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Thread: If you were to redo BEE, how would you do it?

  1. #1
    just me duncan drennan's Avatar
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    If you were to redo BEE, how would you do it?

    I'm sure we've all heard many arguments for and against BEE, some of the things that we hear more regularly (at least us whities) go along these lines,

    Government strategy has created a tiny black elite! Black Economic Empowerment (BEE) favours rampant crony capitalism! BEE is just corporate trickle down to the black middle class! Black empowerment is no more broad-based than Jacob Zuma’s bank balance!
    Those are the opening lines of the M&G article, "The uneasy logic of black empowerment," by Roger Southall.

    There are two things that I think are worth highlighting, firstly,

    But the logic of BEE also has a considerable downside. ANC theory envisaged a growing black capitalist stratum as “patriotic capitalists”, marching unselfishly to the party drum and spreading their wealth around their historically impoverished communities. Yet upwardly mobile capitalist classes don’t act like that, particularly within a consumerist culture which emphasises ostentatious display and the virtues of getting rich quickly.
    Essentially the theory is that we are all patriots and will use out money/power/time/etc. to empower out communities. Put black people in positions of power and the natural flow will result in broad-based empowerment.

    Secondly,

    BEE remains a necessary political project. Leaving white capital to transform itself is like asking the devil to convert to Catholicism. But the challenges are immense: can a well-intentioned but under-capacitated state shape a socially responsible capitalism, or is BEE creating an avaricious class of black capitalists tied to the coattails of international capital?
    I have to agree on that comment about white capital transforming itself - without external pressure would it have ever happened?

    So here are some of my own random thoughts and questions....

    If black people are at the top, are they more likely to appoint black people underneath them? In a way that is what is implied, but in reality, does a black entrepreneur appoint another black person, or just the best person?

    What incentive is there for the business owner to be "patriotic"? There are tax benefits for certain training actions, and donations to certain PBOs. In reality, how many people make use of those?

    If you had the opportunity to reform the BEE setup in South Africa, how would you do it?

    Assume that we want to move towards a country were each person has equal opportunity, and that not everyone has had equal opportunity (as is the reality of where we currently are). Why would people be motivated to follow your scheme more than the current one?
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    Site Caretaker Dave A's Avatar
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    Aaah. A challenge indeed.

    I'm going to shoot for a short post for now, and try for something in more detail later.

    To me the key lies in education and training. We have to equip people better, to develop the capacity to create wealth.

    From there, I think we have to divide BEE strategies into two sections:
    • An approach to establish representivity in big business, and
    • An approach to establish representivity in small enterprises

    My main reason for differentiating between the two is particularly the level of capital (hard cash) involved more than anything else.

    Developing a workable strategy from there has two major factors:
    • How long a timeframe are you going to allow to allow what level of transformation?
    • How much redistribution can be deemed acceptable, or will this be achieved purely through growth?


    How's that for a starting point.
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    I was reading this article on IOL: Should we pull the plug on AA?. A couple of thoughts occured, but this comment on the article really struck me:
    Motau: EE should stay and even drastically implemented. South African whites are spoilt and they think that they can do whatever they want.
    And my thought on this was:
    The problem is not that whites think they can do whatever they want to. The real problem is that my fellow citizen Motau doesn't feel the same way!
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    I was thinking of this question whilst I was mowing the lawn. It actually is a trick question because it assumes BEE is the solution and that the only question is how to impliment it. I'm not convinced.

    We need put some effort into identifying the problem that needs to be fixed first.

    As an aside, I was also wondering when last our poor=black Minister of Labour last mowed the lawn.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    We need put some effort into identifying the problem that needs to be fixed first.
    Well, let's look at the problem...

    Firstly, there is an uneven distribution of wealth. Now this is not unusual for a capitalist society, and is even to be expected, but the problem is that the current(?) distribution is a result of the oppression of a majority group, by a minority group. As a result of that oppression many (most) people have not had equal opportunity. It is that equal opportunity that forms a foundation for a democratic capitalist society.

    So the question (challenge) is, how do we move towards a society where the same opportunities are available to each group of people, with no regard to colour or creed?

    One of this biggest challenges in trying to achieve this is that when we started (in 1994) the tables were disproportionally tipped in the favour of the previous ruling minority - i.e. the whites. Access to good education, housing, and jobs presented us (the whites) with opportunities far beyond those of the majority of our country. Those opportunities were ours largely as a result of years of oppression of the majority of the population.

