by frog
Christchurch members of the Green Party are currently at the Royal Show discussing green solutions and Green Party achievements with the show going public. Luckily for the Greens they are getting good entertainment from their stall neighbours who appear to be re-enacting Arthur Millar’s period piece drama, the Crucible.
Sue Bradford will also be at the show tomorrow morning on the Buy Kiwi Made stall promoting companies that are supporting our economy, our workers and our environment by manufacturing here in New Zealand.
Published in Society & Culture by frog on Thu, November 15th, 2007
Tags: buy kiwi made, crucible, royal show
on the trolls and those who are unable to keep on topic
No no no, you guy’s have it all wrong with patriotism. You are suppost to get the general population into the national spirit by more national anthem singing (i.e. at city council meetings) and general ‘Yay New Zealand activities. Patriotism does not however work on companies as they are generally going to try and maximise profit as their main goal. Driving them out of the country as the green party advocates with policies such as much higher minimum wage, more strict work place conditions and more workers rights and then saying to those who are left “Yay, thanks for staying and supporting our economy, our workers and our environment by manufacturing here in New Zealand” is not the answer.
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Oh, and not content with regulating bussinesses the green party has of course moved on to regulating families as your image indicates.
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Great to see that this piece of disgusting legislation is not going to be forgotten in election year.
The EFB and the anti smacking bill will come back to haunt the Greens.
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BB, I still don’t get how you can be so passionate against violence on animals (as per you post on the Hector’s Dolphin thread), but seem to think violence agains children is acceptable and should be condoned by law, as in “reasonable force” for the purpose of correction.
I take it you don’t believe in “reasonable force” for the purpose of correcting animal behavior, given your various posts on animal rights.
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toad
I understand your confusion.
I mean if big bro is successful in his campaign to eradicate animal cruelty, many of the pig farming and battery hen industries will be out of business, or will have to dramatically change their business through compliance. That sure isn’t big bro’s ACT party way.
Yeah, so put a child and an animal side by side. Both do something wrong and will be corrected by force. According to big bro he will dive in to save the animal, the child is left to fate.
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So Nick, you want to reduce people’s wages, make their workplaces unsafe, and allow employers to treat employees unfairly? Gee I’m definitely voting for you!
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Stuey,
You are being disingenuous with Nick’s comment. (snide remark might be better terminology).
My interpretation of what he is saying is that there has to be a balance between what is sustainable in payrates, working conditions, etc. If you make them so expensive that a business cannot compete with its overseas competitor, the business will fail (loss of jobs the result).
See http://www.stuff.co.nz/4274667a13.html where Griffins are shutting down a bakery due to imported cakes making it uneconomic to keep the Lower Hutt bakery open (220 jobs gone).
That is the reality for existing businesses.
New businesses looking at establishing in New Zealand (local or overseas) will look at their Return On Investment (ROI) rate and if labour rates and working conditions are too high versus productivity, they wont consider setting up here. Easier to set up in Australia and export to New Zealand
Perhaps you would be better to address how increased productivity will lead to higher wages and better conditions. Productivity which will come about mainly by businesses investing in new plant and equipment.
The latest “flexible Working Hours” idea will further dampen an already weak business investment sector. A sector not helped by high interest rates.
As I said there has to be balance, what we are seeing now is that the balance has swang to far in the employee favour and businesses feeling the pinch and moving offshore.
While on the subject of business unfriendliness, one business I know is moving to Australia simply because, in order to expand his factory to meet export orders, it requires two years and $40,000 to attempt to gain council consent for the expansion. With no guarentee that the consent will be given.
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># toad Says:
>November 15th, 2007 at 8:49 pm
>BB, I still don’t get how you can be so passionate against violence on animals (as per you post on the Hector’s Dolphin thread), but seem to think violence agains children is acceptable and should be condoned by law, as in “reasonable force? for the purpose of correction.
Toad, I think you’re deing disingenuous here. The threat to the dolphins comes from the fact that they get caught up in nets, they suffocate and they die. BB has actually spoken out about acts of cruelty to children of that severity.
