I know a guy who hasn't worked for 20 years. A very long time ago his father farmed near Stellenbosch. One day, a neighbour named Anton Rupert, came visiting. He was selling shares in a new company. My friend's dad bought some and his sons today live off Rembrandt group dividends.
There's a myth about Afrikaner capitalism; that it represents a uniquely productive form of wealth creation because it recognises the power of ethnic bonds. People say the same thing about Jewish businesses here. Today black South Africans speak with admiration of the Afrikaners whose visions created Eskom, Iscor, Rembrandt and Sanlam.
But it's just a myth. The collapses of Regal Bank and Corpcom exploded the Jewish myth and, now, Steinhoff and, to an extent, Naspers, are exploding the Afrikaner myth. The Steinhoff collapse is massive and there'll be fraud investigations into the way it has been built up and grown for years.Opponents of both capitalism and white business are having a field day. Steinhoff, to them, proves that white business is no less corrupt than black government. That's inaccurate - corrupt government steals from everyone. Corrupt businesses steal from their investors and customers. In Steinhoff's case chairman Christo Wiese and longtime chief executive Markus Jooste added the conceit of listing overseas, taking their capital out of South Africa.
They should have known better. South African companies that have "left" South Africa have struggled. It's tough out there. Shareholders in firms listed in London, New York or Frankfurt are hard on their investments. Anglo American is a shadow of its former self. Old Mutual is basically coming home. SABMiller no longer exists.
They all fail for different reasons. Not every South African businessman is a crook. And there are lots of excellent people in government. It is why we are still standing. But the business critics are close - our capitalism grew up in a phoney world with Victorian rules and cheap labour. Today it is in decay. It cannot grow jobs and the wealth it creates is for just a few. It is the rules of any market economy that shape its society. In our society the market's rules entrench distrust, division, inequality and poverty.
It has to change. Sadly, there's little interest in making change and no one has a clue about how to talk about it. And there's no hunger for it - merely starting a discussion is frightening because it may threaten the status quo.The essence of South African capitalism's disease is that business chases short-term gain at the expense of long-term stability. Chief executives set themselves quarterly earnings targets. Meet your target and the equities analysts and fund managers hold on to your shares and recommend to their clients that they buy more. You win.
But to meet your targets you cut costs. Jobs go, investments are put on hold. The CEO spends more time running the executive share incentive scheme than the business. Managers have too much power and boards are weak - often a group of like-minded friends of the CEO. The accountants who provide these companies with the cover of respectability are part of the mess. Many end up running the companies they once audited.
What is needed is fundamental reform. Boards should be vetted by the JSE. They should be diverse and measurably distant from the executives; no one should be on a board for more than three years; no one should be on more than two boards. We should adopt the German model which establishes a supervisory board containing union representatives and creditors and no management.
Three-year incentive schemes are ridiculously short and most pay out early when the executives running them trigger corporate action - an acquisition or a disposal - that in turn triggers an early payout from the scheme. Ka-ching! And there's another R15-million in your bank account. For nothing!..