Friday, 7 September 2018

Bridges’ Message To SMEs Should Be: “Survive Or Die.”

Man-Up, Simon: Allowing small businesses to pick their employees’ pockets only encourages New Zealand’s SMEs to remain unproductive. Rather than pandering to SME demands that the state hobble the unions with legislative leg-irons, Bridges should steadfastly repeat the criticism of Labour Minister, Iain Less Galloway. If employers are too lacking in business acumen to pay their employees a decent wage, then they deserve to – and should – go bust. Capitalism carries no passengers.

YOU CAN’T BEAT THE RUSSIANS for pithiness. On the subject of revolution, for example, Vladimir Lenin was unequivocal: “[I]n a capitalist country, he declared. “it is possible to stand for capital and it is possible to stand for labour, but it is impossible to stand for long in between.” Not that New Zealand politicians have ever shown the slightest inclination to heed his advice. National’s and Labour’s urge to position themselves squarely between the extremes of capitalist politics is apparently irresistible.

Small to Medium Enterprises (SMEs) for example are wooed ardently by both major parties and all the small ones. NZ First’s Shane Jones may wax eloquent about the shortcomings of big businesses and their CEOs, but you will never hear a peep of criticism from “The Lion of the Regions” concerning the shortcomings of small businesses. Labour’s Stuart Nash is equally enamoured of the small businessperson – as is National’s leader, Simon Bridges. So enamoured, in fact, that he is embarking on yet another nationwide tour to elicit from the SMEs some thoughts about how their own fortunes, and the fortunes of the wider economy, may best be secured.

In getting to these stalwart representatives of the petite bourgeoisie (as Lenin called them) Bridges will first have to elbow aside Act’s David Seymour and the Greens’ James Shaw. In the eyes of both of these minor party leaders the SME’s represent not simply ‘The Little Engines-of-Growth That Could’, but also a social class with sufficient demographic heft to keep both parties in Parliament.

But, if the enthusiasm of Messrs Seymour and Shaw is readily understood, the eagerness of National’s leader to court small business is much more difficult to fathom. Bridges is, after all, a capitalist; and the defence of capitalism has always been the National Party’s raison d’être. Mollycoddling SMEs and devising new ways of propping them up does not, however, serve the interests of capitalism in any way at all.

“All big businesses were small businesses once.” Like all clichés, this is true – but insufficient. Because, if the SME sector is the nursery of larger, better-capitalised and more successful enterprises, it is also the blood-soaked battlefield from which only the strongest and/or the shrewdest competitors emerge on two legs. Offering to replace the jagged blades of competitive endeavour with the wooden swords of undeserved state support is the very last thing a genuine capitalist would do.

There is a reason why most SMEs fail within their first 18 months of existence. Mastering the vagaries of the marketplace isn’t easy. Most people can’t do it, and those who can do not remain SMEs for long. They seize the share of the market vacated by their defunct competitors and, through their relentless expansion, see off the ones that remain. It’s brutal. There’s absolutely no room for sentiment – only for the quick and the dead. Capitalism is red in tooth and claw. That’s how it works.

New Zealand’s small businesses are currently bleating about the Labour-NZF Government’s plans to restore trade union rights in the workplace. They expect Bridges to be their shining knight when it comes to employment relations; emulating the National Opposition of Jim Bolger who promised to drastically limit the power of the unions – and was as good as his word.

Bridges should refuse – point blank.

Allowing small businesses to pick their employees’ pockets only encourages New Zealand’s SMEs to remain unproductive, lacking in creativity and lazy. Rather than pandering to SME demands that the state hobble the unions with legislative leg-irons, Bridges should steadfastly repeat the criticism of Labour Minister, Iain Less Galloway. If employers are too lacking in business acumen to pay their employees a decent wage, then they deserve to – and should – go bust. Capitalism carries no passengers.

The unions would be doing Labour and the Greens a very big favour if they reminded them that for every SME proprietor who succeeds there are dozens more who suffer devastating losses. Homes, redundancy packages, inheritances, reputations: and not one of their big businesses creditors will show the slightest species loyalty to a fellow capitalist in distress. The “Big Four” Aussie banks don’t repatriate $5 billion per annum in profits by forgiving small Kiwi businesses their debts.

Bridges’ message to the SME sector should be clear and unequivocal. There is no sentiment in business. Survive or die.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 7 September 2018.


peteswriteplace said...

AS a now retired trade unionist and activist, I congratulate you on this excellent post Chris. I have criticised you in the past, but you deserve credit for this contribution.

Richard said...