And perhaps he does believe in smacking misbehaving dolphins too. But these dolphins aint misbehavin.
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Exactly Stuey, what Gerrit said. Raising minimum wage isnt the answer to make people wealthy, increasing productivity is. And Buy Kiwi made campaigns arent the answer to keeping bussiness in New Zealand, nor is patriotism. We need to balance the restrictions on workers rights and workplace standards so that we can actually compete with overseas producers. Otherwise there will be no workplaces to impose saftey standards on as the Griffins move overseas show.
I am not a big fan of Dolphins like BB appears to be, however i would say that he is not so much a big fan of preventing cruelty to dolphins as saving the speacies from extinction which would harm the ecosystem, not so much animal rights so to speak. So there is no real hypocracy in being agianst the “Sue Bradford and Helen Clark know whats best for your children” bill. Which is quite possibly the most fucked up bill to ever go through New Zealand parliment. Much worse then the EFB and i dont particularly like the EFB either…
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Toad
Wow!, I know you lot are well used to “massaging” the facts but I did not expect that from you.
First of all I have never said that I condone violence against kids, to suggest that I did is hitting a little below the belt, mind you we all know that the smacking bill has nothing to do with violence against kids, it is all about socialists taking control of the family unit.
Anyway, you should be issuing a public apology, you told us that the anti smacking bill would stop the horrific numbers of abused kids, plainly it has not.
The public will not forget this come election time, the problem you have is that you let one of your parliamentarians tell lies about the anti smacking bill, we (the voting public) do not like being lied to.
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Yup, Gerrit, I also see Fletchers’ CEO in the paper warning if the Emissions Trading Scheme is too costly, business will relocate off-shore.
In a globalised world things are pretty simple. If governments and unions don’t do as business tells them, they’ll go elsewhere. Democracy has no place in a market-run economy, labour standards, decent wages, environmental protection etc. all have to go or business will go.
Fonterra is planning to open up to overseas shareholders, anybody up for a sweepstake on how long the provisions on NZ ownership will last? Will the WTO tolerate legislation keeping the company in NZ hands? Or will Fonterra simply relocate production to Argentina, where milk is produced at a lower price than in NZ? It’s going to be fun watching (at least it is fun for people like me happy to live on very little).
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BB: “you told us that the anti smacking bill would stop the horrific numbers of abused kids, plainly it has not.”
No we didn’t. We just said it was one small step that would help in a small number of cases.
Meanwhile, you said that the “anti smacking bill” would cause thousands of good parents to be criminalised. Plainly it has not. And unlike you I provide a reference to back up that statement. So I think you owe us a public apology.
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P.S. on the subject of Sue B’s alleged “lie”, are you able to describe what that “lie” was, in your own words?
I think you have stated that she lied about 20-50 times on this blog but as far as I know you have been unable to tell us what the lie was, and all you are able to do is link to a youtube video. If this “lie” is so important that it causes you to constantly refer to it, then surely you must be able to tell us what it actually was?
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The you tube video says it all stuey, what is it about the truth that you do not like?
For the record I cannot remember say that thousands of good parents will be criminalized (although that is undoubtedly the intention of Bradford) my issue is with the sate interfering in our lives.
How ironic that you (the Greens) can campaign about the terrorist raids interfering in the lives of kiwi’s yet are quite comfortable with the double stand that is the anti smacking bill.
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Sam,
“Democracy has no place in a market-run economy, labour standards, decent wages, environmental protection etc. all have to go or business will go.”
That is the reality of todays world. While business hava alternative locations to invest in and produce goods, that is a what they will do.
You may not like it for any reason but that is what it is. Unless you have a revolution.
Or we could be like Ireland and work with the money people to set up business in New Zealand on such terms that are affordable and sustainable for both the employer and the employee.
As I said it is a balancing act. Decent wages for the employee and decent ROI for the employer.
For Fonterra to grow they need capital. Now Cullen could invest some of the surplus (through Kiwi Saver or the Cullen Retirement Fund) or Fontera could list on the stock exchange. I dont mind either way.
