(TEDx is a program of local, self-organised events based on the TED (Technology Entertainment and Design) set of conferences, established to disseminate “ideas worth spreading”.
2. I’m looking forward to part 2 of “Reconceiving the welfare state” arriving from David Craig in the very near future. I hope you’ve all had the chance the read part 1, which was published here last Thursday. It’s a great piece of work, with some really cutting-edge conceptual thinking. David’s one of the very top academic brains writing on these sort of issues in New Zealand, and it’s really great to have him contributing to Policy Progress.
His post raised the pretty provocative idea that maybe, when confronted by ideas like David Cameron’s ‘Big Society’, progressives (while justifiably suspicious as to hidden agendas) shouldn’t just reactively “spring to the defense of the state’s role”.
Instead, perhaps we should accept there is some genuineness and maybe some merit in attempts to “see what can be leveraged from wider elements of the social, local government, communities: elements imagined to be ‘closer’ to individuals and families, and as more flexible and people-oriented than ‘the welfare state’ . . . there’s a real will to see “communities” take up aspects of the social contract that the state has had.”
At the risk of misjudging where David is headed in part 2, I’d like to just add a few brief comments in response to this.
I certainly think there are merits in an honourable effort by progressives to engage with the things like the Big Society in good faith. A case in point is Matthew Taylor, who used to be an advisor to Tony Blair and is now chief executive of the RSA. He’s outlined his critical engagement with the Big Society on his blog in a number of posts including Big Society – ideas but no washing line, The Big Society – news from Downing Street, Big Society – Fair Society and The night watchman state?
And let’s not forget it was critics on the progressive side of things in the 1960s and 1970s who first pointed out the statist and disempowering tendencies of the postwar welfare state.
But I have a big reservation whether going ‘beyond the state’ really offers a way forward on the big issues. I don’t disagree that sometimes community-based service providers can meet people’s needs better than a government agency, but that’s still the state providing the financial resources. It’s just a matter of the state thinking differently about who it uses as its delivery agent (and maybe engaging/consulting more on what should be delivered and how.)
On the resourcing side of things, however, I just don’t see any other actor in society — not business, not communities, not social networks — that has both the will and the wherewithal to take responsibility for a prominent role in providing the resources for areas such as health or education or income support.
But maybe I’m missing something, or have misconstrued what this is all about. Anyway, I look forward to seeing where David Craig takes his line of argument next.
3. And while we’re talking about welfare state issues, I might just add a brief coda to my Understanding the purpose of the welfare state post from last Tuesday. One of the historical ideas I discussed was “decommodification”, which involved important services like health and education being taken outside the logic of the market. I ended by arguing:
If progressives are to recapture the debate, however, and both secure and further advance the institution of the welfare state, then we need to turn back to ideas such as the social wage and decommodification. We should look at both of these concepts again, and consider whether some version of one or both of those can serve to underpin a revitalised 21st century welfare state. And if so, we would need to think about what changes to the current practice of the welfare state that would imply.
On further reflection, and after engaging with David Craig’s post, I still think that it can be useful to conceptualise the welfare state as a ’social wage’, but I do wonder to what extent decommodification works even as an aspiration in the 21st century.
I alluded to this last week when I wrote that “the logics and practice of private market activity have increasingly been seen as something to emulate, even for non-traded services provided by the public sector, and even within the core Social Democratic regions such as Scandinavia.”
Do we really still seek to expunge market logics from, say, our school system, or do we rather seek to control which market dynamics to give free rein to and which to restrain? For instance, we might seek to incentivise innovation, but regulate competition between schools for pupils. I’m reminded of John Kay’s “disciplined pluralism”, as outlined in this post, back in April.
As always, your thoughts are welcome!
The New Zealand Institute is probably the only really serious thinktank we have in New Zealand (as opposed to the handful of right-wing advocacy groups that style themselves as such). Its current focus is on how the New Zealand economy can be more prosperous and effective, which is also a topic that I’ve been looking at here at Policy Progress in the ‘Progressive Path to Prosperity’ workstream.
So, when the Institute last week released its report A goal is not a strategy: Focusing efforts to improve New Zealand’s prosperity, I was keen to take a look, especially since I knew its director Rick Boven would be speaking at the Fabians seminar What Will Fix New Zealand’s Economy? (held last night).
I’m glad I did. It’s a useful report, with some interesting facts and figures scattered throughout, and a proposal that I think is definite worthy of debate.
But I’m also a bit frustrated. There’s some important gaps and a lot of the really crunchy issues and difficulty decisions have been pushed out to the next report in this series.
In essence, what A goal is not a strategy is advocating is that New Zealand make a definitive choice to back information and communications technology (ICT) and niche manufacturing as the crucial sectors that we need to grow.
This, of course, is ‘picking winners’ and for a generation we’ve been told by ’serious’ people that doing that was economic lunacy. But the policy cycle seems to have swung around again, and a lot of heavy-hitters now seem to be open to at least a cautious version of the ‘picking winners’ approach.
