming — nothing smaller than a government could do community development. But since the government was more interested in destroying communities than developing them, then if the churches wanted to do something they needed to pool their resources. “We must work ecumenically and not denominationally” became the mantra (overlooking a better slogan, that might have sounded a warning, “Small is beautiful”).

So the Anglican Church’s Zululand Diocesan Health and Welfare Association (known as HelWel or Zisizeni for short) became the Zululand Churches Health and Welfare Association. But because everyone’s responsibility is no one’s responsibility it became administratively top-heavy, and consumed more and more resources to achieve less and less development.

Better to remember that “small is beautiful”, and we should work denominationally rather than ecumenically. Could an ecumenical bureaucracy provide shelter for 1500 homeless people as the Central Methodist Church in Johannesburg has done? I very much doubt it.

All this has little to do with the often convoluted expressions of liberation theology, which are often even more abstract and difficult to understand than other forms of theology. But one of the things that most exponents of liberation theology did manage to convey was that practice (or praxis, as they called it) was more important than the obscure theories.

So when the Christian groups in South Africa lost their way and became rudderless and directionless at the end of apartheid, perhaps one of the things they could have done (and could still do) would be to pick up the RDP, which the government dropped, and run with it. Have a look at the ANC’s document on Reconstruction and development — there’s a lot of good stuff in it — and see what can be applied.

But it would be important to learn from the mistakes of the past. We should work denominationally, not ecumenically. Ecumenical bodies, like councils of churches, should play a coordinating role, rather than being involved in micromanagement of projects. That should be done by their member churches. Bureaucratic centralisation should be avoided at all costs.

But perhaps even more important is what one of the earliest advocates of liberation theology, Dom Helder Camara of Brazil, advocated. We must conscientizar the masses. Later that was translated into English as “conscientise”, along with a lot of other obscure jargon.

But the conscientising and moral regeneration must begin at home. Before we can achieve anything we must convince our church members that greed is not a Christian value.