But they do need capital to grow their business and provide growing employment for not just their own workers but all farm, contractor and transport sector suppliers that support their infastructure.
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Gerrit
Do you really think that the Greens will support any moves to help Frontera grow?
They are on record as saying that they want to tax Dairy farmers out of existence and cripple the nations economy as a consequence.
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BB: “The you tube video says it all”.
I disagree, I don’t think it says anything. I have watched it twice and I still don’t understand what lie Sue is supposed to have told.
If it is that bad, then surely you must be able to describe it in your own words?
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BB: “[the Green Party] are on record as saying that they want to tax Dairy farmers out of existence”
No we are not. We never said anything of the sort. If you think we are on record as saying that, then you will be able to supply the ref won’t you?
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BB,
I have the Sam’s and Stuey in mind when they want to increase wages and conditions on one hand and on the other want to stop businesses getting a proper return on investment.
The reality (yup,that word again) is that both are required to maintain a vibrant economy.
Even if the state owned all businesses they would still need to invest to maintain wages and conditions.
Such as Air New Zealand needs to invest in new planes to maintain its competitive advantage and provide ongoing work for employees.
I dont know why the Sams and Stueys of this world cant understand that to increase wages and conditions ones needs the business owners to invest.
And just as Sam and Stuey would expect a Return On Investment if they placed money in the bank on term deposit, so the business owner needs a ROI on the money invested.
One without the other is not possible (even in a communist regime).
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“That is the reality of todays world. While business hava alternative locations to invest in and produce goods, that is a what they will do.”
That’s exactly what I said.
“I have the Sam’s and Stuey in mind when they want to increase wages and conditions on one hand and on the other want to stop businesses getting a proper return on investment.”
Don’t recall saying either of these things. I was noting that the reality of today’s world is that business will invest where the returns are greatest, which normally coincides with low wages, low environmental protection etc. What do you mean by “a proper return on investment”? There is no sign that this is what business wants (whatever you define as proper) – what they want is the maximum return on investment.
“I dont know why the Sams and Stueys of this world cant understand that to increase wages and conditions ones needs the business owners to invest.”
Are you suggesting a causal link between investment and wages and conditions? That’ll be news to a lot of economists.
Anyway, I’m glad you agree that democracy and free-markets are in opposition.
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Sam,
Proper return on investment is somewhere around 15 to 20% per annum of the value of the investment.
With the interest rate at 9% you would need that amount to justify the investment and its associated risks. Otherwise be save and just put the money on term deposit at 9%.
“Are you suggesting a causal link between investment and wages and conditions? That’ll be news to a lot of economists.”
Absolutely, for example the griffins bakery in Lower Hutt requires new ovens. With new ovens comes higher productivity, with higher productivity comes higher wages.
Instead of putting in new ovens , increasing productivity and getting the sales force to sell their biscuits into new markets, they choose to close the factory. No factory, No wages. Simple really.
I guess a lot of economist havent studied the Irish model.
“Anyway, I’m glad you agree that democracy and free-markets are in opposition.”
They can co exists and in many countries do. They do not need to be opposites.
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So by what magic do I get higher wages when productivity rises? I do recall once having a job in which I got a bonus if my workplace performed over expectations – though the bosses declined to pay out on a thin excuse on at least one occasion. But that hasn’t been the norm.
“Proper return on investment is somewhere around 15 to 20% per annum of the value of the investment.”
Who decided that? God?
Your reply to me saying “Democracy has no place in a market-run economy, labour standards, decent wages, environmental protection etc. all have to go or business will go.?
Was: “That is the reality of todays world.”
Which seems to contradict your last statment.
Say everyone in NZ votes for a party which promises a higher wage (democracy), but business announces if it goes ahead, they will disinvest (market). Is this not a case of the two being in opposition?
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aha, so if I follow your economics lesson Gerrit, the employer says
“I must reduce all of your wages in order to be able to buy some new equipment, but once we have this new equipment and we can work more efficiently I’ll be able to increase your wages”.
