Consumer-led economy the best offering
The South African economy cannot be said to be performing to its potential. But in one important sense, it is performing well — for consumers. Those with income or borrowing capacity will not find the economy wanting when they come to exercise their spending choices over the holiday season.
The shops will be well stocked and able to meet their every demand and desire, be it for essentials or luxuries supplied from all parts of the world. They will not lack for bread or toilet paper or the best or worst wine, beer or spirits. Or lack for world-class entertainment at the theatres and movie houses. The book shops will be well stocked. Excellent restaurants of all ethnic persuasions will be open to them, but may require an advance booking, given that there will be competition from foreign tourists, who are showing their increased appetite for what we enjoy at the prices we pay.
This is as it should be. Successful economies gained their cornucopias by putting the demands of consumers in first place. That is, by preventing producers, farmers or factory owners, or avaricious rulers or ecclesiastical orders or soldiers, from deciding what is to be produced. When consumers largely rule the economy and producers are required to respond to them, economies flourish. Doing it the other way round — for the state to put the interest of producers first, including those employed by them, whose own wellbeing is always threatened by competition — is a recipe for economic failure, stagnation, corruption and wasted opportunities to consume more.
A consumer-led economy need ask very little of the state. The state and its officials will not be called on to design industrial policy or determine development plans. These require foresight that is simply not available to even the best informed and least selfinterested official. What the effective state has to provide is protection for contracts freely entered into, and the capital of those who have saved and put their capital and skills to work, in the hope of satisfying their customers and being rewarded for doing so.
The state should also ensure that the success or failure of businesses, large and small, is determined by their sales to customers and the costs of doing so. Financial success should not be dependent on an ability to negotiate a morass of regulation and relations with powerful officials.
A consumer-led economy is a continuous process of trial and error, of firms learning and adapting to unpredictable circumstances.
Winners and losers in the competition for consumers’ spending power emerge.
SA has since 1994 spent hundreds of billions of rand — perhaps more than R400bn — subsidising industries of one kind or another using taxpayers’ money or tax concessions. Money that could have been put to much better effect by consumers, especially the poor.
Yet the government remains only too willing to continue to put producers and officials first. For example, competition policy is to be directed to serve industrial and labour policy rather than protect consumers. More important for economic development, given that education and training precedes the ability to produce, earn and consume more, is the tragic reality that educational institutions are not at the head of the line when the huge government budgets for such purposes are allocated.
Were the taxpayer to pay the fees to enable all those desperately seeking education and training to attend private schools, universities and training establishments of their own choosing, the valuable customer would come first. And the outcomes in the form of additional employment and incomes would be far superior.