Aha oni, Yai
A icle
Is ael and he p oblem o in la ion
Sou h A ican Jou nal o Business Managemen
P o ided in Coope a ion wi h:
Uni e si y o S ellenbosch Business School (USB), Bell ille, Sou h A ica
Sugges ed Ci a ion: Aha oni, Yai (1982) : Is ael and he p oblem o in la ion, Sou h A ican Jou nal
o Business Managemen , ISSN 2078-5976, A ican Online Scien i ic In o ma ion Sys ems (AOSIS),
Cape Town, Vol. 13, Iss. 2, pp. 98-99,
h ps://doi.o g/10.4102/sajbm. 13i2.1180
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/217800
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/4.0/
98
In many ways, his app oach o employ~~n ein ? c-
ed
he essen ially ibal na u e
o
~e ~a 1c1pan s, smce
he young men li ed
in
do ~1~ones an~ hos .els,
seg ega ed
by
hei ibe
o
ongm; and m e - nbal
disag eemen s we e no unusual.
..
Recen ly, he mines ha e a emp ed o s ab1hze he
wo k- o ce
by
encou aging pe manen employmen and
by
de eloping acili ies
so
ha amilies can li e oge he
on he mines. Beyond ha , hey ha e in ol ed hemsel ~s
in
educa ional upg ading schemes o s a and hei
amilies and hey ha e also made a emp s a in eg a ing
he wo k- o ce, i espec i e
o
ibal a ilia ions.
I
is
a
slow, expensi e p ocess bu
in
he long e m
i
~s
seen by
many execu i es as making economic and social sense.
Oppo uni ies o ad ancemen a e being de eloped, ~u
s ong esis ance
is
equen ly p esen ed by he whi e
unions which in his indus y a e pa icula ly ecalci an
o social change. When one conside s ha in
1980
o e
700
000
people we e employed
in
mining,
o
whom
900Jo
we e black,
i
will
be seen ha his indus y aces an eno -
mous ask, i espec i e
o
he deg ee
o
sympa hy held by
managemen o he concep
o
social and economic
change amongs i s wo k o ce. Success in his a ea
o
Sou h A ica's economy ce ainly bodes well o he
coun y a la ge; ailu e could poin o p oblems
o
ca aclysmic p opo ions.
I ha e ied o summa ize o you he challenges which
ace managemen
in
Sou h A ica as pionee s
o
social in-
no a ion.
I
is
e iden om my alk ha my hesis
is
ha
he ype
o
socie y which businessmen and business
academics
in
Sou h A ica wan ,
is
one which
is
a leas
simila o a capi alis socie y wi h i s concomi an ee
en e p ise e hic. So managemen
is
bound o s ee change
in he di ec ion
o
ee en e p ise.
Gi en he p e ailing ci cums ances, pa icula ly black
a i udes and go e nmen in ol emen in he economy, i
is
ques ionable whe he ee en e p ise
is
a ma ke able
commodi y o he majo i y
o
he coun y's inhabi an s.
In o de o ensu e ha he sys em can o e bene i s o
he pa icipan s,
i
mus be jus , ai , colou blind and
p o ide scope o equal oppo uni ies.
Managemen 's majo ask hen
is
o ensu e change in
he cons ain s ha exis a p esen -a bo h a mac o
le el, and a mic o le el. I
is
e iden ha go e nmen -
indeed mos whi es o ha ma e - esis he change
which
is
so necessa y, and managemen 's ask
is
he e o e
bo h as and complex. I has been said ha business
alone canno make a socie y lou ish; I belie e hough,
ha in Sou h A ica, wi hou business's in ol emen in
socie y in he b oades sense, i will p og ess e y li le.
Tha managemen has a ole o play in his ega d mus
be
unques ioned, and I do belie e ha managemen has
al eady iden i ied and ackled some
o
he a eas whe e
social and economic change
is
so necessa y. Bu o he
good
o
Sou h A ican socie y, he e
is
s ill so much o be
done. I
is
a once a bewilde ing, complex and ime-
consuming ask, and a c i ical challenge. I would like o
close by quo ing a p aye which Ma in Lu he King was
won o use. I belie e ha i
is
a he ap .
'Lo d,
we
ain' wha
we
ough o be,
we
ain'
wha
we'd
like
o
be,
we
ain'
wha
we
gonna
be,
bu
hank
God
we
ain'
wha
we
was.'
S.-M .
lyd,k .
Hed y sl.
