Throw away the rule book, draft a new one
RULES! Who needs them? Well, we all need some. But they have to favour the good guys, not just catch the baddies.
Rules define the parameters within which society has agreed to behave — they also define the ways that those wishing to break them can operate, cheat and get away with something that is fundamentally wrong but nevertheless legal.
Take tax — more effort and expertise is spent on its avoidance than its payment. The more complex the lock, the more expert the lockpicker is required to be.
Simplicity beats complexity, and fairness is a prerequisite for sustainability. I think back on the bad old days of the financial rand (and the even worse blocked rand), which was fundamentally flawed, as are all attempts to control the flow of capital, ultimately.
Compliance turns into defiance if the rules are against the natural order of things, or if they fly in the face of enduring truth.
In business, economic truth rules. In every buy-sell decision there is a measurable outcome.
Where compliance overrules economic sense, it will lead to delayed action, often result in loss of competitive advantage and rarely deliver a better result.
There have to be rules, of course, but we’d be naive to believe they keep criminals in check. They simply define the challenges for those bent on breaking them.
Rules need to change with evolving norms and circumstances. The good news is that they can, and the will of the people usually prevails. A healthy democracy ensures the rule makers change with the times and in line with the weight of evidence in support of what is right or wrong.
In a perfect world, rules would enable the good and protect the weak. Instead, more typically, the focus is on managing and regulating the bad guys. The imperative is to prevent wrong, to contain, to control, to catch out, to punish. Implicit in this approach is the assumption that undercurrents of immorality and dishonesty prevail in the population. If that is the case, we need to cure the source, not just manage the spread.
The unintended consequences of overregulation are suppressed innovation, dampened enthusiasm and, ultimately, destruction of competitive advantage, the creation of a mediocre middle ground of compliant comfort.
So let’s start again, let’s make rules and guidelines and adopt acceptable practices that enable, rather than restrict. Make paying tax easy and simple to manage — find the percentage of GDP that works and be done with it.
Don’t restrict the flow of capital — encourage it. Scared (or at least skittish) capital isn’t a foundation, it’s a swamp, and a fickle one.
You cannot make rules for the price of money, particularly in a dual economy
We do need to intervene — inequality will not solve itself
such as ours. Likewise with wealth, which cannot be transferred by decree; such dictates destroy the very drivers that create wealth in the first instance.
But we do need to intervene — inequality will not solve itself within the same system that created it. Rather incentivise the creation of wealth where it is not — the market will find its own way to get there.
Protect the sanctity of personal data, have a safety net for those who need it, educate everyone for free (that is the foundation of equality) and let natural economic forces find value and invest in growth.
Maybe it’s not that simple, but I’m sure we could make it a lot simpler than it is now.
Barnes is CEO of the South African Post Office