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The Standard

Think big & embrace the rot

Written By: - Date published: 9:05 am, January 20th, 2013 - 43 comments
Categories: child welfare, Economy, exports, health - Tags: , ,

As reported this morning by Rob O’Neill on Stuff, the World Bank has recently issued a report saying NZ needs to focus more on being friendly to multinational corporations, and be less focused on supporting small NZ businesses:

Small businesses do not create jobs. They are less productive than big businesses. They are not the answer to New Zealand’s export challenge.

Instead of supporting small businesses, New Zealand should create an environment that is friendly to large multinational companies and fast-growing start-ups. We should cancel the myriad programmes currently in place to assist small businesses to become exporters because there is very little evidence they work.

The article also reports on the responses by various NZ “experts” such as Phil O’Reilly, chief executive of Business NZ, and John Banks, who generally agree with the World Bank argument, though quibbling on some aspects of it.  However, all their focus is on exports as the way to boost NZ’s economy, and none on the significant and long term costs to NZ’s economy and society.

Matt McCarten’s column today is critical of the impact of at least one big businesses in NZ.  He responds to comments by the “outgoing Coca-Coal boss, George Adams“, who he says, “lamented that we Kiwis didn’t have the same adulation for multinational corporations that they have for themselves.”

McCarten points out how much Kiwis have contributed to Coca Cola’s empire overseas:

New Zealanders front up over half a billion dollars each year for Adams’ employer and, in 2011, our patronage made his profits jump almost 50 per cent to a cool $66.6 million.

And, McCarten identifies some of the destruction that Coca Cola causes to the health of New Zealanders:

Let’s face it, Coca-Cola markets sugar syrup mixed with water to teenagers, rotting their teeth, giving them spotty skin and making them fat.

At the same time it brainwashes them through clever advertisements and branding campaigns using beautiful and cool peers with perfect smiles, unblemished skin and beach bodies to die for.

The message drilled into their naive subconscious is to be cool, popular and happy you have to drink this wonder drink.

Few pre-teens and teenagers can resist that siren call. It helps that once the sugar addiction kicks in, it can be as strong as tobacco dependency.

Every health professional knows the body doesn’t need sugar at all.

And this will impact on the costs to NZ’s health system and to the social costs related to it.  These are costs that don’t seem to be taken into account when estimating the economic benefits of big businesses.  Not all profit-making businesses are equal in their benefits to the countries in which they operate.  And many small businesses contribute to their communities in ways measured by export-focused analysis.

Also today on Stuff, as reported by Marika Hill, there’s a report on the widespread, preventable occurrence of tooth decay in children from all socio-economic backgrounds.  This is partly caused by the amount of sugar in their diets, especially that coming from sugary drinks.

A new government report on dental care has for the first time revealed the full extent of the problem: 34,000 children under 14 had teeth removed due to decay or infection in 2012….

Toddlers come in with teeth so rotten from sugar that they are no longer recognisable.

“Some of them have decayed right down to the gum level so it’s just roots. We can do a full clearance and take out all 20 teeth on a two-year-old.”

Poor dental hygiene is often to blame.

“Parents will give them biscuits and a drink in the middle of the night to keep them quiet. That’s the worst thing you can do.”…

Losing teeth at a young age can affect eating and speaking and cause poor self-esteem, Lingard said.

Dentures are not an option for children as their mouths grow too fast. Instead, children must wait for the second teeth to come through.

More focus should be on businesses that benefit Kiwis and New Zealand in diverse ways, than just on the short term financial benefits of businesses and exports.  Not all businesses are equal. Some are better for us than others.

43 comments on “Think big & embrace the rot”

  1. ropata 1

    I hope that in future we will treat sugar laden food additives the same way we treat tobacco now. in the mean time, watch this: http://youtu.be/HInOg12jMiY?t=6s

  2. Wayne 2

    So Coca Cola ha become the new tobacco, which is frankly ridiculous. A can or two of Coke every week would have absolutely no adverse effects on health.

    The World Bank is right. As you know this whole area of growth and innovation was a central concern of mine a while back. The big gap we have is building companies that have more than than $100 million in sales, mostly export sales.

    For NZ that is seen as a big company. That is typically a firm employing 200 or so people and is often family owned (by the founders and close associates). There are around 20 of them in NZ, but we need 50.

    We put a huge amount of support to small start ups. At one level that is good, some of them will become credible export firms – but many won’t. Most (if they survive at all) top out at $5million revenue, good for the owners, but not transformative for NZ.

    The new Callaghan Institute should help, but more needs to be done, especially around venture capital.

    Gordon Campbell has a perceptive article on this in relation to Peter Jackson. While I obviously don’t agree with everything he says in it – for instance the employment law reforms were much more important than he accepts, but I understand that is a bit of thing for the Left (especially the Alliance/Green end) – he is broadly correct.

