Personal Finance

Recognising lower class thinking and its impacts

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Leaders of family business, in seeking to adopt long-term policies that lead to prosperity, must learn to recognise differences between intention and actual impact. PHOTO | FILE

Therefore listen, O Israel, and be careful to do them, that it may go well with you and that you may increase greatly [in numbers], as The Lord, the God of your fathers, has promised you, in a land flowing with milk and honey. - Deuteronomy 3:4 AMP

It was supposed to create a fear in the hearts of criminals by imposing harsh prison sentences on repeat offenders. The three strikes legislation which took effect in 1994 imposed a sentence of 25years to life for third convictions even when the last was non-violent.

California’s crime rate from 1992 to 2012 halved; politicians, activists and elected officials believed this to be a result of the three strikes law.

However, according to Professor Robert Parker of the University of California, Riverside, this was not so, seeing that crime declined at similar rates among states that imposed the law and those that did not.

His research revealed that national homicide rates were related to alcohol consumption and unemployment; the more people drink, the more homicides are likely to occur and vice versa. The decline in crime was linked to the steady decline in alcohol consumption since 1982.

What the three strikes law did for California however was to drastically increase its prison population, a rising number of who are geriatric. The high cost of housing these prisoners limits the state’s ability to implement beneficial policies in areas like higher education.

When Singapore resolved to undergo a national transformation, Lee Kwan Yew recognised that the journey would be difficult and that there would be resistance to modernisation.

In seeking to implement measures to deter petty offences such as vandalism, Singapore adopted a penal code that includes caning as a form of punishment for male offenders under 50 years.

Singapore considers “the judicious application of corporal punishment to be in the best interests of the child” and applies this punishment, even in the face of strong criticism from countries whose delinquent citizens attempt to test the statute’s efficacy. The result is a clean, tidy and safe country.

The recent legislation to cap interest rates on bank loans means well. It seeks to make loans more affordable and to increase returns on savings deposits.

It resonates with the public, many of who feel that Kenyan banks are exploitative. However, from a historical perspective, it is unlikely to either reduce the real cost of or ease of access to bank loans; status quo remains.

Leaders of family business, in seeking to adopt long term policies that lead to prosperity, must learn to recognise differences between intention and actual impact.

Lower class thinking imagines simple solutions to complex problems in coming up with catchy phrases and taglines to resolve long standing issues.

When leaders of family business reward well-meaning initiatives that ultimately bear little fruit, they institutionalise lower class thinking in their ventures and will, ultimately, reap bitter fruits.

The road to hell is paved with good intentions. Therefore, good intentions, no matter how noble, cannot be the basis upon which decisions affecting the business are made.

The most important role of leadership is to carefully think through what needs to be done today to secure the venture and its stakeholders in coming days.

They must go further than the rosy aspirations that characterise presentations made to them and, from their knowledge of history, identify the likely real effects of proposals.

There is no course of action that does not bring with it negative consequences, some in the short term and others in the long. Excellent initiatives that hold promise for transforming present problems into future opportunities often have unpleasant implications in the short term as they are bound to be resisted by those they affect negatively, require strong leadership will (especially when dissent brews within the institution) and unrelenting persistence in their implementation seeing that mediocrity fights back; hard.

Leaders of family business should not adopt pleasing short term policies that have obvious negative long term implications in the hope that things will work out in their favour.

They must recognise that there are very few “new” things on earth; that almost everything has been tried before in some form and that effects of such actions can, from the comfort of one’s office, be examined from history and only then, with a clear perspective of a policy’s most likely outcome, should the leader make a decision.

Mr Mutua is a Humphrey Fellow, leadership development consultant and author of the book The African Prince. His email address is p.m

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