By Michael Parker*
[This is Chapter 9 of the book, The Pine Tree Paradox. Links to the previous chapters are at the bottom of this page.]
A prescription for growth means making a lot of choices.
Inevitably, someone will ask the question: why not "zig" rather than "zag"?
Below are responses to some of those observations.
In the summer after I finished high school, I took a job selling home security kits door-to-door around the streets of Wellington. The kits I sold contained three reflective yellow stickers with a cartoon image of a burglar circled and crossed out beside the words “Burglar Beware” in bold, black letters. The kit also contained an invisible ink marker. According to the sales literature, by marking valuables with the invisible ink pen and putting up the stickers in prominent places, the homeowner was able to protect their house from robbery.
Even at the time, I was aware that the whole proposition made no sense. But either I was a fantastic salesman or my target market could work out that the $20 security kit I offered was far cheaper than installing a burglar alarm while the primary benefit - the deterrence value of the reflective yellow stickers - was exactly the same. Either way, I moved some product.
I worked with a team of about a dozen others. After a few days selling, we all began to notice one thing: it didn’t matter whether the person who answered the door was male or female, young or old, wealthy or poor, wearing a suit or work boots, they all asked just about the same half-dozen questions.
The trick to success in selling security kits was therefore to have short, polished answers to those six questions and to deliver those answers with a level of earnestness and enthusiasm that suggested that you truly believed the answer and that you had never heard that question before. Master that art - and you can be a good security kit salesperson.
In the 20 years since that summer, I have learned that rehearsed spontaneity - combining careful preparation, earnestness and enthusiasm - is a useful practice even if you do not sell Burglar Beware security kits for a living.
With that in mind, I have set out below the questions and objections that are most often raised in response to my proposal of the Enterprise. I acknowledge that I am deviating from my normal practice in that I am sacrificing any pretense of spontaneity by setting out my replies below.
However, the compensating factor is that - unlike when I was selling the yellow stickers and invisible pens - I truly believe that this initiative can fundamentally change the trajectory of the country for a century or more.
We all need to eat. Agriculture-based economies like New Zealand benefit from constant demand in times of global recession in a way that innovation-based economies do not. So shouldn’t we stick with farming?
It is not possible to argue with the proposition that we all need to eat. And it is important to note that I am not advocating that we rip up our vineyards or cull our dairy herds. I am simply saying that agriculture cannot be the basis of our economy if we intend to grow faster than the OECD average over the next century.
If the world ever enters a permanent recession, growing agricultural staples will be a great idea. But, absent this doomsday outcome, the delta between the “give” and the “get” is just too high: by focusing predominantly on agriculture, we forego higher growth during the boom years in order to suffer less pain during the bust years.
Because the booms last longer than the busts, we end up going backwards.
No one in the OECD is getting rich on this strategy. In fact, no one anywhere is getting rich on this strategy.
An hypocrisy alert is necessary when responding to the argument that “we all need to eat”. At a personal level, we know that there is more money to be made being an entrepreneur, a lawyer, an engineer, a banker or an accountant than being a dairy farmer. No one emerges from high school or university saying: I want to get rich; I’m going farming. We don’t follow the insight that “we all need to eat” individually ... why would we follow it collectively?
Unless the advocates of the agrarian economy are wearing gumboots, don’t take their argument too seriously.
Why not just open a satellite school of Stanford, Harvard, MIT, Yale or Columbia ... in New Zealand?
NYU is in the process of opening a campus in Abu Dhabi. Cornell, Georgetown and Carnegie Mellon have also set up programmes in the Middle East. We could follow this path and open a satellite campus of an established and respected university in New Zealand. However, opening such a campus in New Zealand is a poor substitute to the Enterprise for three reasons.
First, these foreign campuses require a significant down payment - Abu Dhabi made a US$50 million gift to NYU as a mere down-payment when the programme was announced and will continue to transfer funds to the Washington Square campus for the redevelopment of the Manhattan site for many years. Dubai is effectively underwriting the next leg of NYU’s quest to become of a great world institution of higher learning. We do not have the funds to do that.
Second, a degree from a satellite campus will always be viewed as inferior to the qualification from the original campus.
Third, the concept behind the Enterprise is to build our own prestigious brand and reputation - not borrow and enhance someone else’s.
Should academic research and commerce mix?
The emergence in New Zealand of a private university is going to raise the issue of how research is being funded, by whom - and whether this funding taints the results.
The specific example that usually raises the alarm is of a private company that requests and funds a study at a university in an area of research that is of financial significance to the company: tobacco companies funding cancer research, for example. One solution for a private university is to not accept funding for specific areas of research. At the extreme end of this approach, all donations are contributed to a consolidated fund and allocated by a “blind” committee.
These are important questions that every research university in the world is grappling with. There are two concise answers.