    This whole area is still the big opportunity for New Zealand. Other smart smaller countries (Denmark, Finland, Israel, Singapore, Queensland) have done this – we are the laggard.

    • lprent 2.1

      We put a huge amount of support to small start ups. At one level that is good, some of them will become credible export firms – but many won’t. Most (if they survive at all) top out at $5million revenue, good for the owners, but not transformative for NZ.

      There isn’t that much support for export companies in the initial start-up phase (and I have been around quite a few since the early 90’s). Once people actually started exporting a reasonable amount then there was more. Most of the really useful parts are in MFAT which is currently in a state of turmoil and being cut.

      As you say, most exporting companies will top out somewhere around $5 million in revenue. The problem is that they’re usually in a vertical niche market worldwide. They don’t have the capital to develop a whole new market area. There aren’t a lot of sources of capital that don’t want to effectively take over the control of the company. The choice usually winds up as being to sell out the company overseas to a larger company in the market area or to list in an overseas exchange where the capital is available.

      The NZX is of course pretty damn useless to get any useful capital.

    • Colonial Weka 2.2

      “So Coca Cola ha become the new tobacco, which is frankly ridiculous. A can or two of Coke every week would have absolutely no adverse effects on health.”

      And a cigarette or two every week is unlikely to cause any more harm than a coke. What’s your point?

      As far as I am aware neither tobacco companies nor soft drink companies are content with occasional sales of their products. They both engage in practices designed to get as many people as possible to consume as much of their product as possible, with a special emphasis on people vulnerable to both the product and the advertising strategies.

    • Murray Olsen 2.3

      I’m not sure what Israel or Queensland have done that’s smart enough for us to want to copy. Israel manages to support high tech companies because it’s bankrolled in a very extravagant manner by the US and A. Queensland depends on mining and government investment in anything except property “development” and horse racing has been stopped since Bjelke-Newman was elected. The public service has been ripped to shreds. Ironically, there is a similarity in that both Bjelke-Newman and Bibi Netanyahu are in bed with some very dodgy property developers. Both also have a very dismissive attitude to human rights and the rule of law.

      • Wayne 2.3.1

        Essentially the Labour Govt in Queensland from around 1995 to 2008 had a “smart state” concept which boosted spending on higher education and innovation. The University of Queensland now ranks in the top 50. In contrast Auckland has been falling in the rankings. Queensland has annual revenue of $1.2 billion and Auckland is $800 million. Queensland attracts more research money and more top level academics.

        Queensland had a plan to attract a lot of international firms in pharmaceuticals, aerospace and IT (and this was done by a Labour govt). It is one of the reasons why Brisbane has grown faster than Auckland. Twenty years ago NZ and Queensland had the same living standards, now Queensland is 30% higher, and it is not just about tourism and mining.

        That is why I say the World Bank is correct. We no longer have any research centres of global pharma firms or IT firms. If we did they would generate start ups in the same sector.

        Otherwise we are just a market for the global firms, not generator of IP for them. All those other countries I named are, and have done better than we have.

        After all many dairy farmers still buy Danish dairy equipment, because Denmark consciously built a complete dairy ecosystem from cow to plate. I wonder if the Danes buy our dairy equipment? I know many people on the site do not like Fran O’Sullivan, but her article in the NZH on baby formula shows why we need to do better.

        • Colonial Viper 2.3.1.1

          Unions. Queensland has better and stronger unions and labour conditions than NZ.

          • Murray Olsen 2.3.1.1.1

            The Queensland unions haven’t been very strong in fighting Bjelke-Newman’s job losses.
            The Smart State program is dead under Bjelke-Newman.
            A lot of the success of the University of Queensland came from poaching academics from other universities. These poachees are paid at rock star rates while everyone else is neglected. UQ had the highest paid VC in Australia and the lowest paid staff, except for the rock stars.
            In Wayne’s World, success is defined a little differently than on mine.

            • xtasy 2.3.1.1.1.1

              Unions are being undermined worldwide, it happens all over “developed” countries, also in Europe. It is a sad fact, that proves again, a scientific finding decades ago, that 80 per cent of humans are COWARDS, complicit persons, rather choosing to buckle, go along with any pressured rule, and not take a stand.

              That is reality dear friends, the majority of people are COWARDS!

              That is also why NZ will NEVER see a revolution, and Key and his gang know this, same as wanker Shearer.

              People are vermon, like rats, and gentically the closest DNA humans have is that to rats, and rats are used for research for medicine and so forth, to test medication and so for humans.

              So when you have human cowardice, vermon and shit like that populate the globe, there will NEVER be progress the few idealists on this forum desire and dream of.

              It will NEVER happen, as long as the human majority is pressed, black mailed, estorted and held to ransom for income, jobs and livelihoods, that the capitalists offer them. Slavery and servitude are here to stay, because most are cowardly slaves and idiots.