I don’t have a problem with that. And the report makes a good argument that the more even-handed open-to-all-players approach has resulted in ‘insufficient aspiration and lack of a sufficient focus’:
Aspiration is missing partly because there is not yet sufficient agreement that ICT and niche manufacturing should be the priority sectors. As yet there is no consensus that agriculture and natural resource development will be insufficient, nor that New Zealand can build a prosperous economy based on innovation and exporting value-added goods and services. (p. 33)
The other thing I like about this report is its insistence that an economic strategy has to have some real consequences if it’s to make a difference:
A strategy is a reallocation of resources to achieve a valued goal. If the goal is important and the strategy is sound then the reallocation should be material; sufficient to change the outcome. A few tens of millions of dollars is not material. Competing small countries are committing hundreds of millions of dollars to efforts they regard as strategically important. (p. 3)
Their critique of the failings of government efforts to support cluster development (p. 46) illustrates this point well. An evaluation of New Zealand Trade and Enterprise (NZTE) programme four years on found it to be “too small, too thinly spread and its objectives and outcomes were insufficiently defined to support true cluster development”. So was the response to put more money in and tighten its focus? No, the programme was abandoned as it was felt “that regions were in a better position to prioritise and make decisions that suit their needs which may include cluster funding.” (There may be another side to this story, but on the face of it that seems an illogical response to those findings.)
But I have some misgivings, too. Firstly, it’s not clear to me that picking “ICT and niche manufacturing” really narrows things down that much. It represents a clear choice not to rely on agriculture as our engine of growth (while preserving our existing strength there). But there isn’t really a definition of what that does and doesn’t include, and why.
Nor is it conclusively demonstrated that things like, for instance, the previous government’s focus on the development of the food and beverage sector were a misjudgment. The report makes much of the low productivity rate of the agriculture sector overall, but surely this masks quite a range (as with manufacturing) and there are high-tech high-productivity pockets in agriculture and affiliated industries.
Secondly, while some of this is yet to be unpacked, it reads like what the report is advocating is pouring an awful lot of money into business assistance. Maybe that is what we need to do, but I’d like to have seen a bit or evidence about that sort of thing being a good spend.
Personally, I’m still cautious that throwing contestable grants (or loans) at individual business who meet the right tests and are in the right industry is the most important thing we need to do. I’m inclined to feel that more cross-cutting issues like our low rate of savings and (related) the capital shallowness of New Zealand business are more the sort of things we need to address, and that implies rather different policy levers. (These issues are touched on in the report, but aren’t its main focus.)
One of the general problems that the report does have a bit of a focus on is our weak management capability, and I’d tend to agree that this seems to be a problem. But I’m a bit perturbed by the lack of evidence of our weakness that they’ve actually assembled here. I think the report does a good job reconciling some of the areas where we are reported to be strong — we score well on measures of entrepeneurship and on ease of starting a business — with our overall weakness: we end up with a lot of SMEs satisfying people’s desire for independence but not really building up the kind of skilled entrepreneurship that’s needed to break through into successful exporting.
But there really isn’t anything beyond assertion to show that we really do have weaker levels of management capability than our competitors. The MED report Management Matters is cited but its findings aren’t really presented.
That means that report doesn’t really offer us any insights about why or in what ways our management capability is weak, and what structural factors might be responsible and need addressing. That gap results in some rather out-of-left-field solutions: is ensuring one of our ten MBA providers offers a “full-time world class” programme focused on international entrepreneurship really a transformative difference??
This all leads the report to the conclusion that supporting success at ‘internationalisation’ in ICT and niche manufacturing should be New Zealand’s economic strategy priority. But exactly what ‘internationalisation’ entails isn’t spelled out and “[t]he specific actions, resource reallocations, and policies required to lift internationalisation performance remain to be identified and agreed” (p. 51).
I guess we have to accept that this report is one step in a wider work programme, and only takes us so far. And despite the limitations I’ve outlined, I think it does provide a good conversation-starter for a debate on which winners to pick and how best to help them. But we need to have that debate, and argue back and forth about the evidence — we can’t take it that the New Zealand Institute has made a settled case for anything, as yet.
Postscript: I drafted this post before going to the Fabians seminar last night. I took the opportunity at that event to ask Rick Boven whether the significant sums he envisaged this emerging strategy as requiring were actually to be spent primarily on business assistance programmes, as the report seemed to suggest (and as I mentioned above). Surprisingly, he said no — he felt the priority spend was on various innovation-friendly tax-breaks in areas such as depreciation.
I thought that was pretty interesting as in some ways it chimes in more with my mention of cross-cutting obstacles (above) than with needing to pick winning sectors (although the tax-breaks could be restricted to certain sectors). It’s also an idea that’s entirely absent from the report except in a ‘case study’ on South Korea (pp. 40-41). That case study felt somewhat superfluous when I first read it, but it may turn out to be an important pointer to the New Zealand Institute’s further work in this area.
But before you read that, head on down to Connolly Hall at 5.30pm this evening if you live in Wellington and hear Institute director Rick Boven give his perspective on the report, as part of the NZ Fabian society’s seminar What Will Fix New Zealand’s Economy? Ganesh Nana from BERL will also be speaking.
You can read the details (and register your attendance) here. And here’s a map to help you find the place:
Then, later this week, we’ll have a duo of guest-posts on an area we haven’t really explored much at Policy Progress to date, namely international relations. So keep an eye out for that, too!