Human Capital

I think I've ranted about this subject before, but I think I need to do it again. Just a quick explanation of what 'human capital' is, courtesy of Wikipedia:

"Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, cognitive abilities, embodied in the ability to perform labor so as to produce economic value."

Now, I've been reading quite an interesting book called "The Story of Money - For understanding Economics".

For a layman on the economics front like me, this book has shed a lot of light on how the whole financial system works. It starts from the origins of money and goes on to present day economics in easy to understand language. It has been translated to English from French and there are a few grammar errors here and there, but it's not that bad.

As with any book that I read, I always draw parallels to South Africa and other countries. I'm by no means an expert on the subject now, but one thing that stood out to me is the 'Human Capital' aspect of money.

Through the ages, the Greeks, the Romans, The Dark Ages, The Enlightenment... One thing has remained the same. Money is a 'token' of productivity. And as you can see in the above quote from Wikipedia, Human Capital is a measure of your ability to 'produce economic value'.

And Inflation? Well, as far as I understand, inflation, in its most basic form is when the production of a country falls in comparison to the total amount of money in circulation.

This happened many, many times since civilization began. And it's happening NOW in South Africa.

We all know that South Africa has already passed the point where we consume more than we produce. In fact, even our agriculture, which makes up a small part of our economy has passed that point. We now import more food than we export. And I can give you a lot of reasons for that, but it's not the point of this post. If you browse through the rest of my site, you'll probably figure that out by yourself.

Something interesting that jumped out at me in this book is the following about the inflation and unemployment crises in the 70's (in the West):

"Women joined the workforce en masse in the 70's after the social changes of the 60's. Until then, women had worked intermittently to support the war effort, but later quitting their jobs due to marraige and childbirth.

This surge of female workers was a challenge for the economy due to the length of time it takes to train and become profitable. Mass hiring was unrealistic, because wages combined with low productivity would have only led to more inflation. Along with other economic woes, workforce demography contributed to mass unemployment in the 70's."

Now, before the feminists get all up in arms... I'm not saying that the current situation in South Africa has anything to do with female workers.

What I'm getting at is this:

The Situation in South Africa:

Our official unemployment rate in 2011 was this:

15-19 years: 78%

20-24 years: 59%

25-29 years: 43%

30-34 years: 36%

35-39 years: 32%

Rest about 25%

IF the ANC was able to create jobs for the unemployed, what sort of jobs would it be? Picking up litter? Cleaning jobs? MORE government jobs?

The fact of the matter is that these sort of jobs don't contribute to the productivity of the country. The money has to come from somewhere to pay these people. And, contrary to popular belief, this money WON'T come from our taxes (the 3.3 million people who pay taxes). No, the taxpayers merely pay off INSTALLMENTS on the loans that the government take out. They spend WAY more than what they get in from taxes.

No, the money these people would earn is 'created out of thin air' by banks. This increases the money in circulation. And on average, the country's productivity goes down. So BAM! INFLATION!

The ONLY way to sort out this economy (from my layman's perspective) is to stimulate growth in the private sector to create jobs that will actually contribute to the PRODUCTIVITY of the country. But what are the chances of that happening? Because that would mean that the ANC would have to support the private sector (which is in white hands) instead of blaming everything that is wrong with the country on us.

And even IF they do that, we still have a problem with productivity. And again, this brings up the question of 'Human Capital'.

We've all driven past a gang of workers next to the road in South Africa. And we've probably all commented on the fact that there are 40 people looking and 1 working. This is the government's policies in action. Those two women flying the red flag at the stop and go... They're causing INFLATION.

I've subcontracted for big companies working at mines and factories. When they found out that I only have one guy helping me, they'd usually say that they can supply labour. Then they'd shower me with 10 labourers who would just end up being in the way. If you walk around on a site like that, you'll see the art of 'looking like your busy' in action. Our fellow citizens in South Africa have perfected this art. They'll sweep a floor for fucking hours, watching that clock the whole time. And as soon as the white man is out of view, the broom stops and they just stare at the clock. 

So, why are they all there, you may ask... Government regulations. You've got to employ a certain number of people if you want to get a big tender. And guess what.... In the end, this causes INFLATION.

South Africa vs The World:

So, how competitive are we? Why do we have inflation? Well, the Global Competitiveness Index compares 148 countries.

Here lies the answer: http://www.weforum.org/reports/global-competitiveness-report-2013-2014

South Africa's Labour Market Efficiency:

Cooperation in labor-employer relations - 148/148

Flexibility of wage determination - 144/148

Hiring and firing practices - 147/148

Redundancy costs, weeks of salary - 35/148

Effect of taxation on incentives to work - 15/148

Pay and productivity - 142/148

Reliance on professional management - 12/148

Country capacity to retain talent - 51/148

Country capacity to attract talent - 55/148

Women in labor force, ratio to men - 88/148

Human Capital:

The sudden increase in luxury German cars and the colour of their occupants irritated me for quite some time when I came back to South Africa. I've been running my own business for ages and I can't afford a German car, neither do I want one. But it always pissed me off because I KNEW that I work 24/7 just to survive and put a little bit away, while most (and please note, MOST) of these idiots probably just got a nice fat tenda or got some cushy government job where they have to do nothing the whole day.

But it struck me one day that I have something they don't. And even though I don't have a University Degree, I have Human Capital. From the day my dad started teaching me how to mow the lawn, how to hammer a nail, to help him fix things. From the day I got interested in how things work and how things are built, I started gaining Human Capital. And that is something Julius Malema, even though he wants it so badly, will NEVER take away from me. He can take my house, my money, my flat screen TV. But he can never take away my ability to produce economic value. 

I've gone under a few times and had to start again from scratch. And I can do it again.

So you big BEE men, the BEE babies, the instant millionaires. You're going to get your day. It's all nice on the big 'white taxpayer funded' gravy train now. But the gravy train is running out of fuel, my friends. And no matter how much money you've got now. No matter how much bling, gadgets and BMW's. I've got something you don't. And you can (and probably will) take everything from me, but I'll go somewhere else and I'll start up from scratch again and in a few year's time you'll be back in your shack and I'll be all right.

And if you follow us to other countries, the fact that you are black and the fact that your uncle is in the ANC will count FUCKALL. You won't get that tenda just because you are black, my friends.

You're the shit now, huh? Tick-tock...

Article for the above picture: Young, Black and Superich South Africans