Is it better to be popular than right, or can you be both?

Business

Is it better to be popular than right, or can you be both?

As the truth of our backlogs in SA become more clear and obvious, it’ll be obvious what to do. We must invest

Mark Barnes

By some measure, almost by definition, populism will always prevail, given enough time. Whether or not the political system is a democracy, what the people want will surely be what they end up getting. It must be that way, if for no other reason than to maintain peace and stability. Even if the enduring ideology has a religious or other more fundamental basis than simply voting rights, it must remain popular to persist.Within the various democracies across the world there is nevertheless a wide divergence in the latitude given to the government by the people as there is in the different levels of authority or force of rule exercised by elected leaders. What’s more, increasingly, across the world, the judiciary has been brought into the equation – to settle differences of opinion and interpretations between elected leaders, those who elected them, and, of course, those who didn’t. This is all very well when everything is going along swimmingly, but not when there’s a need for change.
South Africa finds itself in the middle of so much change. It will simply not be possible to go where we need to with only popular actions. This is the conundrum. To get into power, to implement the policies which are necessary and right, you first must win the popular vote. Inevitably this involves compromise. Once in power, though, you are surely obliged to do what is in the best long-term interest of the people, no matter how difficult, how unpopular.The more ambitious the political manifesto, the more difficult the economic mandates required to support its execution.
In our personal lives the balance between being disciplined and behaving recklessly offers similar choices and consequences. The difference is that you have the rest of your life to get it right, and it’s just your life. Leaders of democracies have limited time.
In SA, with its vast economic inequality, the choices are so much more stark, and the consequences of failure so much more dire. Making the right choices, doing the right thing, becomes even more necessary.
In its distilled essence, the choice is between consumption and investment. But, as the French president recently said in parliament (in a speech seen as perhaps too business-friendly): “If you want to share the cake, you’ve got to have a cake.”If you start paying higher wages for less work, you’ll never stop. It must be a fair deal to survive. To convince everyone that it’s worth it to defer consumption in favour of investment, there first has to be a shared vision of the future, an honest understanding of the present, and a very high level of certainty that the economics of the end-game will be achieved, and shared.In business, it is straightforward and there is common purpose. In the first instance, any business must demonstrate its ability to survive without help (or hindrance). The rules of survival have been established over the years. The ratios in the income statement and balance sheet required for prosperity cannot be tampered with, or ever overridden for the sake of immediate popularity. You can’t borrow more than can be serviced or repaid, even for capital projects, let alone to fund consumption. If you do, you’ll either fail or be taken over – the political analogy is obvious. Sustainability requires cost-to-revenue ratios to be sacrosanct. Breaching these will inevitably lead to an erosion of capital. Choices will start to emerge between self-preservation and growth. Competitors start filling the gaps you once owned. You simply cannot contract outside the economic realities of the firm and expect to survive.When political and economic mandates become mixed, neither will succeed. Whether in the form of imposed obligations or subsidised services, the separate purpose of a social, non-commercial mandate must be seen for exactly what it is – and its success or failure must be judged accordingly. Performance evaluation, funding and management criteria aren’t the same for public service execution and private sector competitiveness.When investment back-fill is required, when you’ve fallen behind, and when the firm isn’t yet generating sufficient surplus to make up the deficit, you’ll have to get partners, and give them some of the game, to save the game.
As the truth of our various backlogs in SA become more clear and obvious, it’ll be obvious what to do. We must invest. I think we will.
Mark Barnes is CEO of the Post Office.

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