Contradictions resolve in ways you don't intend

Great expectations ...

From a business perspective it means that, if you're aiming for the long-term, you don't take short cuts even if they look lucrative. The result is a contradiction: proclaiming one thing while acting in quite the opposite way.

The expectation that, one day when the company is big, you'll correct all the misdemeanours in between is ignorant. It is no more likely than waking up on your fortieth birthday, after a life of indolence and fatty foods, and completing the Comrades Marathon.

The same is true of a nation.

The official South African definition of unemployment is anyone aged 15 – 65 who has been actively looking for work in the past four weeks. When unemployment remains stubbornly high then people who have spent months looking without result give up. Since 2001 official unemployment has hovered between 25 – 26%.

Over the same period the economy has become 27% larger.

Much of the ANC succession debate has been over this seeming contradiction. Either capitalism doesn't create jobs, or businesses are being selfish and refusing to create them, goes the argument.

Pointless jobs can be created with taxpayers' money but taxpayers' money cannot be created without active and successful businesses. Job creation comes from economic growth, and economic growth comes from the success of businesses.

Note, though, that it doesn't work the other way round. Business success does not mean that jobs will be created. Businesses act to maximise their production and efficiency. From the invention of the wheel, to the steam engine to the microprocessor, businesses have acted to get more output from the capacity available to them.

If we disconnect production from employment then job creation becomes an astonishingly simple act. Nigeria, for instance, reports only 5.8% unemployment but 60% of the population earns less than US$1 per day and the country is hardly a regional powerhouse. With three times our population, and despite being the world's eighth largest oil producer, Nigeria has only a tenth of our Gross Domestic Product.

But South Africa has achieved neither full production nor full employment. South Africa is tangled somewhere in between; stranded in a no-man's-land where no-one is particularly happy.

What led us here? How have we achieved economic growth without also increasing the absolute number of jobs?

If companies have managed to dramatically improve their production without employing more people then it must mean that there is something wrong with the labour supply. One can discuss our historical legacy until we all go purple, it makes no difference. Any company that can increase production without hiring additional staff will do so. Any person who is employed is not there because of the benevolence of the employer but to increase the profits of the business.

If your actions do not improve production and efficiency then no rational business will hire you.

It is unclear as to what government intends to do about this. Any social experiments towards job creation can be tried in the state sector first where private companies don't have to be co-opted into agreement. Despite this there are more than 40 000 job vacancies in government departments.

It is extremely easy to interfere with the productive use of capital. Inflation robs money of its value. High interest rates make investment in new ideas prohibitive. High tax rates and extortionate political policies push the most creative out of the country.

Yet, as we head into the home stretch in the race to discover who will govern South Africa next, new ideas about economic growth are what we most need. And, like effective leaders, they are in terribly short supply.