So if the employer is so sure that the new equipment will make more money, how come they don’t just borrow the money to make the investment?
Also, will the wages go up to the same level as they were before, less than they were or more than they were? Seems pretty crucial to me.
And finally, does it make good business sense to piss off your workforce by reducing their wages? Will you find that all your skilled staff resign and you are forced to employ less-skilled staff and so the quality of your work suffers and you make less money with your new equipment not more?
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Stuey,
“I must reduce all of your wages in order to be able to buy some new equipment, but once we have this new equipment and we can work more efficiently I’ll be able to increase your wages?.
I dont recall ever having said to reduce wages. If an employer upgrades equipment it does not come from lowering wages. Comes from retained profits and usually with a bank overdraft.
Sam,
“Proper return on investment is somewhere around 15 to 20% per annum of the value of the investment.?
Who decided that? God?
No its a standard ROI figure that most accountants will understand.
What is your interpretation of what that figure should be?
If a business is returning less then that it will be closed.
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Hmm, and I don’t recall ever saying increase wages.
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And no one has really commented on the photo of “Family First” or should that be “Children Last”.
Sorry to say this Gerrit, but if the Government interest rate were say 4% and the rest of the market floated around about that figure that 8-10% would be an outstanding ROI.
If interest rates were in the 20-25% range as they have been in the past then I would have to say 15-20% would be pretty pathetic.
I think my accountant would tell me to get out of business and put my money in a bank and take a holiday.
We put up with that, “we can’t afford to pay you properly and you need to increase your productivity” stuff in the 80′s and 90′s and look where it got us. The basic principal remains the same. If you can’t afford to run your business (and pay your staff properly) just do us all a favour and close or go off shore. Just don’t expect thinking people to buy your products.
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Gerrit
Meanwhile your team bleat on about kiwis leaving to settle in Australia. Honestly Gerrit what will your team do to decrease the wage gap with Australia?
Increase productivity? Sure, as workers we can all trust that productivity increases will be passed on to us in the form of wage increases. Most employers recognise that their employees create the profits don’t they?
Lower taxes? That’s not going to help close the gap.
Attack the terms and conditions of NZ workers? Well that sure isn’t going to help, been there done that. We need to build on what we have got, not go backwards.
The reality is that all over the world, irrespective of the type of government, irrespective of wage costs or laws, businesses are uplifting and settling overseas. It’s what they do to gain competitive advantage. Maybe a business that moves overseas shouldn’t be in business in the first place, as they have not assessed the risks properly. It shouldn’t take something as simple as a fluctuating currency to make a business move overseas.
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“Honestly Gerrit what will your team do to decrease the wage gap with Australia?”
Gerrit and his mates don’t WANT to decrease the wage gap with Australia. The whole strategy is to keep that differential, otherwise businesses would all be better off to move over there with a bigger market, or so they think…
This is the exact opposite of the Irish model, which Gerrit has so badly misunderstood. They were in a similar position with respect to the UK, but leap-frogged over them to a high-wage economy by investing in education and infrastructure. It’s quite impressive to behold : they’ve gone from the late Neolithic to the eight-euro latté in less than a generation… but not by keeping wages down and fighting over the scraps from the big boys’ table.
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Gerrit, as to your idea that profitability of 20-25% is “normal”… on the contrary, it’s precisely what’s killing capitalism as a vector of human well-being. The great years of social and economic progress were those when inflation was high, and profitability fairly poor… now the international insistence on absurdly high profit margins has completely changed the balance between income from labour and from capital, to the detriment of (nearly!) everybody.
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Shaky, It does take something as simple as a fluctuating currency to make a business move overseas if most of products are exported and if it uses very little imported material in its production. Cullen’s simplistic dismissal of the high dollar has always been that it is offset by low import costs to farmers and manufacturers.
The first part of your last paragraph overlooks the fact that the move to low wage countries often the only way to remain competive when, for instance, new countries are added to the EU free trade zone or developing nations compete agressively for manufacturing jobs.
