Hard for Shuttleworth to win if he sounds like a whingeing whitey

Rhodes>Perspective>2013 Archive

No matter how logical an argument, it can fail to persuade because of who is presenting it. The ancient Greeks, who invented the art of rhetoric, knew this well.

They saw argument as partly logic, but also partly the darker arts of persuasion, appealing to emotions or prejudices in order to convince.

One prejudice they knew they had to manage was their own credibility. No matter how logical, an argument made by someone with a vested interest in its conclusion is less convincing than one made by someone authoritative, yet neutral. This is, I think, why the argument against exchange control has so far failed to convince all of the policy makers who are empowered to change it.

Those often making the argument are rich whites who want to take their money out of South Africa — not credible voices on national policy. Many mount the wrong argument, positing that exchange control violates their property rights, while ignoring that maintenance of the value of the currency is a legitimate role for the state in protecting a public good. So they irritate the political class, and defence of exchange control is unshaken if not entrenched.

I’m not yet sure whether Mark Shuttleworth’s constitutional case against exchange control will serve to entrench political stubbornness or shake it into change. Mr Shuttleworth has a credibility problem. He is a rich white businessman who took much of his wealth abroad, and now lives in a tax haven.

On matters of public interest, his voice is too easily seen as self-serving, irrespective of the logic of what he says. In court hearings so far, the South African Reserve Bank has tried to paint Mr Shuttleworth into this corner, with counsel Jeremy Gauntlett decrying him as a "financial refugee" who seeks to "bring down the pillars of the temple".

Mr Gauntlett is a master of persuasion, who will know how to avoid logic when it does not serve his purposes. So, when he said that ending exchange control would mean there was "no inhibition on removing capital from this country at all", he assumed everyone would think this was a bad thing, ignoring that Botswana, Mauritius and Zambia had capital inflows when they abandoned exchange control, never mind examples from Eastern Europe and elsewhere.

He also evoked the spectre of malevolent actors damaging our financial system. "There are sophisticated economic forces at work, and there’s a need for fast action for the purpose of protecting the currency.

"There’s nothing wrong with such a legislative scheme," he said, ignoring the fact that billions of rand are traded in markets around the world every day unfettered by any "legislative scheme" while South African citizens are forced to fill in forms (in triplicate) to pay paltry sums of money to foreigners, let alone take their wealth abroad. Mr Gauntlett has gone for sophistry rather than logic to persuade.

But Mr Shuttleworth is adept at managing the way his message is received and may turn his perception problem around. He has already said the R250m he stands to win will be put into a fund to support South Africans who pursue constitutional cases against the government.

While this, of course, is not in the government’s interests, it does weaken the view that Mr Shuttleworth’s challenge is purely self-interested. He has said his opposition to exchange control is motivated by the belief that it does great damage to the economy. He can afford to obtain expert testimony to prove it.

Mr Gauntlett’s argument that some great harm would befall us should exchange control be abandoned, may backfire if Mr Shuttleworth can deliver the evidence that it will not. Of course, Mr Gauntlett is no fool and has covered other bases in the Reserve Bank’s legal defence should he not convince on the economic logic.

I presented the case last Friday in this paper for why exchange control should be abandoned, citing mainly the serious damage done to the competitiveness of small business. We play out a script from the theatre of the absurd, trying to manage our way through an intricate bureaucracy designed to thwart ambition, while global actors move the rand exchange rate every time the president utters something on the economy. "Absurd" is the word.

If Mr Shuttleworth is to break this spell, he needs a clear strategy on how to shake the entrenched resistance to relaxing exchange control. Unfortunately, he has started by sounding like a shrill voice that won’t.


Source: Business Day