Project Economic Guardian

What is the synonym of Guardian?
guardian(n): defender, guard, tutelary saint, keeper, warden, protector, defence, guardian angel.
-- synonyms.com

There are two economies in South Africa, sometimes referred to as the formal and informal economy. Simply the informal economy is the economy of poverty.

On the poor side of the economy, everyday life is a real struggle where a person is required to hustle, beg and scratch out a living every day, and where going hungry is an everyday possibility.

Understanding the problems of the South African economy means being honest with ourselves about the problems and seeing the bigger picture. We can only solve a problem by first understanding the problem.

BEE Failing The Poor

No matter how many B's or E's you build into the acronym, BEE is mostly about looking at the existing white-owned business in South Africa and trying to force them to give up a part of that ownership for black ownership. Black employment also plays a role, but it does not count nearly as much when compared to ownership.

Of the people previously disadvantaged by Apartheid in South Africa, some benefited and were able to use BEE to uplift themselves and their families out of a bad situation, but this very quickly ran out and hit a peak and then left behind millions of poor South Africans.

Because of the Apartheid education system, most of the poor, are not educated in business and formal sector skills. The poor also do not have much exposure to the parts of the economy that BEE applies, and are by their situation excluded from being able to participate.

The large majority of people that we're able to benefit from BEE were the politically well connected that we're able to bring lucrative government contracts and tenders to the table. Coupled with more and more aggressive BEE laws forcing white business owners to give up ownership or closing their businesses, ended up creating an environment of tension and anger where corruption and backhanded deals have thrived.

The Job Numbers Problem

The government likes to beats the transformation and BEE drum, and very few people ever question the logic of transformation. There is an estimated 4.5 million white South African's in a country of almost 60 million. When the ANC government runs out of white jobs and businesses to transform, what then?

The maths of transformation and BEE does not add up and are more destructive than helpful. It creates tension between races, chases away existing skill and creates a toxic and corruption incentivised system for our black youth and professionals to navigate and compete. The best black person is not always the one to gets the job or the contract but rather the most well connected. Everyone else is left out in the cold angry and worse off.

Growing The Pie

The BEE system focuses on existing business, unfortunately, 100 sweets cant fit into a bag made for 10. In the same way, we cant squeeze all the poor unskilled, unemployed and previously disadvantaged people into the current existing economy.

There is no other way out of this, to create new jobs we need to also create new businesses, and we need to find ways to start a lot of new businesses. If our country is not creating jobs, poor unemployed people only legal alternate is making people dependent on handouts and the generosity of others.

By creating new businesses, we also grow the size of the economy and the number of jobs it can support. As the economy grows, we will be able to fit more and more sweets in our bag and reduce our tax burden by reducing the number of people that require welfare assistance in the form of grants.

Economic Migration

Creating jobs is the primary goal, but we also need to change the structure of the economy. Today with our current economic policies, we have created many businesses that are headed by previously disadvantaged citizens. Combined with improved black employment, it is estimated that the black middle-income group today is larger than the white middle-income group.

Even with these successes, white people only make up 8% of the population, and the majority of South Africans are still living in poverty, and operating in the informal economy. To achieve any real change in South Africa, we need to find a way of migrating people from the informal sector into the formal economy by creating new black, coloured and Indian owned businesses.

Only by creating new businesses do we create jobs. Only by creating new previously disadvantaged owned businesses do we change the structure of the economy and start to migrates the poor out of the informal economy into the formal economy.

Business Is Not Easy

An often-quoted statistic is that most new businesses fail in the first few years. Creating a new business is not easy, and it is especially not easy in South Africa. There is a labyrinth of laws that entrepreneurs need to navigate. With many obstacles and challenges that a new business will face and need to overcome if they are going to survive and be successful.

The Skill And Resource Gap

One benefit the current middle-income families have over poorer families is access to skills and resources. A person that grows up in a middle-income or high-income family today will have a better education than a person that grows up poor. They will have access to resources like the Internet and private transport. In simple terms, the poor are not able to pursue and act on opportunities that their wealthier peers will be able to.

There are many more differences similar to this, and when it comes to starting a business, there are a few critical gaps that cannot be ignored. The wealthier a person is, the more easily they can access financial services including capital to start a business. It is difficult for banks to loan money to people living in poverty when they have very little in the form of assets.

Another often forgotten missing element that is possibly the most important ingredient, is access to other business people that have experience in starting and running a business. If a person grows up in a middle or high-income family, with a parent or uncle that has their own business. Children growing up in such an environment will be encouraged to start a business of their own or join a families business.

The environment people grow up in, and the people around them to learn from and ask for help is vital to their future, as it creates an enabling environment, that improves their chances for success. You can see this also play out in families that have a large number of academics, lawyers or doctors. A child that grows up to be a successful doctor or lawyer, often it is because of the environment around them that was enabling, and supportive of their goals, improving their chances of success.

Shared Goals, Mentors, Guardians And Business Partners

Apartheid and the current government, with its race-based laws, have made the black population and white population enemies. Forcing them to compete for resources and access to markets, increasing tension and conflict.