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Alistair,
“Gerrit, as to your idea that profitability of 20-25% is “normal?… ”
You are confusing profitability (variation beween the cost of producing goods or service and the selling price of those) with what is a return on investment.
If I invest $100K to set up a business I would expect to budget a return to the shareholder $20K per annum (after all you get $9K just by putting it in the bank).
The variation between the two is (bank rate versus ROI) the value placed by the shareholder on the the risk the money may be totally lost if the venture failed.
Profits (not to be confused with ROI) budgets would be around 10% of turnover (If you have $1M of sales $100K profit).
Overheads (including wages, raw material costs, factory leases, etc) accounting for the $900K.
Of the $100K profit, $20K is returned to the shareholder. The remainder is either also returned to the shareholder or in most cases reinvested in the business to grow (and employ more staff on wages).
“it’s precisely what’s killing capitalism as a vector of human well-being.”
On the contary as demonstrated above, it is what capitalism is, it works, it is alive and well.
The alternative is?
The secret for the workers is to club together and buy into the business and enjoy the profit generated.
Another grand capitalist institution called the stock exchange (you can invest through Kiwi Saver if risk averse) is available to do that.
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Gerrit
I don’t know where the idea comes from that 20% return is reasonable, fair, expectable or sustainable. Try lending money out at that rate and in most of the places I’ve lived you get locked up for usury.
15% is on the high end of what I generally would expect in a business effort, and I’d be ecstatic to do so well, while 10% is regarded as a fair earned return … the question of whether that’s before or after inflation is of interest but at 3% or so, not a whole lot of it.
So this idea of 15-20 percent being “generally accepted” by accountants seems to have some explicative power when applied to the question, “why is this economy so damned weird?” What it is telling me I am not yet sure but it pushes at my model of the universe from an unexpected direction…. and I am always grateful for such tidbits.
Thanks
BJ
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Ahhh… I see… missed that last post..
respectfully
BJ
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Hi Gerrit,
I think we are somewhat talking past each other as you seem to be taking capitalism as some sort of given, whereas I see it as a temporary phenomenon which invents “economic laws” to suit itself (or more accurately, to suit the interests of the powerful, Marx did much the same thing, inventing “rules of history” to produce outcomes that suited his theories). I believe in other possibilities, which I gather you don’t?
“On the contary as demonstrated above, it is what capitalism is, it works, it is alive and well.”
“Works for who?” is the question, doesn’t work too well for the environment, the homeless, people in large chunks of the world, nor for that matter, the depressed, alcoholic and suicidal, those for whom buying a house is out of the question or the Griffins factory workers (etc. etc.).
“The secret for the workers is to club together and buy into the business and enjoy the profit generated.”
That of course requires considerable affluence on the part of the workers to begin with. They could possibly achieve this by forming strong unions and demanding wage increases (which is usually why wages go up, nothing to do with increasing productivity), but the company might then decide to shift off-shore to a more ‘business-friendly’ (AKA ‘worker-unfriendly’) environment.
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Sam,
Present an economic social theory and I can believe in it. Bearing in mind that theory has to include a transition from the existing capitalist system (with all its faults, anomolies and unequalness) to the new one.
What would make an equatible system for “people in large chunks of the world, nor for that matter, the depressed, alcoholic and suicidal, those for whom buying a house is out of the question or the Griffins factory workers (etc. etc.).”
I agree the current system does not work for everybody. But it does for 90%?. (I know what will come next – what about to 10% – something you can address in your social economic theory)
“That of course requires considerable affluence on the part of the workers to begin with.”
No it does not, is a myth spread by socialists.
Join up a bank that does share and bond transactions and for as little as $500 plus a $30 per transaction fee you are in business.
When I see the money going down at the pub, the pokies, lotto, etc. I would say the $500 is chicken feed and would take the average worker less then 3 months to get together. All it needs is sacrificing a few non-essentials on a long term basis (perhaps Cullen is right – we dont have a savings attitude in NZL).
