Category Archives: Economy

Immigrants: Good or bad for an economy?

I was going to post something on immigration in the future, but seeing as Malusi Gigaba brought the topic into discussion, I decided to throw in my two cents. This is one of those interesting times when I actually agree with someone from the ANC. Our Home Affairs Minister has come against the South African status quo, and said that we should not be fearing immigrants. I agree with him, within certain limits.

Now what does the average South African think about immigrants? I guess it’s no secret that South Africa is a Xenophobia hotspot. We are also a riot hotspot… and what happens every single riot? At some stage in the riot, the locals start looting foreign shops and burn down foreigner’s houses. But one must ask why? Why do they apparently hate immigrants so? When asked about it, they always state that the foreigners “steal our jobs”. (Very ironic, because if you run your own shop, your not stealing any jobs, but rather create jobs for others.)

Now let’s go one step further. If you go to your typical employer – someone in the middle class who employs a domestic worker or gardener – and you ask them who are the best people to employ, then they will almost always name some people group from another country: Zimbabweans, Malawians etc. And the reason is very simple, in general, immigrants work harder and better, are more trustworthy and complain less. For obvious reasons, they can’t mess up in this country, because then they can get deported, or jailed in a foreign country. Also, they already left their country in order to grind out a better living for themselves, so their very mindset is more focused on hard work, and that is what transpires.

Now please note that I am not limiting this to South Africa. I believe it can be seen across the globe. In the USA it were always immigrants who fueled their economy. Firstly Irish, then Italians, Jews and later Asians and it just goes on. There is something that I like to call “First generation immigrants”. These are people who gave up their life and country so that their children would have a better future. Their whole lives are focused on working hard and earning a good income. Their children usually have a lot of that as well, but less, and then from the third generation they are just plain locals. So those first generation immigrants are the best thing an economy can have. They will keep your workers on their toes, they will work hard and complain less.

But are there dangers in getting a lot of immigrants into your country? Yes of course, if you do not monitor and control it well. We saw this happen in liberal Great Britain and Europe. They allowed everyone in, for any reason. And the result was that a lot of uneducated lazy people flocked to Europe, only to become a drag on the economy.

So how should you control immigration? I would firstly suggest that you tighten your regulations to only let people in who are more educated than your average locals. Now of course in South Africa that is very easy, as our literacy rates are among the worst in the world. Secondly have a criteria list to see whether they will be able to offer a positive contribution to our economy. If they will, then by all means, support that. If they will be brilliant entrepreneurs, let them open shops and stimulate the economy. Let them do what they do best, and the whole economy will benefit from it. But watch out to make sure that their children also get educated and trained in profession, so that the second generation won’t have to much of a back-lash.

In Conclution: I believe that well controlled immigration is a key to the growth of any country. You should always ensure that you have a healthy amount of “first generation immigrants”, for who knows what they will accomplish before they work their way to citizenship.

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Minimum wage?

A bit of background information on myself: I was born in Malawi (to South African missionaries), and spent my formative years there. I moved to South Africa at the age of 12, but still visited my folks in Malawi regularly over the years.

Malawi HungerMalawi is one of the top ten poorest countries in the world, so growing up I saw a lot of real poverty. Malawi is a country where, if the rain does not fall at the right time of year, then people literally die of hunger. It’s not even like they can beg for food from other people in the village, because no-one has food. In times of hunger, people would swarm in masses to the local missionaries, NGO’s, churches ect. in search of work. They will be willing to work a full day, doing anything required, if that means that they can feed their family a single meal at the end of the day. Now people like my parents, were forced to make extremely hard decisions in those times. Helping everyone was impossible, but how many people can you help with what you have?

Most of my reasoning on this topic stems from my actual experience in life. Growing up with extreme poverty around me, and later, working off study debt and starting a business venture with zero capital.

When it comes to the topic of minimum wage, those in favour (of the concept/law) tend to take the moral high ground and make those opposing it out to be cold-hearted oppressors, who only want to empower the rich at the expense of the poor. The problem is that, if you do not actually sit and run all the real-world scenarios through your head, you will probably tend to agree with those in favour of a minimum wage.

So let’s try a real-world scenario:
Imagine that you have R150 at your disposal, and there are 10 starving people outside your door, all of them are willing to clean your house/garden/car – if you can pay them – so that they can buy food. You are faced with a choice: Will you pay one person R150 to clean your house, and let the others starve? Or will you hire all of them, break the work up in smaller pieces, and pay each one of them R15, so that they all can eat something that night?
If you are pro minimum wage, then you will choose to help just one person, and let the other 9 people starve. How could you!?
Who has the moral high-ground now?

For minimum wage to work, the employer needs to have unlimited funding at his/her disposal, so that the only reason why he will stop hiring people, is because he does not want more expenses, and wants to maximize his profit.
But do all employers have unlimited funding? Or do they stop hiring because they can’t afford more workers? With 60% of our economy comprised of small businesses, I highly doubt that we have a market where employers have unlimited funding. So the only thing that a minimum wage law does, is to cut the amount of jobs. The facts speak for themselves. South Africa is loosing tens of thousands of jobs per year, due to forced wage increases from unions in the various sectors.

Mine workersSo what about the worker? Is it right to assume that they will rather die of hunger than work for what the employer is willing to pay? Are you in their shoes? It is very important to note at this stage, that the people who are protesting for higher minimum wage, are employed themselves. What about those who are not employed? What about those who lost their jobs due to the increase in minimum wage?

I can go on and on with the implications of all this: The entitlement mentality that flows from it, the decay of working ethics and even the complete collapse of an economy in the long run. In fact, I have been writing and rewriting this article over weeks, but as I try to write this blog for casual readers, I decided to rather leave it at that, the core principle.

Julius MalemaMinimum wage is an utopian concept that is incompatible with human nature and a real economy. It would have been nice if no-one had any lack, but due to human nature, this is not attainable in this world. You can’t force financial equality through government intervention, it will never be sustainable.

I will put it to you that citizens should rather be encouraged to help others from their abundance (earned through hard work), rather than being “forced to share”, as our hot-headed red beret puts it.

Deuteronomy 15:11 – “There will always be poor people in the land. Therefore I command you to be openhanded toward your fellow Israelites who are poor and needy in your land.”

For further reading on this topic, I really suggest this insightful article by Temba A Nolutshungu about the origin of the minimum wage laws in the world.

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