So the raiding of employees pockets by employers should be a capital offence. ie Putting down offending businesses. As Lee- Galloway calls for.
Converse to your call. I would like to see comment on the devastation caused by Govt central and local regulated costs and meddling and there effect on wages(I put the price of electricity in the Govt meddling category, legal extraction by monopolies duopolies and cartels all govt enabled). But what they have caused in my experience in the last ten years is a 100% increase in the overhead component operating the same business manufacturing the same product. Where as In the same period wages have increased 50%. You don't need to look much further than that to find where employees wage increases have been redirected to and its not the Govt narrative of profits for greedy SME owners.
While successive Govts central and local legislate and continue to decree it is paid to them, it obviously wont go to workers. Those of us that are not a monopoly, duopoly or part of a cartel, ie all SMEs have little ability to increase prices. We cant mimic Air NZ and demand eye watering pricing for provincial customers where they have no competition then go on to pay an $1800 bonus to employees.
A more robust and useful discussion could be had, if politicians and there agendas weren't used as the basis for setting the narrative such as we see with this article. Lee-Galloway should have to front up on what he is going to do to stop the Govt onslaught on employees wages. Not parroted as though his version encompasses all there is to consider on the subject. To state the obvious there is only one possible variable cost for an employer, wages. The rest of the costs if not paid will be extracted by whatever means Govt has legislated to ensure they are paid, and/or services will be withheld by monopolies, duopolies and cartels unless you pay there ransom. Richard

David Stone said...

"Allowing small businesses to pick their employees’ pockets only encourages New Zealand’s SMEs to remain unproductive, lacking in creativity and lazy."
When did you last have a permanent employee Chris?
If NZ's SMEs are so unproductive doesn't that have some implications about the contributions from their employees? Are they supposed to do all the work and pay their employees to watch? Or is it all down to their business acumen?
The most effective force in successful business is monopoly. And when you have a monopoly you can deal with wage demands by moving your operation to a country where there is no protection for workers at all. But until the whole business is shipped offshore unions arguably have a more satisfying interlude while the industry is dominated by a local monopoly and the employers can be anonymised and vilified as some evil predator rather than the guy who is chairman of the PTA at the local school and who's wife runs your kids to soccer on saturday and you drink with on friday night. And who you know works harder than anyone else on the job and doesn't make a fortune.

sumsuch said...

The job of the Left is to represent the interests of the people to the powerful. As muscularly as possible, as senior partner in these times, as per the 30s. Can't afford not to win.'I ha'e m'doots'.

sumsuch said...

Lenin isn't an ideal.

But now, all force for the people except killing shitloads of humans and authoritarianism.

Geoff Fischer said...

Organised labour prefers to deal with large enterprises. Large enterprises (which includes the state) also prefer to deal with large enterprises. That in itself creates a material bias against small enterprise which has nothing to do with efficiency of production or quality of product.
The economic system is biassed against small enterprises in other ways which have nothing to do with efficiency. It is often difficult for amall enterprise to obtain supply of raw materials from importers or wholesalers on any terms, never mind discounts for quantity. Compliance costs are disproportionate to the scale of enterprise, and all those factors that come into the category of "economies of scale" work against small business.
I understand why unions favour large scale enterprise, but the nation as a whole is bigger than the unions. For the best of reasons many people don't want to work for large capitalist corporations or the state. Then there are the thousands who are not permitted to work in government or large enterprises because they are perceived to be politically radical, left-wing, or, greatest of ironies, pro-union. They all end up working in small business.
Simon Bridges may not be the sharpest knife in the block, but he does understand that millions of New Zealanders will not be fodder for multinational capitalist enterprises, and will choose to take the harder path of small enterprise. That understanding will do Bridges no harm at election time.

David Stone said...

I think it is unhelpful to constantly depict employers and employees as virtually different species; one predatory on the other. It is not like that in most of New Zealand. The distinction is mostly infinitesimal and many people move from one category to the other and back again depending on circumstances. We are basically all the same. Same weaknesses and the same strengths .
Even setting a basic wage is an admission of a failure of the microeconomic management. If the overall running of the state prioritised everything being produced here that can be produced with full employment being the priority goal , then there would be a demand for labour beyond the supply, and employers who tried to get away with less than a fair wage would not get anyone to work for them. Setting an arbitrary wage irrespective of the viability of enterprises or whole industries is like the ambulance at the bottom of the cliff. It is addressing the symptom not the illness. Why not set a minimum wage of $70 an hour and then we would all be rich.

Anonymous said...

Where is your post on Clare Curran and the PM's shambolic handling of said mess? Come on, get with the times!! Cherry picking pro Labour stories instead. Still proud of Ardern??? Not to mention, the fact that Winston is clearly the real power behind her throne, and we now all know it.


Nick J said...

Well said Richard, I find it outrageous what the wage levels in the public sector peak at. Yes you have to pay for performance but when there is no revenue raising or risk of personal loss it is hard to justify. And we the taxpayers, ratepayers, levy payers fund this,

greywarbler said...

This is a totally inadequate response to Ron's gripes about Labour. But it seems to fit and may provide some moments of relief from the chore of reading or writing paragraphs that read like grinding Labour's bones to make one's bread.

Guerilla Surgeon said...

" I find it outrageous what the wage levels in the public sector peak at"

Peak? Friend of mine was a head of the science department in a reasonably large high school. His daughter went to work for the government as a junior bureaucrat. Very bright woman, saved the country millions of dollars one day by sheer persistence. But she's only been in the job a few years when she was earning more than him. So either someone is underpaid or someone is overpaid – or both.