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BALANCE AND RESTRAINT: LET THE GAME FLOW - By Dr. Francois Stofberg, Managing Director: Efficient Private Clients

Like most passionate South Africans, we thoroughly enjoy watching the Rugby World Cup. Setting aside the tragic events that have unfolded in Ukraine and Israel, this sporting event often resembles strategic warfare between nations. Just as governments play crucial roles in ensuring success within their respective domains, referees are vital to maintaining order on the rugby field. Experienced referees create a favourable environment where the game can be played as intended, to the delight of all. Similarly, governments should establish business-friendly macro-economic conditions where wealth creation occurs naturally, which causes job creation, and, ultimately, leads to overall satisfaction. However, if governments fail in their responsibilities, as the South African government has, it is detrimental to all.

Amid the economic downturn which our failing government has caused, our Finance Minister, Enoch Godongwana, faces the nearly impossible task of appeasing millions of grant recipients, government employees, unions, and his party that is on the brink of an election year. All this while our country is rapidly running out of financial resources. To compound matters, austerity and privatisation are politically taboo, even during economic contractions.

Yet, it is not a straightforward matter, as striking the right balance is crucial for governments. Too often, they overestimate their roles and responsibilities, much like referees who forget that they do not hold a flute but a whistle in their hands. Wayne Barnes, an experienced rugby referee, recently noted that the best games are the ones where he needs to intervene the least. Unfortunately, such a philosophy is rarely adopted by governments. It is often difficult for legislators and parliaments to step aside for fear of redundancy. Overextending their roles can crowd out private-sector investments and overstimulate economies, leading to issues such as the elevated levels of inflation observed in the developed world. Significant adjustments in credit spreads and debt markets returning to long-term equilibriums are indicators that policies are being judged without emotion, much like the assessments of figures like Liz Truss or Recep Tayyip Erdoğan.

In both rugby and economics, competition levels the playing field and drives exceptional performances. It might be more sensible for the well-being of many to simplify the rules, reduce the politics, and let the game flow.

But what does all this mean for the average citizen, whether they are cheering from the rugby stands or observing the economic policy discussions from their homes? It means that the role of referees and governments, while essential, should be characterised by balance and restraint. Just as an overzealous referee can disrupt the flow of a rugby match, an overly interventionist government can hinder the free market’s natural ability to create wealth and jobs.

When governments acknowledge the limitations of their roles and allow the private sector to thrive, we see remarkable economic growth. It is the difference between a well-refereed rugby match, where the game flows seamlessly, and one where every minor infraction is scrutinised, disrupting the rhythm and enjoyment for all.

The lessons from rugby can also teach us about the value of simplicity and minimalism. While complex rules and constant intervention may appear to address immediate concerns, they often lead to confusion and inefficiency. In rugby, a well-officiated game is one where the referee’s presence is felt the least, allowing the players’ skills and teamwork to shine. In economics, effective governance involves creating an environment that fosters economic activity and innovation, then stepping back to let businesses and individuals flourish.