First, the policies should be set at an institution-wide level and boundary issues reviewed on a case-by-case basis by the school affected.
Second, no one is suggesting anywhere in the world that the answer to the question of privately funded research is to tear down the universities or, in our case, not build one. Privately funded research is a thorny issue. However, it is not so complex that universities should not be built for fear of encountering it.
Is lifestyle enough to get potential Nobel Laureates to a New Zealand university?
The short answer to this question is: of course not. The idea that an academic at Stanford or Harvard or Cal Tech who is on the verge of receiving a Nobel Prize will move to a new university in the South Pacific because the weather is nice and the sailing is good is laughable. It will not happen - and this book is not for a moment suggesting that it will.
Instead, what this book is suggesting is that, over a long period of time, an iterative process can take place where an ambitious research university located in an attractive part of the world can anchor an Innovation Cycle that includes research and development centres, start-up companies, venture-capital funds, banks, accounting firms, law firms, advertising agencies, architecture firms, design studios, art galleries and yoga studios that will attract an ever more prestigious calibre of students, faculty, administrators, entrepreneurs, investors and other members of the supporting infrastructure and creative class.
The process will take decades - but we know it is achievable because it has been done before. With the opening of Stanford University in 1891, the New York Mail and Express predicted that “the professors for years will lecture in marble halls to empty benches.”66
Shouldn’t it be on Bledisloe Wharf?
The university has to be on the waterfront. This is the most valuable and under-utilised land in Auckland.
It is also the location that best expresses our aspirations for the university - an iconic structure that emphatically announces our intention and defines our relationship with the rest of the world.
The debate over the exact location should involve the Auckland local government, the New Zealand government and the architect designing the waterfront complex.
Placing the complex on Bledisloe Wharf at the western end of the Ports of Auckland land would ensure that it is the first structure seen as you enter the Waitemata Harbour.
This is without question the most dramatic site for the building. However, this location also separates the university from transportation hubs in downtown Auckland and potentially isolates the campus if the cranes on Bledisloe Wharf are relocated to the west.
The Marsden and Captain Cook Wharf locations are more central but there is a risk that the structure is hidden behind the cranes on the working ports. That said, we are building a university that will be integrated into the New Zealand economy and will drive its innovation sector and its relationship with the rest of the world. At some level, there is something poetic - or, at least, appropriate - about a setting that includes a working port.
More fundamentally, if the biggest complaint from critics of the Enterprise is the university’s precise location on the waterfront, our work is largely done.
Why would anyone contribute?
New Zealanders see that we are on the wrong horse. Wealthy New Zealanders take no satisfaction in the continuing decline of the country’s economic fortunes and our apparent inability to reverse the trend. The answer lies outside anything government can do, and it lies outside anything we individually can do. But collectively, we can make a change.
Raising US$50 million annually, every year, is a huge challenge. But it is not impossible. The process is quite simple: find a New Zealand resident, citizen or company with a desire to see New Zealand more focused on innovation than agriculture and ask them to make a long-term financial commitment. Then repeat.
The short-term goals are concrete: build a university complex with the government assistance. The long-term goals are clear also: build a world-class university. It starts with the individual deciding that he or she wants change.
What can I do?
Of course, not everyone has US$10,000 lying around that they can donate every year. And the figure of US$10,000 is intended only as illustrative. If someone can only contribute a dollar, we should take it.
But there is more to this effort than money.
At the most basic level, when you hear someone talking about some new agricultural product or the agricultural sector in general as the key to New Zealand’s economic growth, point out the flaw in their argument.
Second, if you are at school or university currently, stay there - and work hard. The 21st century is unlikely to be kind to people who rely on the agricultural or manufacturing sector for work.
Third, write to your Member of Parliament and, if you live in Auckland, City Councillor - about the proposals in Chapter 7.
Fourth, if you have a relative outside of New Zealand who may be in a position to contribute, send him or her a copy of this book.
Finally, if you can make a financial contribution yourself, please do so.
----------------------------------------------------
This is the tenth part of a serialisation of the book, The Pine Tree Paradox. It will be published online here in eleven parts.
The Introduction is here »
Chapter 1 is here »
Chapter 2 is here »
Chapter 3 is here »
Chapter 4 is here »
Chapter 5 is here »
Chapter 6 is here »
Chapter 7 is here »
Chapter 8 is here »
If you would like to buy a copy of the full book, you can do so by credit card here » (Visa or Mastercard only.)
----------------------------------------------------
Michael Parker is an equity analyst living in Hong Kong. Originally from Wellington, he has spent the last decade in San Francisco, New York and - on good days - Waiheke. He has a law degree and bachelor of commerce from the University of Otago and an MBA from NYU. You can contact him here »
Used with permission. © Michael Parker. This book was originally published in 2010.
---------------------------------------------------
To subscribe to our weekly business newsletter, enter your email address here.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.