Emigration is Depriving SA of critically needed Wealth

Emigrants leaving South Africa are causing Izak Smit of the Professional Provident Society some concern. The reason, according to BusinessTech, is “the loss of these workers will not only impact revenue collection but also job creation, as many of these individuals develop businesses and generate wealth.”

In particular, Smit is concerned high-income individuals, when leaving, are taking jobs with them. The BusinessTech article seems most concerned about the loss of tax revenue, even though more funds for the government are not necessarily a benefit, given how it wastes billions on inept state-owned enterprises. What, of course, should be of concern are the jobs because millionaires create jobs, which is often how they became millionaires.

But what the article is missing is every emigrant created jobs. Emigrants leaving South Africa stop the productive work they do in the country when they leave—or more precisely they do the work someplace else. No matter how low their income, if they were earning some money, somehow, they were spending that money and creating jobs by doing so.

It isn’t just millionaires who create jobs. Your typical family buys groceries and that alone creates jobs. Not only do they create jobs at the store, and on the farm, but in-between as well. Jobs are created for those who transport the food. And that means jobs are created for those who repair the trucks, as well as for those who manufacture the tyres and sell them.  Each rand they spend is added to the billions of rands everyone else is spending and that aggregate spending creates opportunities, jobs, and wealth.

I’m not saying it isn’t a concern when a country loses residents, it is. People leaving a country are a bad sign, but then the reverse is true as well. People entering a country is a good sign. Just as people leaving, no matter how low they may be on the economic ladder, destroys jobs, immigrants coming into the country create jobs.

Sadly it is often found in politics that the quickest way to power is to find some group and blame them for all the social woes—and too often immigrants are targeted. One ugly reality of politics is power-seekers often single out a group to slander and scapegoat. Having someone to blame is one way politicians divert attention away from their own shortcomings and policy failures.

If it is true each person leaving South Africa makes the country poorer, then each person migrating to South Africa makes it richer—the only difference is by how much.

Too often wealth is thought of as money or property, but both are the result of human ingenuity and effort. Wealth doesn’t magically come into existence; it is created.

Wealth is created and created by people. People aren’t the enemy of wealth creation, they are its engine. And it doesn’t matter where they were born.

The brilliant economist Julian Simon said: “The main contribution that additional persons make to society is the new knowledge of all kinds – scientific, organizational, and everyday knowledge. . . that they create and leave behind them. …These gains are the result not only of geniuses but of a real number of work-a-day ingenious people.”

If an immigrant opens a shop, they create wealth. If they take a simple gardening job, that too creates wealth. They may hire others or not but along the way they spend the income they earn, and spending creates a long line of jobs.

Spending is like a river created by a massive collection of raindrops. Each rand spent seems insignificant but when put together means they are spending trillions of rands, which has a major, positive impact on the economy.

Immigrant-owned businesses couldn’t exist unless they serve the needs of a wider community. Somebody is frequenting their salons and shops, and they are doing so because the businesses improve their lives. If they were worse off spending money there, they’d go elsewhere.

Those immigrants are also buying goods and services, which create jobs for others. They buy from the local Pick ‘n Pay, or ride the locally owned taxis. They spend their money in businesses run by South Africans and often are paying wages to locals. Their enterprises create jobs out of thin air, they don’t steal them.

The unemployed are unemployed because the jobs didn’t exist, not because they were stolen. Attacking job creators is not the way to solve the problem—it will only make matters worse.

Yes, South Africa needs more job creation, but the failure in that matter lies entirely in the hands of politicians who have plundered the economy to prop up failed state-owned enterprises. It’s SAA, not immigrant-owned hair salons, that is destroying jobs. Politicians tend to avoid taking responsibility for their own failures and instead point their fingers at others. It’s as old as the hills.

James Peron is the president of the Moorfield Storey Institute and author of several books including Exploding Population Myths and The Liberal Tide. He has written for numerous newspapers including The Star, the Wall Street Journal (Europe), the Auckland Herald, and others.

Photo by CHUTTERSNAP on Unsplash.