Those “workers” who have joined Kiwi Saver plus are planning their retirement benenfit to come from Cullens Superfund will be quite keen to hear how your social economic tranformation is going to impact on the very capitalistic funds.
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Gerrit.
You ask for an economic theory. But you are not qualified to asses onoe. You say…
“That of course requires considerable affluence on the part of the workers to begin with.?
No it does not, is a myth spread by socialists.
Join up a bank that does share and bond transactions and for as little as $500 plus a $30 per transaction fee you are in business.
$500 is a lot of money for the large number of workers at the bottom of the heap.
Median house hold invcome from all sources is $1203. Average weekly income for females $510, males $832.
With figgures like that finding $500 to spend in the bond or stock markets is a big ask.
W
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Present an economic social theory and I can believe in it. Bearing in mind that theory has to include a transition from the existing capitalist system (with all its faults, anomolies and unequalness) to the new one.
Government ownership for all sectors of the economy where the goods/services are required for participation in modern life and natural monopilies exist.
Water and power utilities obviously, major transport and communications infrastructure, ports and air ports. The SOE model is better than privatisation but it needs to be tamed and made socially responsible. Utilities should be provided so the more you use the higher the marginal cost (opposite from free market pricing).
We can allow capitalists to play with the luxuries: They can make movies trade in paintings, build luxury cars, sell computers and flash sunglasses. Whatever they can think of. All of it of course would need to be regulated to control the externalities, which the market will fail at, and to control working conditions as capital is more powerful than labour so labour needs to be organised and to organise capitalists need to be regulated.
And before you say it the most dynamic sector is, and has always been, the government sector. The universities, where most technology is developed and adapted are in the government sector. The profit motive is absolutly crap at innovation. Profits crave saftey.
peace
W
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Proper return on investment is somewhere around 15 to 20% per annum of the value of the investment.
With the interest rate at 9% you would need that amount to justify the investment and its associated risks. Otherwise be save and just put the money on term deposit at 9%.
Golly! 6% to 11% real ROI!!
Last time I looked the risk free rate was about 7%. So you are sugesting a market premium of 8% to 13%.
The lower end of that band might be what you would get for a rather risky portfolio, the top end is the domain of crooks and successful gold mining companies!
8% minimum market premium. ROTFL!
peace
W
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Bliss,
Over a 12 week period that is $41 per week. Yes it is a lot on money and no doubt there are people who cannot afford it.
Maybe you could qoute me the weekly figures spent collectively on lotto, drinks, smokes, take aways, pokies, etc. Many, many millions of dollars.
And then qoute me how much of the joint $1203 per week could be saved by not “indulging” in wastefull spend?
Yes bliss, I am not qualified to asses any economic system. What I can asses is the money waste by “workers” on frivilous pursuits.
Just park outside any pub or fast food outlet here in South Auckland and tell me why just going without a family KFC meal once a week or not spending money on the pokies is so much hardship.
From every household not able to save $41 per week I will show you 20 who can by proper budgetting, doing without the frivolous, cooking home meals, not buying on layby, etc. afford $41 per week.
Remember we are talking workers not beneficiaries here. Beneficiaries are catered for by our tax system and while some should be working I acknowledge that most cant.
That is what Cullens superfund is to be used for. Provide for beneficiaries in later life when no longer a part time dependant on the tax payer.
The angle I’m coming from is that collectively the workers of New Zealand have tremendous leverage in the capitalist market if they just didn’t spend their money on wasteful pursuits.
The challange for the government is to change the NZL culture from a spending one to a savings one.
Kiwi Saver is a start ( a bad start as I think a it is very susceptable to collapse due to it not being government guarentied).
Tax relief on saving’s interest another. As is tax relief from dividends paid to shareholders, etc.
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Bliss said “The profit motive is absolutly crap at innovation.” With the a few minor exceptions Bliss is correct. Mind you, those minor exceptions include: telegraph, telephone, radio, TV, elevators, steam engines, air brakes, electric lightbulb, compact flourescent lights, transistors, refrigirators, MRI scanners, seat belts (patented by Volvo).
