Why didn’t the Prime Minister tell his Rotorua audience to simply 'harden-up and stop whining,' it would have saved a lot of time

By Chris Trotter*

There is a large measure of cruelty built into the conventional wisdom of business leaders and commentators. Their assumption is always that those who venture into the world of capitalist enterprise do so on the understanding that the only laws that truly count are the laws of the jungle.

They postulate an environment in which failure to grow stronger kills you – and rightly so. The key accomplishment in this ruthless world is to be “adult, adult, adult”, because to be anything less; to adopt the role of supplicant child – especially in relation to the state – is to signal one’s unfitness in a world where only the fittest survive.

Prime Minister Christopher Luxon’s speech to the Rotorua Business Chamber offers us a classic example of this mindset. Why didn’t he simply tell his audience to “harden-up and stop whining”, it would have saved a lot of time.

Instead, he offered his mostly small-to-medium business audience this:

“Like we’re entrepreneurs and businesspeople, and I get it. You know, if you’re not retooling and radically disrupting your business, you ain’t doing the job.

“You know, you have to disrupt yourself aggressively before you get disrupted by global events, and if you keep thinking you want the same business model, the same customer mix, the same margin structure, you know you’ve got to be retooling and refinancing and rehoming, and that’s just the reality of businesspeople all around the world.

“So, my job is to make sure I’m setting up the conditions for you to be able to go create that growth.”

He might just as well have advised a roomful of domestic cats to become lions and tigers.

How does the corner dairy, a small family business that serves its neighbourhood while making just enough money to pay the mortgage, put food on the table, meet its obligations to its primary lender and maintain a modest cushion against adversity supposed to go about “radically disrupting” itself?

How does the husband-and-wife team who purchased a small café and invested every ounce of their energy into transforming it into a thriving business supposed to “aggressively disrupt” themselves in anticipation of a global pandemic?

How can any small-to-medium size business be expected to cope with a government whose economic policies are formulated according to ideologically-derived priorities that materially worsen the economic conditions in which they’re expected to operate? A government which delivers special favours to significant electoral donors? A government which deliberately deprives itself of the revenue required to maintain and/or stimulate a flagging economy?

How should such businesses go about obtaining the financial resources required to re-tool, re-finance, and rehome from banks whose economists see nothing ahead but an extended period of low growth, rising unemployment and falling demand?

More to the point, why should they go on supporting a party led by a man who tells them that if they fail to obtain the sort of resources routinely made available only to large corporations like Unilever and Air New Zealand then they ain’t doing their job?

And why wouldn’t they be sceptical of such a man’s promise to “set up the conditions” so that they – small, undercapitalised businesses – can assume responsibility for generating the economy-wide growth that he and his government have so conspicuously failed to deliver?

Such businessmen and women could be forgiven for asking such a man whether he had ever had to put everything he owned, including the family home, on the line before venturing out into the marketplace? And if his answer is “No.”, then they could also be forgiven for asking where a former senior corporate executive drawing an enormous salary (plus bonuses) acquired the right to tell them to be “adult, adult, adult” and stop behaving like whiny little kids?

Christopher Luxon’s ideological objection to a hands-on state: his objection to his government being forced to play the role of supportive parent to small business “children” struggling to survive; is extremely difficult to reconcile with that same government’s willingness to sanction “fast track” applications that contradict every rule of free-market economics. Who, exactly, is the “parent” and who the “child” in this clientelist business model?

It doesn’t have to be this way. Not every Western government refuses to adopt policies directed specifically at preserving and bolstering the small-to-medium business sector.

As any visitor to Rome will attest, the city is awash with small-to-medium businesses. So much so that New Zealanders can’t help but notice. Tiny retailers, the sort of specialist family-scale enterprises that disappeared from our streets 40 years ago, are everywhere. In the centre of the city even the “supermarkets” are small, their trading space strictly regulated to keep their smaller competitors in business.

Hopeless! Typically Italian! Economically irrational! That would certainly be the response of most New Zealand economists. But Rome has been around for 28 centuries, and in that period of time it’s just possible that the Romans have learned to treat economic theories as transient follies. A city stripped of its small businesses, and the important social layers they support, will be emptier, poorer, and dangerously deficient in economic and cultural diversity.

The wellbeing of a nation may be judged by more than how closely it conforms to the rules of laissez-faire capitalism. Private enterprise will struggle to survive long-term if its only serious defenders are the rootless cosmopolitan elites spawned by forty years of neoliberal globalisation.

Small businesses, precisely because they are the creations of individuals and families who prefer the rigors of self-exploitation to wage slavery, are the bedrock of every functioning market system. Wipe out the smaller stakeholders in capitalism, refuse to defend their interests, and watch what happens. Expect outcomes a great deal worse than a National Party loss.

Christopher Luxon’s failure to understand the importance of the socio-economic makeup of NZ First and Act is astonishing. He clearly hankers for what he reads as the electoral sanity of First-Past-the-Post (FPP) completely unaware of the enormous service provided to New Zealand capitalism by the Mixed Member Proportional (MMP) electoral system.

In fat and happy times, FPP homogenises politics, submerging minority viewpoints in a soft centrist blancmange. In times of economic and social stress, however, FPP feeds the extremes. MMP, by concentrating the insurgents within manageable electoral boundaries, actually protects the system. FPP, by encouraging the discontented to take over one of the two main parties and bend it to their will is by far the greater threat to liberal democracy.

An angry populist party commanding 12 percent of the popular vote is much less likely to inflict lasting damage on the system than one attracting 50 percent – just ask the Americans.

Christopher Luxon’s insulting attitude to the nation’s 200,000 small-to-medium enterprises, the backbone of New Zealand’s “property-owning democracy”, offers further proof of his deficient political education. His top-of-the-head “Captain’s Call” for a third MMP referendum confirms that deficiency beyond reasonable doubt.

In the Prime Minister’s eyes “small” is not beautiful, it is merely proof of inadequate talent and ambition. Capitalism, red in tooth and claw, is his ideal precisely because it encourages players to disrupt themselves aggressively before they are aggressively disrupted. He would point to the fact that most businesses never make it to their second birthday as proof of the need to be “adult, adult, adult”.

Not for him the accommodating policies of the Italians, that is not the way he intends to set up the conditions for small-to-medium enterprises to grow New Zealand. Quite how he would explain away Italy’s 37th global ranking by GDP per capita PPP, while New Zealand sit at 45th is anybody’s guess.

Presumably we’re just not “smacking it” hard enough.