What if we had to flip this situation around and create an environment based on shared goals. An environment that rewarded these two groups when they work together to overcome the challenges of poverty, helping South Africa create new black-owned businesses and with it jobs transforming the economy.

Starting and running a successful new business is not easy. It requires capital investment, knowledge, experience and a lot of hard work, passion and dedication.

If on one side of the population we have the capital, knowledge and experience, and on the other side the passion, motivation and dedication. Why can't a white businessman be an investor in a new black business, acting as a mentor and business partner? Providing guidance and direction to his black business partner in a new business venture.

Economic Orphans

Orphans are children with no parents, and if they have nobody to look after them, they are moved into orphanages where large groups of orphans are kept together.

Orphans are vulnerable, lack resources and lack the guidance that normally comes from the enabling environment of living in a family. Orphans don't have the parents to look after and guide them to become strong self-sufficient adults.

Apartheid was an unnatural system, that resulted in a large portion of the population not being able to participate in the free market economy. Just like with orphans, the population was divided up and grouped by race. The poverty concentrated townships of today, are Apartheid created orphanages, and the poor that live there are excluded from participating in the formal economy.

Apartheid turned all black citizens of our country into economic orphans and the townships they live in their economic orphanages.

Economic Guardians

A guardian is somebody that looks after and protects another individual that is vulnerable in some way. A guardian provides guidance and safety when needed, and acts in the best interest of the person they looking after. Parents are natural guardians of their own children, and if a person adopts an orphan you are that orphans guardian.

To be a guardian of an orphan is a responsibility, and is done out of care and love. You are creating and extending your family by adopting an orphan, looking to give somebody poor and vulnerable a better life and future.

If the Apartheid created poverty of today are economic orphans, excluded from the economy. We need economic guardians that can help, protect and guide our economic orphans out of poverty into the formal economy.

Economic Guardianship Corporation (EGC)

A person can't just pick up an orphan in the street and take them home. When agreeing to adopt an orphan, there are terms and rights set out in an agreement. The orphan has rights, and so does the guardian.

A new type of company would need to be created to act as the guardianship agreement, an Economic Guardianship Corporation or EGC. Legally this company would be a PTY company, no different from any other company. The difference would be in how ownership and taxes are structured.

The goal is to create an enabling environment that benefits everybody involved. With the result being the poor, vulnerable and excluded, joining the formal economy as strong, no-longer vulnerable individuals, building new wealth. A currently wealthy businessman is not going to invest in another person's company if there is no benefit to them. We not talking about donations and philanthropy where our economic guardian is just giving away his money and time.

An EGC would need limits to prevent abuse and an incentive structure with the end goal in mind. Patriot Democracy suggests that an EGC company be tax-exempt for a set period of time and based on annual turnover. Whereby after the company grows and is successful, the EGC would start to be taxed as a Small Business Corporation (SBC).

Ownership will also need to have guidelines with the end goal in mind. Patriot Democracy suggests that the economic orphans collectively in an EGC should never by less than 50% ownership and should limit the number of partners to four. The Economic Guardians existing businesses should also not be negatively impacted in any way by participating in an EGC.

Goal Focused

The end goal has to be new previously disadvantaged individuals owning new businesses that are successful and creates wealth where there previously was poverty. For this reason, existing businesses should not be able to convert to an EGC, and only newly created companies should be allowed to register as an EGC.

An adult that grew up an orphan, can't be adopted by a guardian. Once they become an adult, they are expected to look after themselves. In this same way, an existing black business owner that is already participating in the formal economy, possibly very wealthy, cant be adopted by an economic guardian and participate in an EGC as the economic orphan.

Existing successful black business owners can however by guardians to an economic orphan. The focus and goals should always be on the poor and to uplift them and migrating them to the formal economy.

Poverty Not Race

The vast majority of the poor today are black, but we would not want race to now exclude participants. Many other race groups were excluded from the Apartheid economy, and BEE today is creating new economic exclusions.

Patriot Democracy believes in race-free laws and an inclusive economy with inclusive incentives. A wealthy black business owner should be allowed to act as an economic guardian, and Coloured and Indian race groups should be allowed to participate as economic orphans or guardians.

An Economic Guardianship should be about poverty and assisting the poor to lift themselves out of poverty. Patriot Democracy believes the system should 100% colour and race-blind and promote a non-racial South Africa. The only measure and limitation of an economic orphan should be poverty. Further, to prevent abuse, economic orphans cannot already be participating in any other company.

The Job Forge

The Economic Guardianship System focuses on creating new businesses and employment where there is little to no jobs. By focusing on the poor, we are creating jobs where they are most lacking, and bringing the formal economy to the informal economy.

By connecting the currently wealthy and successful, with the currently poor, in a new partnership, where everyone benefits, we are creating a system that rewards the creation of new wealth and new jobs.

The system would be set up to be a job creation factory, where new jobs are forged, where they are most needed.

Building A New Nation

The law and economic system under Apartheid kept its citizens separate and made them enemies. By creating a system that rewards these previous enemies coming together and working together, we are creating friendships where there was previously anger and resentment.

By not making systems about handouts, race or existing business, and focusing on new businesses and partnerships, we are rewarding hard work and collaboration. This leads to the forging of a new path and a new national identity, together as one people and one country.