The General Motors disinvestment shows politicians that reality bites


The recent announcement by General Motors (GM) that it will disinvest from South Africa after 2017 should not come as a surprise to South Africans.

As much as we might want to rant and rave against GM, as much as we condemn their actions and look for ways to force them to stay in the country, reality simply does not match up to our emotions. Perhaps if we evaluated the actions of companies with the standard of reason and reality, and not emotion, the move by GM would not have caused such outrage.

Isuzu Motors SA will take over GM’s Struandale vehicle assembly plant in Port Elizabeth, and manufacture its own vehicles. 1,500 of GM SA’s 1,800 employees work at the Struandale plant, and talks regarding potential job losses have begun.

If I desperately want to buy a Chevrolet vehicle I will have to buy it from overseas, as these will no longer be sold in SA after 2017. According to the Minister for Trade and Industry, Rob Davies, the move by GM is not a surprise because its sales have been declining for several years.

I agree with the Minister: the disinvestment by GM should not be a surprise.

Every move by our government has resulted in the move, and will cause more companies to leave our shores. The international market may be tough at present, GM may be downsizing, etc., however, instead of looking at the problems they have caused, government does what government does best: blame outside forces.

Our government has done nothing to lessen its grip on companies and the South African taxpayer. Instead of making it easier to grow a company in this country, the government increases regulations. Instead of cutting government spending, and in turn lessening the burden of taxes on all South Africans, the government increases its reach, with Financial Advisory and Intermediary Services II regulation and the upcoming sugar tax the prime examples. Instead of making it easier for companies to open and operate here, we make it more difficult for them. Increasing regulations and burdens on companies, not wanting to attract investment and in turn economic growth defies logic, but this is exactly what our government does.

We have a prevailing philosophy that companies, to be moral, must ‘give back’ to society for the money they have made, for the privilege of existing. We need to commit to a complete revision of this position. A company’s profits indicate that its services or goods are valued by society. It does not force consumers to buy its products; it has to appeal to them. It has to convince them to part with they money. Government operates with force – this is its only avenue.

Time after time after time, the failures of statism are blamed on the free market, even though we have one of the biggest governments, and most regulated economies, in the world. Minister Davies will not point to government regulations as the problem; GM will profusely apologise and say their move is not because of government behaviour. When government is as large as ours, companies must do their best to please politicians. The socialist philosophy followed by our government results in the expected actions by GM; the more government grows, the more companies will leave because the cost of operation will simply be too great.

Businesses have to make a profit – this is their very nature. When it becomes too expensive for them to operate, they will seek more amenable markets. Yaron Brook explains that, “Our unprecedented prosperity and standard of living exist not despite but because of these [business]men. To shackle and tether such individuals with government regulations and interventions — to treat them as potential or actual Al Capones — is both unjust and self-destructive.” It would do South Africans well to do all we can to keep companies here; if we follow the socialist path, reality will bite back accordingly.