South African Consumers Must Devise Strategies to Influence Economic Policy
BYLINE: Colin Bower
Forget spurious categories of race. Forget age, gender, language group or tribal affiliation. The most important categories of person when it comes to public policy formulation are consumers and producers.
All South Africans are consumers, but only some are producers. Producers can be defined as people who earn a material return from some economic activity. So, for instance, all those studying in educational institutions - schools for instance - most of those who are retired, all the unemployed, many of the underemployed, and housewives or even husbands are consumers, but not producers.
The needs of consumers are diametrically opposed to the needs of producers. Consumers derive benefit from aggressive competition between producers, which results in profusion of product choice and good value for money.
The needs of producers are to minimise production costs, and to provide the lowest level of product service or quality consonant with high market share and high profit.
In their private capacities, producers are also consumers, but, because they draw an income from producing, and sometimes enjoy other income or wealth generating opportunities from being producers, they are nowhere near so dependent for their material well-being on product choice and good value for money. Indeed, for the very rich, these benefits are irrelevant.
For the poor, they are crucial. Of all the benefits that well-functioning economies can confer, one of the most over-looked and under-estimated is the provision of products that are fit-for-purpose.
The irony is that the poor are far more dependent upon a product that is fit-for-purpose than the rich, who can afford to discard and replace.
As you ascend the ladder of success as a producer, you enjoy an increasing ability to buy your way out of the troubles and the frustrations of an economy that is not producing fit-for-purpose goods and services at a competitive price.
This includes the option of buying goods and services from overseas.
Why is it then, that in a state which, nominally at least, is committed to looking after the interests of the poor, public policy is driven by the needs of the producers, rather than the needs of the consumers? People who are solely consumers in an economy are uniquely vulnerable to economic forces and have little economic leverage to protect themselves against price increases, scarcity, fluctuating interest rates or inflation, for instance.
Not so with producers, who can leverage off their status as producers to ameliorate their circumstances.
Of course there is a spectrum of status and interest along the scale from those who are solely consumers, and vulnerable, to those who are successful producers, and invulnerable.
Those at the bottom end of the production spectrum enjoy some protection, but also share to a large degree the vulnerability of those who are solely consumers.
Included in this category would be wage earners, poorly qualified teachers, office clerks and the like. For these people, their needs as consumers far outweigh the benefits they enjoy as producers.
One of the most enduring myths that continues to inform policy debate is that the free market is the philosophy of producers, or, if your prefer the term, capitalists. Not so!
Producers hate competing on the basis of price, quality and service, which is of course what the consumers want them to do. For decades I have been a proponent of freedom in all its forms, including the freedom of the market.
And yet for decades I went to work in a commercial organisation and worked from dawn to dusk trying to find a competitive advantage by subverting the freedom of my market. …