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Not Credible

Entry 446, on 2006-12-19 at 14:58:06 (Rating 4, News)

This morning I listened to an interview between union representative, Laila Harre, and Business Round Table director, Roger Kerr. Kerr has always been a strong supporter of laissez faire economics, low business taxation, and reducing the power of unions. He has been repeating the mantra of free markets for 30 years now and he seems to be one of those people who believes what he wants to believe and doesn't let the facts get in the way.

Its partly a matter of opinion and perception, but it seemed to me that he was fairly well demolished in the interview. The New Zealand government has just increased the minimum wage, and business doesn't like it because it means more cost and less profit for them. Kerr claims he wants higher wages, but this isn't the way to get them. Well I'd like to know what is. We pursued his economic methods for 20 years and we were a lot worse off as a result. How long do we have to wait for the economic miracle of free markets to produce results?

The answer is that it will never happen. Business can only flourish when it exploits a resource. That resource could be physical (oil, materials, etc), political (laws and regulations designed to give it an unfair advantage) or human (a source of cheap labour). Look at the economic success stories and you'll see a story of exploitation. Two classic examples are the wasting of resources and pollution of American industry, and the low wage economy of China. When we examine "success stories" like these, we usually view them in isolation, but that doesn't reveal the negative effects we see when we look at the big picture.

Of course people like Roger Kerr aren't really interested in justice and equality. They just want rich business people (the group they represent) to get richer by whatever means are available. Well that's fair enough, and they can try it if they want to, but they shouldn't expect the people they are taking advantage of to cooperate, and they shouldn't expect that people in general will believe them, because they just aren't credible any more.

Comment 1 (287) by SBFL on 2007-01-10 at 21:19:13:

When you make ‘off the cuff’ statements like “They [Roger Kerr et al] just want rich business people (the group they represent) to get richer by whatever means are available”, then clearly your views are clouded. Ironically, perhaps it is your views that are the ones that lack credibility.

Regarding your ‘exploitation’ paragraph… where you see exploitations, everyone else sees opportunity. Only taking opportunity too far leads to exploitation. However if we had everything your way (“don’t touch anything in case it gets exploited”), we’d still be living in caves.

Re your comment “How long do we have to wait for the economic miracle of free markets to produce results?” Have a look at your failed Communist states as a classic example of what happens when you don’t embrace free trade. Everyone in Romania and Bulgaria are now rejoicing at joining the EU. China is now prospering now that its regime is embracing free trade. As a results MILLIONS OF PEOPLE are leading better lives. Vietnam, another “communist” country embracing free trade. These are all well-reported in the media. The poor people in these countries will give you plenty of time to talk about the miracle of free trade. Yes, I know many of these countries are not yet up there with the West, but it’s early days (since say 1990 when everyone gave up on socialism) and the important thing is that they are heading in the right direction as a result of free trade. You will probably come back with examples of sweat shops, and child labour, and all that other left-wing drivel, but that exploitation was around before free-trade and will still be around for many years to come, sadly. The key thing is economic growth. If it’s heading in the right direction, so are the lives of the people in that society. This a fact you and your union mates fail to realize. (Note: everyone knows Laila Harre just loves promoting herself in the media so that she can get into Labour once Helen is gone).

I think what hurts you the most is that in NZ, free-trade is universally accepted as the way to go. Labour promotes the free-trade agenda (ouch! for the unions). Everyone laughs at how things were in the Muldoon era and before. I hope you will wake up soon too.

Comment 2 (293) by OJB on 2007-01-11 at 16:47:01:

The Business Round Table is there to represent business interests. If they weren't doing that they wouldn't be doing their job. But the best interests of business and the best interests of the rest of the population rarely coincide.

You are right that taking opportunity too far leads to exploitation, and that is what so often happens with foreign investment. I read a survey once which said that many investors prefer investing in other countries because they don't feel as guilty exploiting the workforce, etc there.

I agree that free trade can often (but not always) improve the lives of people. But free trade and exploitation of resources by big business are not the same thing. Also, we don't have free trade anyway. There are plenty of laws protecting powerful business groups all around the world still. It keeps getting back to the fact that big corporations have too much power. They need to be controlled by governments, and close control of foreign investment is a good starting point.

The Labour party has backed away from the extreme monetarist agenda of the mid 80s and 90s. It is now that we have a more moderate economic system that things are going better. I agree that the protectionist regime of Muldoon was damaging, but that doesn't mean that going to extremes in the opposite direction is any better.

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