This is because the profit motive actually craves risk as much as it craves safety. It all depends on the individual investor’s priorities. Of course none of the above came from big business either. Not suprising since it is big business that craves safety and small business that takes the risks. Same thing in government. Departments don’t innovate, that is the role of the fringe agencies, the universities and statutory boards (now SOEs) such as Transit and ESR.
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Totally agree Kevyn.
Having done many a presentation on potential markets and product for diversifying a companies product range only to see CEO’s more interested in discussing Key Performance Indicators such as Return On Investment or Shareholders Value Added, I knew for sure to get out the corporate game.
All they really want is twist balance sheet figures into as many permitations as possible.
Some for large government department I would suspect.
They are both the home of the pliant and the placid.
Payday for a small business is when a large company comes knocking and wants to buy you out.
Bliss,
You sound suprised at the market premium level of around 8-10%.
How much would you personally expect in return for putting your house (or savings, or loans) into a business that creates jobs for workers?
It is the same “market premium” workers receive for getting out of bed in the morning over those who stay in bed and receive a minimum “wage or benefit” from the tax payer. The workers “market premium” over the benificiary is with your medium wage figures around 100%.
Surely those who invest (in getting out of bed or running a business) should get a market premium, otherwise why bother?
We might as well stay in bed and leave the money sitting in the bank.
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telegraph, telephone, radio, TV, elevators, steam engines, air brakes, electric lightbulb, compact flourescent lights, transistors, refrigirators, MRI scanners, seat belts (patented by Volvo)
I think this is an optimistic assessment of what the “PROFIT” motive did as it includes a lot of things that came not from corporate labs but from independent researchers and developers. In other words, the idea and invention came from the inventor and was then commercialized, but do you really think that inventors and researchers are motivated by profit first?
Some stuff DOES come out of commercial labs. Bell labs was notoriously successful at generating innovation. It was also funded by a monopoly which had money to burn. Profit motive? The men who worked there were paid well enough but did not get wealthy… they worked there because they were paid enough and they wanted to work where the ideas were percolating.
As a motive however, Bliss is dead right. Wanting to make money is a p!ss poor motivator of innovation… but wanting and having the ability to innovate can generate commercial opportunities to make money. The thing is that taken over the entirety of people involved in attempting such enterprises it shows a poor rate of return. Not all ideas are good ideas.
I think the argument balances. The commercial labs tend to be over-focused on specific areas, that was Bell labs great advantage… it took a far broader view… but the focus DOES give progress. OTOH, focus excludes the ideas from left-field a bit too thoroughly to get breakthroughs. the incremental improvements are there, but the quantum jumps of understanding are far more difficult.
I am reminded of one of the addenda to Murphy’s law.
“All great advances of science are the result of some sort of mistake”
(…think Penicillin ) “The greater the funding the longer it takes to make the mistake”.
respectfully
BJ
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BJ, Of the 13 innovations I mentioned only one was the consequence of serendipity. Bell was trying to invent a hearing aid and invented the telephone instead.
The rest of your arguments are correct for invention. But innovation isn’t the same thing as invention. An invention really only becomes an innovation when the inventor teams up with a promotor (or an engineer teams up with a salesman as in the case of Rolls-Royce) to attract investors. Whilst more innovations fail than succeed, and probably by more than ten to one, the returns on that one success can be many times greater than the losses on the many failures. This might only be a mantra of venture capitalists but if so then it is one with enough power to defy reality for centuries.
At the heart of this discussion is Bliss’s assertion “And before you say it the most dynamic sector is, and has always been, the government sector. The universities, where most technology is developed and adapted are in the government sector. The profit motive is absolutly crap at innovation. Profits crave saftey.”
The raison detre of government is stability and preserving the status quo. That makes it the most static sector, although big business often aren’t much better. The military is the only really innovative part of the government, including giving us Murphy’s Law. I wouldn’t be too surprised if the most innovative universities turn out to be those least beholden to state patronage.
