‘Never tell a young person that anything cannot be done. God may have been waiting centuries for someone ignorant enough of the impossible to do that very thing.’ John Andrew Holmes
We had a good, healthy and hearty laugh the other day about my suggestion that rent should be dropped by 25% in this country.
A blanket 25%, would you believe that! Even before I made this suggestion, I knew and announced that it was going to be an absurd suggestion. But, when you are facing a steep, jagged fiscal cliff, you need any idea to throw at it. Like a soldier who suddenly runs out of bullets in front of an enemy who still has six, you must make sure that you use anything within your grasp to disarm, disable or terminate your enemy. What had actually happened was that, we (Petula & I) had asked our listeners on our weekday radio show on Gabzfm, to share with us how they are coping with the current liquidity squeeze.
Over the past few months, these two words; just like the word recession before them, managed to worm themselves into our everyday conversations. So, we felt that talking about it on national radio would help with the exchange of ideas and thoughts and in the process present a litmus test to the full extent of this situation. It is a pity that we did not really debate this issue at a level that would have helped us achieve what we had set out to. Nonetheless, the show had to go on, and that is why I made this suggestion.
In fact, I did not end there. I also suggested that, over and above rent being discounted by 25%, we must also have a five year moratorium on the yearly 10% escalation on rent and lastly, we must start paying the [small] debts we hold between us ÔÇô well, this one as important as it is, it is inconsequential in the grander scheme of this conversation. The question is why would I suggest such an absurdity? Well, our situation is not pretty. On the one hand, we have astronomical loan defaults that have crippled our banking system; on the other, we have weak global demand for our precious commodity, the pearly diamond. Under normal circumstances this would be manageable, but these are not normal circumstances. We also carry on one shoulder a stubborn deficit while on the other we carry a disgruntled, overly indebted labour force.
And under near normal circumstances this would also be manageable, but these are not near normal circumstances. We carry the biggest load of all on our head, the dichotomy of saving the system or the people. Now, this one is tricky ÔÇô if you save the system, the people will be disgruntled and history is littered with what happens in that situation. If you save the people, the system will collapse. Why? Because our system has peaked! If you as much as remove one person to save it, it will explode and if you try to add one more, it will collapse.
Yet you must do something, and this is where it is dicey. If the system is to recover, either salaries are increased to appease the labour force that is now doing three times more than it can handle; or, if the people are to recover, new industries must be set up to absorb the many who are unemployed. We cannot do either because there is no money. Banks do not have it and those who do, are not lending it out. That means we now have a system that is threatened by its people and a people that are beholden to the system. And there are no two ways about it but to find that money. So, what is the usual route that is taken to find this money? Belt tightening! The system goes into overdrive and makes adjustments and cuts to what is already a volatile situation. And that has served us well and unfortunately we are at a point where it will be difficult to do so any longer.
Which is why it is time the people met the system half way and make similar adjustments. This is why rent should be where we begin! A 25% drop will reverse the system’s financial clock by two and a half years and the five year moratorium on escalations, will add a good seven and half years of financial muscle building. Think of a skinny guy spending seven and a half intensive years in the gym! How will this work? A blanket 25% drop in rent will bring a lot of relief to the labour force. Where one would remain with say, P20 after costs, they will be able to add say, P75 to their disposable income. At a grander scale, we are talking billions of unadulterated interest free cash!
The system will definitely breathe a sigh of relief as well as avert a revolt. Above all, there would be money to invest into new industries which in turn would hire our unemployed youth thus dismembering that infamous dichotomy alluded to earlier. Yes, we will suffer knocks, but this is what Joseph did in Egypt when he saved a whole generation from a seven year famine. In the same manner, our efforts will bear fruit in the long term. We must not be afraid to be the first in the world to pioneer this one. We should learn from Greece and appreciate that these are not times for profits but for foundations. Therefore, We Need An Economic Cooling – this is actually a title to my book.
*K. Gabriel Rasengwatshe is a business strategist, author and broadcaster