1982,
13(2)
Is ael
and
he p oblem o
in la-
ion
Vai Aha oni
P o esso , Leon Recana i
G adua e
School
o
Business Adminis a ion,
Tel-A i Uni e si y,
Rama -A i ,
Tel-A i 69978, Is ael
Talk deli e ed o
s a
and s uden s,
G adua e
School
o
Business Adminis a ion, Uni e si y
o
he Wi wa e s and, Johannesbu g, Sep embe
3,
1981
Is ael, al hough a small coun y, has big p oblems
o
which, aside om secu i y p oblems, in la ion
is
one
o
he mos pungen . Be o e elling you some hing
abou
how he business communi y in Is ael li es wi h he
p o-
blem
o
in la ion - a ew backg ound de ails
on
ends
in h ee
majo
a eas: de ence expendi u e, he
expansion
o
social se ices
and
economic g ow h.
De ence expendi u e has been g owing
exponen ially
since
1973
a e a sho emission in he ea ly yea s o
he
se en ies. The Peace T ea y wi h Egyp has b ough
no
elie ; in ac expendi u e has inc eased o accommoda e
he deploymen
o
he
a my
and
ai po bases o
new
si es
ou side he Sinai.
Thi y- wo yea s ago, when he S a e
o
Is ael
was
es ablished, he
amoun
o
money spen
on
social
se ices
was low. Since hen i has been inc easing
in
line
wi h
wo ld ends. Also, he e lux
o
ime coupled wi h
good
heal h se ices has changed he small p opo ion
o
popula ion
a
he uppe peak
o
he age py amid
in o.
a
sizeable
and
inc easing segmen
o
ou
socie y.
Is aelis,
like hei coun e pa s anywhe e else in he wo ld,
make
equen calls
on
he na ional heal h se ice, ~hich
is
apidly g owing mo e sophis ica ed, mo e eqmpmen -
o ien ed and he e o e
mo e
cos ly. These ends
a e
he e o s ay. . .
The high g ow h a e
o
IOOJo
-
120Jo
du ing
~he
s1x ~es
made possible he high le el
o
de ence and social
se ice
expendi u e. The wa cos Is ael he equi alen o
he
G oss Na ional
P oduc
o
one
yea , -plus an
amou~
which s ill has o be paid.
A
he same ime, he
e_con~mic
condi ions we e d as ically a ec ed by ising
011
pnces.
These p ices can be compa ed
o
a o eign ax on
he
economy, and like axes,
canno
be a oided.
By
he end
o
he se en ies, Is ael had changed o~ a
'wel a e' o
an
'insu ance' s a e: e e ybody became in-
su ed agains e e y calami y -loss
o
job,
loss
o
p o i ,
mo emen o new
jobs
in new a eas -e e y hing.
The
s a e had aken
on o
i s own shoulde s he ask
o
p o ec-
ing he whole popula ion agains he e ec s
o
change.
As a esul Is ael
is
now le wi h e y li le oom
o
' m
manoeu e. E e ybody ag ees
ha
he go e nme
should cu expendi u e,
bu
i
is
impossible o name
any
speci ic cu wi hou
an
ou c y om somebody.
Democ a ic socie ies b eed a sense
o
en i lemen :
he
'why-should-I-lose-ou ' synd ome. De ence cos s a
4007o
o
he o al budge a e high bu nobody belie es ~ey
can
be educed·
o
e ec e en small cu s in he social p o·
' · I
s
g amme
demands a change in he law; and he
soc1a
c~
o
la ge-scale unemploymen
is
conside ed o be oo
high
a p ice o pay o educing in la ion. The esul
is
ha
he
s.
A . J. Bus. Mgm 1982, 13(2)
go e nmen
is
hams ung
when
i
comes o using he ools
adi ionally applied
o
es ain in la ion wi h su icien
o ce.
In
1980, money supply inc eased by
9711/o
and
in la ion,
which was
abou
2511/o
-
3011/o
in he ea ly se en ies, each-
ed
l300Jo.
This igu e e lec s an accele a ion in he a e
o
in la ion -an accele a ion pa ially caused by g ow-
ing
expec a ions.
G ow h
has declined, e en s opped, bu
in la ion con inues
o
ise. Since some
500Jo
o
he p o-
duc
o
he
economy
is
excluded om ma ke o ces,
i
is
mo e di icul
o
exe cise Keynesian- ype con ol.
Unde condi ions
o
in la ion as
ampan
as hese, peo-
ple
end o
bo ow
like
mad
and
spend wildly because
hey expec p ices
o
con inue
o
ise.
The
go e nmen
has eso ed
o
a ious de ices in an e o o change such
expec a ions; o example, o he i s ime in
32
yea s
he p ice
o
a
commodi y,
in his ins ance ele ision se s,
was
educed o e a ce ain pe iod, so
ha
people we e
le wonde ing wha p ice would go down nex ; his made
he public become
mo e
hesi an
abou
buying.
P oblems acing he business manage
High in la ion causes manage s h ee p oblems:
Unce ain y.
No
one
knows, o example, wha he p ice
o
goods will be in i e
o
eigh
mon hs'
ime,
o
he s a e
o
he o eign exchange
ma ke ,
o
in ac he s a e
o
any
con ac which is conce ned wi h money alues.
In o ma ion.
