You’re going to despise me, so let’s get that over and done with.
It is winter in Cape Town. Temperatures plunge to the low single Celsius digits. Worse than that though is the hurtling, searing, icy bullets of rain thrust malevolently in gales that reach over 100 kilometres per hour.
You don’t want to be living in a plastic shelter in an informal settlement during one of our winters. Millions do.
In winter, when the cold presses in, shack dwellers cluster closer around paraffin stoves to keep warm. There is no electricity. Common toilets are outside. Shacks lean up against each other. Accidents. Happen. Then the fires spread quickly. Thousands can be made homeless.
This happens every winter. Since 1994, when we had our first democratic elections, the scale of informal settlements has grown exponentially. People have flocked to the cities looking for work and opportunities denied them in the country. Not that there are many opportunities in the city either.
On one especially bitter Saturday morning a knock on my door. A stout woman dressed warmly with a look of balmy good-will: “I am from the church, we’re collecting clothes and money for people living in shacks,” she said.
I know what living there is like. I said, “No.”
I had to repeat myself several times. Her look: of outrage and disbelief.
The obvious? How do I know who she is or where she’s from or whether my “donation” will even be used appropriately? The belief that because it’s charity I have no right to question it.
Let’s put that aside. I wouldn’t have donated anyway.
The poor are always with us
Now, before you judge me, let me ask you this: do you believe in charity, or in opportunity?
Do you believe in helping people to remain where they are, or to help themselves to improve their lives. Do you believe, as the Christian bible says, that the “poor are always with us”?
More prosaically: do you prefer the poor on bended knee, submissive, dependent, grateful and “knowing their place”; or do you prefer them looking you in the eye and well on their way to being your equal or better?
This is a critical distinction. It defines not just your relationship with the destitute living down the road from you, but with your country’s relationship with impoverished nations across the globe; from Laos to Bangalore, from Kazakhstan to Colombia, from Nigeria to Papua New Guinea.
US discomfort with China says more about US fears of losing their top-dog economic place in the world than of their attitude to Chinese worker’s rights. A quick look at US trade policy indicates that US politicians (no doubt, with the tacit support of US citizens) prefer charity to opportunity.
Both Democrats and Republicans whinge about worker’s rights in developing nations. Democrats want to see new laws to protect these enacted. Both at home and abroad. Minimum wage laws, minimum conditions of employment. Most seriously, Democrats attempted to sneak into the recent bill about funding of troops in Iraq additional clauses relating to minimum standards of labour in bilateral trade deals.
Speaking for everyone who supports these sorts of minimum standards of employment is Tony Ehrenreich, a firebrand leader in South Africa’s union movement: “We would rather that workers remain unemployed than be exploited by capitalist corporations who only seek profits.”
Striking for jobs; marching for poverty
It is the South African union movement who came up with a unique mechanism for job creation. They strike for jobs.
Millions of people across the country march and toi-toi (a peculiar dance-form unique to here) for employment opportunities.
Striking for jobs is like fucking for virginity.
Maybe you think that this is silly and a meaningless comparison to the idea of charity and supporting the poor.
Is striking for jobs any different than marching to end poverty? Marching to end poverty? And this achieves what exactly? Raises the profile of the poor?
What is poverty? Is it a lack of stuff, or a lack of opportunity?
Perhaps you believe that the poor lack things like televisions, microwave ovens, cars, or even computers. If you believe that having these things ends poverty then, by all means, donate. I don’t.
Most laws relating to poverty are the equivalent of moving the furniture around. Do you believe in minimum wage? How minimum? What about minimum benefits? Minimum standards of employment? In and of themselves do any of these laws act to end poverty?
Notice that no-one ever tries to set minimum wages for accountants or lawyers or computer programmers. The only jobs ever encumbered with minimum conditions of employment are ones accessible to the poor.
Why don’t the jobs taken by the rich and educated need this type of protection? Because there is competition for these people and companies respond by offering competitive benefits.
This happens even in markets filled with unskilled people. Chinese wages are rising dramatically as the population of unemployed urban poor has dropped dramatically in the past decade. Now factories are popping up in the Philippines and Vietnam to take advantage of cheap labour there.
