Trevor Manuel is Clueless on Entrepreneurship

Trevor Manuel should take his own advice to his political elite colleagues and go out and learn the true role and nature of the entrepreneur in the economy, and maybe he could actually be useful in the ANC. He said at a Progressive Business Forum in Mangaung yesterday that:

“We’re not going to be able to build an economy on ‘ag shame’. We need to be pretty tough… I think the tougher we are on young entrepreneurs, the better the quality of entrepreneurs we will create in this country.”

This is just mind boggling. When you are free to start a business without having to go through state licensing and taxation registration procedures, not to mention auditing requirements, labour laws, etc. etc. it is already tough to be an entrepreneur.

Statements such as this can only come from someone who’s a career politician, living like a parasite off the incomes of productive people in society (called taxes).

Somehow Trevor Manuel thinks the state should be even tougher on entrepreneurs so we can produce better ones. This is just idiotic, and shows his lack of understanding about how an economy and entrepreneurship actually works.

Entrepreneurs are in the game of surveying the economic landscape, always seeking factors of production that are priced in such a way that they can combine them in a new and unique way so consumers are willing to pay more for them than the set of goods were initially worth.

When government interferes and makes it ‘tougher’ for entrepreneurs to achieve these aims, by raising the cost of doing business (regulation and taxation), they do not get ‘better’. The best ones may succeed above others, yes, but the good and average entrepreneurs are driven out the market. It means there are fewer jobs and a lower standard of living for the rest of society.

Also, if these ‘better’ entrepreneurs are really worth their salt, they can compete on a global playing field, and noting that it is cheaper to run a business in friendlier government jurisdictions, they will eventually leave the country and either produce products elsewhere and sell products back into SA, or produce outside of SA to sell to a much bigger market outside of the country where they could earn greater profits. Again think of job and wealth implications.

It is all about combining costs to produce goods or services that can be sold above their initial value. Being ‘tough’ on entrepreneurs is a cost to them, and eliminates profit and business opportunities.

The best entrepreneurs will leave this country if government is ‘tougher’ on them Trevor, and then it will be impossible to reverse your ‘tough’ business regulations and tax laws, to allow the good and average entrepreneurs to take over.