The
inancial accoun s
o
companies cease
o make any sense
a
all wi h in la ion a
13011/o.
People
lose he eel o he meaning
o
cos . They a e
on
he c es
o
he Money Illusion -which makes i impossible
o
ap-
p ecia e ei he
he
a e
a
which he cu ency
is
losing i s
alue,
o
he p ac ical implica ions
o
he loss. A ha
s age in Is ael, e en he axmen did no ecognize in la-
ion, wi h
he
esul
ha
axpaye s paid ax
on
incomes
ha did
no
exis .
P oduc i i y. E icien
managemen ,
p inciples
o
sound
ma ke ing,
and
he
impo ance
o
p oduc i i y
a e
s ill
being
augh ,
bu
he
business manage hinks only
o
one
hing -money: collec
oday,
pay
omo ow
and
bewa e
he axman.
Tha
sums
up
his
app oach
o business.
Time
is
a
manage 's
sca ces
and
mos impo an
esou ce:
i
i is spen
on
collec ing money,
o
wo ying
abou he
axman,
he e is jus no ime le o imp o ing
p oduc i i y.
The
s a agems employed in money
manipula ion
a e
a legion:
bo ow
a high in e es , show
his as
an
expense, in es ax ee - he e
is
no end o i .
The examples I ha e gi en you a e no anywhe e nea a
ull accoun
o
he
pe nicious e ec s
o
ampan
p ice in-
c ease.
Lea ning
o
li e wi h
in la ion
In Is ael
mo e
and
mo e
companies mus no only wo k
o educe
in la ion,
bu
also
o
build sys ems
ha
will
99
enable hem o li e wi h i . This
is
achie ed h ough in-
dexa ion. Fo example, conside lending R
JOO
o be
epaid la e : he in e es mus be eal, no nominal,
and
e u n mus ake in o accoun he all in alue
o
he p in-
cipal as well.
In
consequence he unce ain y caused by
in la ion
is
aken
ou
o
he ansac ion: he le el
o
in la-
ion
in
x
mon hs'
ime
is
imma e ial - he lende will be
compensa ed.
Labou con ac s we e he i s o use indexa ion, and
wages a e au oma ically indexed o he limi
o
7011/o
o
he Cos
o
Li ing (COL) inc ease, a i s adjus ed e e y
six
mon hs. One good e ec has been an imp o emen in
indus ial ela ions and he i ual elimina ion
o
s ike
ac ion.
Conside li e insu ance and bea in mind ha a
mon hly sala y
o
IP 6
in
1939 could ha e become IP
100
in 1952, and IP 100,000 oday, o he same p o essional
job.
Li e insu ance should be dead in imes
o
high in la-
ion. In ac
i
s opped ope a ing in he i ies; bu i has
been e i ed wi h he in oduc ion
o
indexa ion.
Li e insu ance companies could no o e indexed in-
su ance wi hou he indexa ion
o
he asse side. Conse-
quen ly, go e nmen was asked o issue long- e m bonds
linked o he COL index. These bonds we e issued by he
Elec ici y Company which could inc ease i s egula ed
p ices wi h he in la ion. O he indexed bonds linked o
speci ic p ices ( o example cemen ) we e issued. La e
mos long- e m mo gages and bonds we e linked o
COL. This may ha e complica ed accoun ing, bu
on
he
c edi side, unce ain y has been eased: sa ings, which
wi hou indexing would be ze o, s and a 20%
o
GNP
-
an
imposing igu e compa ed wi h abou
70Jo
in he
Uni ed S a es
o
Ame ica.
The numbe
o
linkages
o
his ype ha e inc eased
and
wi h he high in la ion
o
he se en ies, adjus men s ha e
become mo e equen . Wages a e au oma ically adjus ed
e e y h ee mon hs, no six, and hey migh be adjus ed
e e y mon h
i
he p esen in la ion a e pe sis s. Bonds
and mo gages a e adjus ed mon hly, social pensions,
e e y h ee mon hs.
O
cou se he solu ion
is
no pe ec :
he way hings a e going, one can lose money e en on a
mon hly adjus men ;
i
is
some imes a ques ion
o
days!
La ge companies a e g adually being o ced by ci cum-
s ances o p esen s a emen s adjus ed o he
COL
index.
Pe sonal income ax
is
now indexed, and he p oblem
o
companies
is
being ackled h ough egula ions p o iding
ha company ax be paid on one gene ally adjus ed s a e-
men . Today, he
majo
dis o ion emains in he ields
o
e ailing
and
wholesaling: e aile s wi h high in en-
o ies pay high e ec i e ax unde highly in la iona y
condi ions. The Go e nmen , howe e , p oposed
an
in-
la ion adjus ed ax law designed o elimina e his dis o -
ion.
To
sum up, indexa ion allows a leas a pa ial solu ion
o he h ee
majo
p oblems discussed abo e.