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An entrepreneur proposes a way for the country to improve its credit rating, grow the economy and cut unemployment.
An ideological debate is desperately needed to sort out options South Africa could pursue to find a way out of its economic morass, wrote Patrick Bond, a professor of Political Economy at the University of the Witwatersrand, in an opinion piece that was republished on Fin24 from The Conversation.
Fin24 user Wynand Meyering responded. He writes:
You need to grow the economy, that means making things easier for businesses to grow and to create jobs and for investment.
It is precisely what the ratings agencies, the IMF and the World Bank complained about: economic growth. So start reducing stock market and investment taxes and business taxes and taxes on savings accounts and partially-privatise those loss-making state-owned enterprises.
The government owns 15% or more of the land, redistribute this land to people that are in need: the poor. The land is just standing still doing nothing. Zone more residential and commercial and industrial zones. Start making positive economic reforms that these agencies want that boosts investment and saving in the economy.
The rest of the world's economy is at the very moment growing at an average of 3%, these credit ratings agencies handle the credit ratings of 220 countries plus their companies and they want to see positive economic steps towards economic growth. South Africa is currently growing at 0%, with 50% youth unemployment, 30%+ real unemployment.
How to become rich
Start putting businesses first, it has been the biggest mistake of the ANC the past 23 years not to do so. Businesses create the wealth and jobs and you first need a job to become financially independent, 17 million black people relying on government welfare, won't make you rich. You only become rich once you work and start a business.
Self-reliance and capitalism and starting a business, there's your best and fastest solution to all economic and financial problems. Less socialism, less welfare redistribution and more hard work, saving, investment and *more production* - so stop taxing savings and investment.
Visit the skyscrapers of Hong Kong, South Korea, Taiwan, Singapore, China, Japan, Botswana etc. They show you the economic model you should be following. GDP per capita is now higher in Botswana than South Africa and Botswana was the world's fastest growing economy from 1966 to 1990 with 15% business taxes.
So lower business taxes and increase entrepreneurship. It's businesses that create wealth for everyone, that creates jobs and world class products that are exported across the entire world. Remove the businesses and everyone is poor. You cannot redivide the wealth and think you will become rich. Only businesses create the wealth and jobs at the fastest pace.
You have to boost the businesses, investment and world exports to get 6% GDP growth a year just to reduce the unemployment. Private businesses is 75% of the economy and the world economy is 200 times the size of the South African economy, so boost exports to get to the 99.5% of the economic pie, using the 75% of the economy. SOEs rely mostly on taxes, the fastest growth will come from the private businesses and exports to the world economy.
South Korea, restored it's credit rating within one year afer the Asian financial crisis in 1997 precisely because it was such a strong global exporter, so boost the private sector and take steps to boost exports.
Disclaimer: All letters and comments published in Fin24 have been independently written by members of the Fin24 community. The views are therefore their own and do not necessarily represent those of Fin24.
