The government’s use of corporate-style way points is an indication that we are back on the path toward becoming "New Zealand Incorporated" that characterised Bill English’s former economic stewardship.
This is not surprising, given the present Minister of Finance is a Bill English protege and, in any case, the idea of New Zealand as a dynamic, disciplined economy has broad approval, having been backed, in one form or another, by both National and Labour.
In spite of this, New Zealanders have been blind-sided by the speed with which the present government has set out to lock in a neo-conservative agenda as the means by which to create "New Zealand Incorporated".
This raises a concern which has been the subject of research into the human side of why otherwise sound management systems fail. This is, the problem of confidence exceeding competence when job applicants apply for positions and the way employers tend to be convinced by confidence.
The problem being that over-confident applicants’ failure to perform satisfactorily manifests itself as a tendency to concentrate their efforts where they believe they have strong abilities. They tend to redefine the job, often neglecting aspects of the complete job description. This is then further compounded by employers’ human reluctance to admit to a mistake and seek a better qualified person.
Projected self-confidence is a politician’s stock in trade and, as their potential employers, we voters need not to let self-confidence distract us from the skill set required for the job. Politicians essentially sell themselves as social engineers with the skills to build and maintain a society (in the present government’s case, on a corporate model). That implies either a very wide native skill set or a willingness to take expert advice in the interests of NZ Inc’s citizen shareholders.
Those who promote themselves as being suitable applicants to run a country, solely on the basis of corporate business skills, are almost automatically in danger of over-selling themselves.
Anyone who has seen the value of their shares in corporate businesses reduced to nothing, and seen the members of the board of directors walk away as the unscathed recipients of wealth transferred from the shareholders, will know that the corporate governance model can fail spectacularly.
In some cases, those running large businesses have lacked the competence to run complex organisations. In other cases, their understanding of whom they serve has been flawed and they simply put their own interests first.
Having been elected to office, the corporate governors of New Zealand Inc should do their best to see that all the shareholders are included in the wealth generated by NZ Inc.
If a country is just a business on a larger scale, then it is an extremely complex business and it is instructive to look at a large and complex business that is in trouble at this time.
The Boeing Aircraft Company has been a standard by which a successful, complex business could be measured. Recently, it has begun to struggle, with shareholder confidence, both in its technical competence and its management practices, declining.
It is a long established company with a culture that has parallels with a small nation state. It has practices and structures based on complex interrelationships between the considerable number of people who make up its workforce and management. These people have varying degrees of ownership of and dependence on the company.
The criticism being levelled at Boeing, with respect to what has gone wrong, is that its management and corporate leadership have become dominated by people whose skills lie in finance, sales and marketing — and that the wider understanding that managers from an aviation engineering and design background have is missing.
In other words, that the business is being run by people who do not have an appropriately wide skill set.
If the running of a country is a social engineering project then we, like Boeing’s shareholders, need to be confident that social engineering knowledge and skills are strongly represented in management and governance.
When established corporate businesses fail, there is a common pattern. A link between director and senior management earnings and short-term profits incentivises cost-cutting. This leads to the running down of plant, investment in research and development and investment in training.
Human capital, in the form of experienced staff, is laid off and asset sales are used to boost the bottom line.
These changes are often sold as efficiency gains, but they can hollow out corporate businesses to the point where they become fragile, lacking the institutional knowledge and asset base to respond to change.
In the worst cases, pumped-up short-term returns and productivity bonuses for senior management and directors are followed by a collapse that leaves shareholders with valueless stock.
It can be argued tax cut handouts are an analogue of the kind of pumped-up returns that can precede long-term losses to shareholders. This analogy is more striking when we consider that these pumped-up returns are based on the running down of NZ Inc’s investment in plant (infrastructure) institutional knowledge (government work force cuts) human capital (education, health and welfare cuts), and so on.
Future asset sales, in the form of privatisations of water, mineral rights and things like healthcare and education, might lead a diligent NZ Inc shareholder to wonder whether a corporate raid is under way.
In concrete terms, does the assertion that New Zealand is "open for business" really mean that New Zealand is up for sale?
This would be particularly alarming if there is any hint of cronyism in asset sales. For example, favouring sectors of the economy that are backers of the incumbent coalition.
In a business investment setting, any and all of these concerns would be cause to call a special general meeting of shareholders on the grounds that we might have chosen a team whose enthusiasm for their own abilities had blinded us to their lack of suitability for the job of running NZ Inc.
The corporate business analogy stops here. We can’t call a special general meeting of shareholders. New Zealand has no simple formal mechanism to go back to the polls and that is a constitutional weakness that we should, perhaps, address.
If we have chosen who is going to run New Zealand Inc unwisely, then we are stuck with it until the next election.
■Glen Morgan is a retired teacher and former short-term member of the Greymouth District Council.