    To draw an analogy with athletics, the whites got to jump the gun. Eventually, in the long run, the field will even out, but that will take many years. The government is therefore faced with the challenge of evening the field out faster, so that firstly they can remain in power, and secondly we are not faced with a rebellion or revolution (or a land/property grab).

    Essentially the government had to stack the odds in the favour of the previously oppressed group to compress the time frame within which the redistribution of opportunity occurs.

    So that is how I would frame the problem. We need to present equal opportunity to all race groups within a defined (i.e. short) time frame.

    Thoughts?
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    Site Caretaker Dave A's Avatar
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    My first thought is that promoting a person beyond their ability certainly isn't going to help.

    So the first step is to equip people. Fix the education program. Spreading the resources too thin will dilute the effect.

    My second thought is that the ability to generate wealth (add value) is going to finance all this. So protect the wealth generation engine. Certainly do not hamstring it.

    My final thought for the evening is like it or not, it's going to take at least a generation, possibly even two, for the results to really show.
    The trouble with opportunity is it normally comes dressed up as work.

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    my views

    This is truly a touchy subject.

    I agree largely with what both dave and Duncan are saying, in that the one of the routes required is education and training of the previously disadvantaged communities.

    I however do have a problem with the length of time being taken to correct these items, i.e. should BEE and EE not be coming to an end now.

    Schools have been multi-racial since about 1993 / 1994, this is 13 years ago, agreed that in terms of a new democracy this is still very young, however it has been a lot of time for people to up skill themselves.

    When I started working back in 1994 (only had a matric), it was in a clerical position of posting clients statements for a financial institution (you don't get much lower in the corporate ladder.)
    Over the years through hard work and self development I was able to grow to various management positions, even with the challenges that I face as a white male, my argument is what is stopping any other individual from achieveing what I have achieved.

    My view is that through the enforcement of BEE and EE we are stopping people from developing themselves as it is easier to rely on the current process for advancement.

    With the nexct generation finishing school now and heading off to university and work etc, I can only see bright things ahead for SA as a lot of the new generation do not see colour but rather see the person (amazing what my children have taught me).

    Thats enough from me for one day

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    Site Caretaker Dave A's Avatar
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    I'm seeing quite a few headlines going BEE under fire.

    This article from M&G wraps up quite a few recent statements.
    An admission by Finance Minister Trevor Manuel that black economic empowerment (BEE) needs an overhaul has added fuel to the fire of critics who say the flagship policy has only benefited an elite.

    Fakir said too much emphasis has been placed on wealth creation at the expense of expanding the boardroom base. "The overall aim of the BEE has been to deracialise business ownership and control instead of aiming to make it easier for black people to gain access to capital for business development. It should not be about contracting wealth but creating opportunities through proper regulations."

    Among the most trenchant of critics has been anti-apartheid campaigner and Nobel Peace Prize winner Desmond Tutu, who has said BEE "seemed to be benefiting a small recycled elite".

    Even President Thabo Mbeki, seen as the godfather of BEE, admitted in his State of the Nation address this year the number of black managers in companies listed on the JSE was "woefully low".

    According to Dirk Hermann, of the Solidarity trade union, Manuel's criticism was long overdue. "We only see the enrichment of an elite few, and those who have connections with the ANC," Hermann said. "There is not enough done to train the previously disadvantaged to be independent and start their own business. Instead, unemployment is still high and people still don't have access to capital. It is a serious problem."

    The main opposition Democratic Alliance (DA), which has been heavily critical of BEE, said it would support a review of the policy.
    I have some concern about revisiting the rules around BEE yet again. The main one being the uncertainty that goes with all the chopping and changing. But I also think the main problem is impatience. Take note of this comment:
    However, some experts say it is important to look beyond the headline figures before concluding that BEE had been a flop. Lerato Ratsoma, marketing manager of the BEE ratings agency Empowerdex, said areas such as skills development and employment opportunies are also key.

    "There is no need to review the whole of BEE. The problem is that people's focus is often on the ownership and management," Ratsoma told the Star newspaper.
    Now you'd think Empowerdex would know if there was real cause for concern.
    And as for the criticism of too much focus on ownership and management
    The trouble with opportunity is it normally comes dressed up as work.

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