The economy is not a building

I've seen this one come up a few times, in various forms. The contention is that the "economy" is somehow exclusive - that it belongs to a select few in South Africa. As if it's some sort of club, or a specific building somewhere.

People arguing against "white monopoly capital", the "legacy of apartheid", and just white people in general, will tend to bring up the notion that the "economy" is somehow "exclusionary". That it was "built for the whites" and that's why they can't "get in".

Which is nonsense.

The "economy" is not some special club, or a physical address in Sandton. It literally just describes the exchange of goods and services in a given country:

An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location.

Source: Wikipedia

Anyone and everyone can "get in" to the economy - so long as you can create something of value (be it a product or a service), and then trade that for something else of value, you're in the economy.

A highly-credentialed lawyer who earns R5m+/year for arguing corporate cases in court is in the economy.

A skilled electrician that earns R600k/year for wiring up new houses and repairing broken distribution boards is in the economy.

A street trader selling basic groceries, earning R50k/year is in the economy.

In South Africa, there are basically no barriers to getting "into the economy". There are no laws that prohibit sole proprietors from carrying on a business, which is why we have such a large informal economy.

Granted, there are barriers when looking to scale your business up. Registering and maintaining a legal entity in terms of SARS and CIPC is a lot of confusing paperwork. Access to investment, capital and loans can be difficult if you're not already running a proven business - South African investors tend to be risk-averse.

There are labor barriers, too - with union-friendly labor laws and the pending introduction of a national minimum wage, ramping up your business can be tough.

But neither of those are barriers to entry if you're just getting started. If you want to be in the economy, it's a simple process:

  1. Identify something people would pay for
  2. Make that thing and sell it to them

You don't need a university degree, mentorship, a business loan or investment finance to start a business. You don't even need a bank account! The idea that any of those things are necessary is fallacious, if not dangerous - for as long as people believe they are powerless, they will cede power to those that claim they can "restore" it.

Which brings me back to the DA's tweet:

I do agree that there is lots that can be done in terms of educating, training and equipping young South Africans to enable them to compete in the formal economy. Those things are going to be very, very necessary if South Africa intends on competing in the future global economy.

There's also much that can be done at the national and provincial levels. Regulations around labor law, unions, and the minimum wage need to be challenged. South Africa is in a bad enough position with our economic growth already, and there's precedent (specially in the United States) that abolishing unions and loosening labor laws leads to economic growth.

Public safety is a big concern too - the xenophobic violence in South Africa has always correlated with looting. Places of business (and the customers that patronize them) need to be kept physically safe.

Those are all valid concerns that need to be addressed, but I strongly disagree with the notion that the only economy is the formal economy. The only difference between an informal economy and a formal economy is the scale.

Every bit formal trade we now have, was at some point informal - it just stayed around long enough, and generated enough revenue, that it became necessary to create rules and regulations for it.

If we are to build a better South Africa, economic growth is the engine for that. Government can only do so much, in terms of regulations and public safety - it's up to individual South Africans to take up the challenge of building something for themselves.

Wogan May

A South African citizen looking for Truth and Reconciliation among all the noise. Believes in Libertarian principles, and Capitalism as the engine for prosperity.

South Africa

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