The unintended consequences of minimum wage
South Africa is a country of 45 million people of whom 30 â€“ 40% are unemployed. Some 8 million people of working age are looking for jobs. Surely when they find them it is only fair that the pay be good?
The South African Department of Labour recently announced a minimum wage for all restaurant staff. It sounds like a fantastic idea. The poor have their poverty and desperation turned against them by ruthless business owners.
The thing about poverty is that it is compounded by a lack of formative education. There aren’t many jobs open to you if you can’t read or write. Working in a restaurant may be high-pressure work but it doesn’t require much education to waiter or wash dishes. It is a very simple way for a person to enter the job market without proving their capabilities. Restaurant owners take in anyone without question and, in exchange, pay as little as possible.
Everything in a restaurant is carefully worked out. The food will be 15% of the bill, rent 10%, labour 10%, taxes, utilities, wastage, cleaning … everything carefully done. These relationships can’t change. If individual wages are put up by an act of parliament then the number of workers must go down.
But restaurants must operate. How to do so with less staff being paid at higher wages? Only one solution: they must have more skills.
Suddenly the people being hired must have minimum experience and references must be checked.
Not only is the absolute number of people employed in the industry reduced, but the barrier to entry has been raised by requiring experience and talent.
At the same time, all over South Africa (and the world) people stand by the side of the road waiting for you to park. Then they guard your car. Whythawk Ratings is busy researching the car-guarding industry. Working entirely for tips (the vague hope that, arriving back at a car miraculously undamaged, the owner will pay the guard) a person may earn R 10 (US$ 1.40) per day.
People are prepared to do this. Clearly the alternatives are worse.
The tragedy of charity
Perhaps you think we should raise taxes on the rich, keep our high-standards in place protected by strict rules, and redistribute the wealth to the poor? Governments are famously bad at redistributing wealth. The US spends far more on state-sponsored education than do the Europeans, yet for far less benefit.
In South Africa the barriers to entering the formal market have become so high that the informal / extra-legal economy is now growing faster than the legal one.
The same is happening all over the world. Where protectionist measures in the developed world (subsidies to local businesses, demands for high labour standards in poor countries) deprive the poor of an opportunity to help themselves and trade their way into wealth.
At the same time images of poverty have resulted in massive relief efforts by charities. Another famous stereotype of Africa is the relief worker driving in their luxury four-wheel drive vehicles distributing largess from on high. The relationship â€“ at once patronising and insincere â€“ is part of the problem that sees the west as preaching economic and social values that are not practised. No wonder African countries relate more to China.
This has also lead to the alienation of countries like Cuba, Iran and Venezuela and the attraction they have for other marginalised people.
The limitations of capitalism
Capitalism can only go so far. It is not a functional ideology. It is simply like gravity. It is a way that people interact through trade. Socialism is a particular capitalist strategy. So is communism. Capitalism can assist those people who know the ideology and rules of that society to become wealthy.
What happens to those who have no such capacity? If you are healthy and able then there is no excuse for you to sit at home on welfare, and be paid to drink and be bored, by the state. If you are too old to work, or too unhealthy to be productive, what of you?
That is where taxes come in. Capitalism generates wealth. How that wealth is spent is a decision for that society. But, whatever we do, we must ensure that our subsidies do not create their own distortions.
South Africa has more than 5 million people who suffer from AIDS. The highest national AIDS infection rate in the world. One of the few social benefits our government provides is one of health incapacity benefits. If you’re too sick to work then you get an allowance. Around US$ 100 per month.
Many people are refusing to go on to anti-retrovirals to control their AIDS for fear of losing their disability grants. There are no jobs, so there is no point to becoming healthy.
It is a terrible problem.
The simplest way to deal with the moral hazard of unemployment benefits is to say that the state will, through taxes, provide everyone with a minimum wage. If you earn more than that then it is a wonderful top-up. And the very rich subsidise everyone, but they still get that minimum wage as well. Notice there is now no incentive to lie. Everyone gets the same benefit.
During the past two years I ran a project I created called the Thousand Rand Challenge. We had a budget of US$ 7 million provided by the state and the mandate to create as many businesses as we could for US$ 140 each. With payment for consultants and support that would translate to around 1 000 businesses. We fell short. We created 670 businesses and 1 540 jobs.
It wasn’t charity. It was opportunity.
There is a difference.