OJBs Web Site: Business

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Some Opinions on Business

In New Zealand we have been hijacked by the "new right" monetarists since 1984. I can see a correction occurring in many places though. In the last few years we have gradually been drifting back to the center. The policies of privatisation, tight fiscal control, and tight business-like control of public institutions has, in most cases, failed miserably here. For example we privatised our railway system and its been a disaster, services have been lost, the company has let the system degrade while shipping profit overseas.

Another example is our national airline was sold and had to be bailed out by the government after grossly incompetent management. Our telecommunications system is a monopoly owned overseas and provides mediocre over-priced services while shipping hundreds of millions overseas every year. Our electricity system was "modernised" as the last act of the previous right-wing government and it has been a complete failure - prices have increased, generation has been wasted, and new projects have been put on hold.

Here's the unemployment stats for New Zealand since the "miracle" of monetarism was introduced in 1984:

Year	Unemployed
1984	50136
1990	139625
1998	154774
1999	197982

So what was the benefit of abandoning our welfare state and moving to a market driven economy? Well, plenty of CEOs got fat salary increases for laying off workers, so they were happy I guess.

More recently unemployment has improved dramatically here. The new right claim it is a delayed effect of their good work, of course. I think its more likely the effect of having a more sensible, center-left, government in power for the last few years.

In summary, I have little confidence in private ownership of important services. Private owners are there to maximise profit, not quality of service - and if you believe the two are the same you are very naive. I have even less confidence in overseas ownership. People invest overseas to maximise their return (often without the guilt of exploiting workers in their own country). They have even less interest in quality than local investors. Private enterprise has little concern for the big picture and long-term planning. In most cases they simply aim to make a good profit to include in the current financial report. Larger aims involving social issues and long term sustainability aren't seriously considered. I'm sure there are some exceptions to this rule, but even in little environmentally friendly New Zealand, I can't think of any.

Globalisation

I think a lot of international organisations, such as the World Bank, are there to further the interests of big (mostly US) corporations. I don't think free trade is necessarily a good thing - even if it was, that's not the game they are playing. The big world powers like the USA and EU want access to exploit other countries but have plenty of ways of blocking free trade and investment in the other direction! A whole series of American governments have been hijacked by big business - and it doesn't seem to matter whether they are Democrat or Republican - the only option for the average American is to lose! Unfortunately this affects everyone else as well. What is the point in trying to reduce greenhouse emissions, pollution, and plundering of non-renewable resources and to foster fair trade when the US (who generate most of the pollution and have the least fair trade practices) won't cooperate?

We Need to Control Capitalism

So what's the alternative to pure capitalism? Believe it or not, contrary to the propaganda spread eveywhere by government and big corporations, there are alternatives. First, don't totally disregard government control of key assets. I know its trendy to say governments don't run electrical supply, telecommunications, airlines, etc well, but ask yourself: is it really true? It seems to be that they don't do that bad a job at all. They're not perfect, but private enterprise isn't perfect either. So which is less imperfect that the other? Personally I think we had a better deal here in New Zealand when the key assets were under the control of the government. And also contrary to common belief, consumers do have control over government organisations. We can vote out a government we don't like, but we can't change the board or CEO of a large corporation can we?

Another alternative is to allow private control of important assets but have strong regulations controlling how they are run. When this is mentioned I usually hear the old argument: "but companies need to be given the freedom to run the way they want to". Usually the arguments about "freedom to innovate" and "being allowed to exercise entrepeneurial flair" are thrown around. This is just not true. Most business would prefer to stifle innovation and build a monopoly - there's plenty of examples out there! Strong control over business practice is an absolute necessity in my opinion.

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