Anyway, this whole discussion is a red herring. Bliss was advocating government ownership of all the innovations I mentioned. Anybody who thinks that politicians and beauruecrats can do a better job than business people is beyond belief. Ps & Bs have a monopoly on their slice of life, no competition means no performance comparisons can be made. IMHO that is the only real difference between big business and big government but it is a significant difference. Now, if Bliss had suggested stringing up all the Ps and Bs and business “managers” and letting technocrats run things then I would have no objections. At least then we could be sure that the proposed solutions to AGW would have at least there basic assumptions tested to make sure they wont make things worse instead of better.
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What are Ps and Bs?
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I am suggesting an economic model where the (material) necessities of life are socialised and the wants are privatised. For a sensible definition of necessity and want.
The reason is to give capitalists a place to play where they can do no real damage. Personally I would be in favour of doing away with capitalism entirely. But we need to get there (just society) from here (unjust society) and I can see no way of peacefully abolishing capitalism.
peace
W
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bliss,
while my list of material necessities may well differ to your, I’m in favour of major infastuctural assest being owned by the people. Such as roads, rail (only the lines not the transport equipment), airports, electric generation, ferries (especially the Cook Straight), etc.
Monopoly situations such as the Auckland International Airport should have been retained for public ownership.
However private enterprise (such as Bluebridge with an alternative Cook Straight ferry service) are free to start up and compete.
Same if you owned a strip of land and put in a toll road as an alternative to the free public road.
Bearing in mind that the material assets as per current government directives have to meet a Cost Benefit Ratio.
No doubt leading up to much debate on whether a new bridge at Kopu or the SH20 loop from Manukau to Albany meet the government cost benefit ratio.
Labour have said yes but the Greens have said no.
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Gerrit
I’m in favour of major infrastructural assets being owned by the people
Nice to see that we can be in agreement on some of the most important economic issues.
It is an interesting theoretical issue whether private enterprise should be able to duplicate public infrastructure. In practise it usually is impractical. Duplicating roads as a profit making venture is generally not practical, as the externalities of roading are generally huge. So a socialised road where those externalities can be managed. Very few economists think that the market is good at dealing with externalities. Most agree it can be done, but it is an inefficient method.
W
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The Govt owns none of the country’s oil refining and fuel distribution infrastructure yet according to the green’s the absence of petroleum would be life changing….yet that industry seems to work pretty well.
Why would hte govt own anything where there is no monopoly risk? (I’d add that govt owned monopolies tend IMO to have worse behaviours than private ones becasuse they can and do call in the power of the state when it suits their monopolistic tendencies.)
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Kevyn
Having worked at JPL I’d have to take serious issue with your statement that the military is the only innovative part of the government. It SPENDS more damned money in a day than NASA sees in a month… but it isn’t any better at innovation… and on average, its contribution is hardly constructive.
In short form.. I think you’re at least partly wrong on this issue. Bliss is quite correct in terms of the profit motive being a poor innovator. It isn’t a bad method of culling the wheat from the chaff, as there are a lot of damned useless innovations out there, but it isn’t any more creative and I personally think it is LESS creative, than the public sector research organizations.
I can’t imagine a private sector research group studying climate change… no private sector research was (to my knowledge) ever considered in one of my specialities, imaging spectoscopy, until after NASA broke the ground and provided the initial example.
I don’t agree with Bliss entirely either. There’s a lot good to be said for Capitalism in theory… but it eventually and inevitably fails to perform that well in practice. Humans practice it. This leads to a lack of perfection… which makes it a lot like Communism. It fails for human reasons.
respectfully
BJ
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I second the question
What are P’s and B’s?
BJ
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Politicians and Bueracrats?
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Politicians and Bueracrats. It was getting late, they’re long words and hard to spell and make long posts even longer.
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BJ, My apologies. Too many history channel docos on ancient Greek and Roman wars and WWII. Probably the only times the military really were innovative. WWII’s innovations even morphed into peacetime innovations.
Frank Whittle’s life story seems to capture every facet of this debate.
http://en.wikipedia.org/wiki/Frank_Whittle
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