Pity business owners, especially agricultural. On top of all their woes, they are being asked to contribute to the national effort to reduce unemployment.
The free market, driven by competition, is by and large the only way goods and services can be efficiently made and distributed.
You are an entrepreneur who likes competition. You get your costings right and your market mapped out, and you start producing.
You face an array of largely unpredictable factors. Your product is matched by another country’s that can be produced more cheaply. Sometimes competition is “fair” in that their workers will accept lower wages than yours; sometimes “unfair” because their government provides subsidies.
World Trade Organisation rules mean your government may not keep rival products out, even if you are unfairly disadvantaged. Your government tells you to become more competitive: cut costs and staff, tool up, outsource. (But, whatever you do, keep shareholders happy.)
Then the value of the rand changes sharply. If it rises and you are an exporter, you must cut costs. (But don’t forget the shareholders.) The same applies if you are an importer and the rand falls. For reasons outside your control, you are suddenly in a worse position. There is a strike in your sector because jobs are under threat, or a disaster or disease somewhere affects your product. Or a new competitor suddenly depletes — or enlarges — demand for your product.
Now imagine you are in agriculture, with the weather to contend with. Supply of your product is “inelastic”: it cannot be changed because the price has dropped or rain has failed. Those unpredictable factors produce a roller-coaster in prices and profits. Without extra investment, you may make a fortune one year, then sell at a loss the next.
The irritating injunction “become more competitive” assumes all factors of production can be adjusted at short notice, that owners can switch out- put as global markets change. This is unrealistic, particularly in agriculture.
Now add the suggestion that business should create jobs. How do you factor into your careful cost, output and market calculations the addition of people to your payroll? How does that fit a difficult balancing act in unpredictable markets?
One way is for the government to create an environment in which employing more people benefits business — by scrapping taxes on employment, for example. It can put an end to massive tax breaks for companies using job-shedding technology. Currently, we penalise employment.
We can forget about other countries removing agricultural subsidies and supporting our food industry. Everyone knows agriculture cannot survive without subsidies. We must protect our agriculture and its jobs, either by direct subsidy or tariffs.
Current practice, however, suits large multinational businesses, especially in the financial sector, which produce nothing and deal in other people’s money and debt. They are the shareholders whose interests always come first. An unregulated global market suits them.