BEE And The Law Of Unintended Consequences

Half the heading to the article by Karabo Mashugane (Business Report, May 2) is correct:

“The BEE codes are inhibiting…” But what appeared to promise some divergent thinking on the subject of BEE, turned out to be more fine-tuning of what has become a runaway train.

Since its inception, BEE has become Byzantine in the plethora of regulations it imposes on those engaged in trying to generate wealth and meaningful employment. The fact that BEE and its expanded form of B-BBEE is not making any impression on unemployment and now, according to Mashugane, needs new layers of regulations to service the SME category should trigger alarm bells.

Here’s why:

  • BEE in whatever incarnation it exists does nothing to promote black entrepreneurial skills because it affords an easy passage to low-risk, soft option positions. In other words, by making positions available for blacks in white-owned companies, blacks are not being incentivised to create their own companies.
  • As John Kane-Berman has argued (November 2009), the redistribution of posts and positions which is termed “empowerment,” is actually disempowerment because it is not creating anything new while simultaneously allowing opportunities for the independent black initiative to be lost.
  • BEE perpetuates the syndrome of victimhood and a culture of entitlement. Redistributing jobs and wealth based on victimhood and entitlement, which some now claim must hark back to 1652, is simply a recipe for more poverty because redistributing wealth is not a substitute for economic growth. As such, BEE is part of a political agenda to marshal votes and to service the illusions of transformation. If BEE was the Government’s answer to poverty, then why is the army of social grant recipients constantly increasing – now in excess of 18 million?

By shackling the business of wealth creation and productivity to the prescriptiveness of a social charter, BEE has not advanced entrepreneurship for blacks. Moreover, it has retarded job creation and has not incentivised foreign direct investment. Although at the outset of his opinion piece, Karabo Mashugane makes reference to the law of unintended consequences, it is ironic that he fails to recognise its relevance to the whole concept of BEE.

Sent into The Business Report and published, 3 May 2018.

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