              I am sorry to upset you, but this is the total and blunt truth about human kind. Forget humanity too, I just experience again this weekend, how someone was prepared to kill me, for no sensible reason at all. Humans are vermin!

              • Saccharomyces

                Actually, our closest genetic relative is the Bonobo Chimpanzee.

              • Draco T Bastard

                There are none so chained as those that think that they are free.

                And that is the true victory of capitalism as the majority of people actually think that they are free when they aren’t. They’re slaves to the capitalists without realising it.

    • Richard Down South 2.4

      “So Coca Cola ha become the new tobacco, which is frankly ridiculous. A can or two of Coke every week would have absolutely no adverse effects on health.”

      The amount of sugar normally in your body, is about 5g…. a can of coke has 39g of sugar. ever ponder why we have so many cases of diabetes in NZ?

      This makes for an interesting read http://www.kare11.com/news/article/1004378/391/Brain-image-study-Fructose-may-spur-overeating

  3. muzza 3

    Woops, the myth of the export lead recovery makes another appearance, this time from the World Bank. I believe there was some articles recently showing that while Oz has been exporting more than ever in its history (past decade +), their current account had blown out further – One country’s exports , in another county’s imports, you simply can’t have even export driven recoveries amongst trading partners, under the current systems!

    http://www.interest.co.nz/news/62640/big-aussie-trade-deficit-record-eu-jobless-markets-nervous-ahead-us-earnings-season-nz-da

    New Zealand Current Account
    http://www.tradingeconomics.com/new-zealand/current-account

    (extend Date Selection to 1965 from drop-down box)

    New Zealand Exports
    http://www.tradingeconomics.com/new-zealand/exports

    (extend Date Selection to 1951 from drop-down box)

    As is plain to see, the more we export, the GREATER our current account deficit gets.

    ________________________________________________________________________

    Was it not only a week or so ago, we had a report aimed at NZ by the IMF!

    Who’s picking up how these entities work – Show of hands..

    Perhaps its all just random publishing, of randomly *produced/written* reports!

    • Poission 3.1

      NZ has not had a current ac surplus since 1972,due to the repatriation of multinational investment.and excessive borrowing for non productive assets.

      Of the additional 51 billion of external os debt we have racked up since the GFC (2007) 80% is into additional household debt,and farmland purchase,.

      As these so called think tanks such as the IMFand WB bring very little to the table in as much as innovative thinking or solutions to the persistence of the GFC NZ should look at providing its own solutions.

  4. AmaKiwi 4

    + 1 to Poission

    We create innovative companies so foreigners can buy them up. The profits go overseas and we spiral deeper into financial slavery.

    “The power to tax is the power to destroy.” We can create tax structures which severely discourage the takeover of NZ companies by overseas powers. Until we do so, we will continue to be bled dry.

  5. Bill 5

    Small businesses do not create jobs. They are less productive than big businesses.

    How do they figure that? Putting the strange and stupid quasi- religious fixation on exports aside for a moment…a supermarket might employ a few hundred people. And take the place of how many potentially local and convenient gift shops, specialist stores, general grocery stores, green grocers, off- licenses, florists, butchers, bakers etc?

    According to the following quote from a UK study, quite a lot.

    In their Ghost Town Britain reports (2003), the New Economics Foundation (NEF) revealed that between 1995 and 2000 we lost roughly one fifth of our local shops and services including post-offices, banks, butchers and grocers. Furthermore, over the five yeats to 2002, around 50 specialist stores closed every week.

    And from the same report

    In 1960, small independent retailers had a 60% share of the food retail market. By 2000, their share was reduced to 6% while the multiples share increased to 88%

    Meanwhile the ” British Retail Planning Forum (1998), embarrassingly financed by the supermarkets themselves, discovered that every time a large supermarket opens, on average, 276 jobs are lost.”

    And on the questionable production side of things, I wonder if they had a blind spot for… ” Off Our Trolleys’ (see Further Reading) shows that a typical out-of-town superstore causes £25,000-worth of congestion, pollution and associated damage to the local community every week.”

    http://www.corporatewatch.org/?lid=2599

    • karol 5.1

      And with the closure of small stores, we lose a lot of the personalised service they provide. The staff there most likely come from within the local community, and can chat with customers.

      Now the post shops banks etc, within the malls and shopping centres, as well as adding to travel pollution, cost customers in time standing in long queues.

      • Colonial Viper 5.1.1

        Small businesses do not create jobs. They are less productive than big businesses.

        This is standard bankster bullshit.

        Large companies DESTROY local jobs and replace them with miimum wage. Ask any small retail owner what happens when the large malls and corporate retail move in.

  6. Whom does the World Bank generate its money from?

    My perspective: The World Bank Report, funded by Multi-National Corporations, recommends that New Zealand support Multi-National Corporations (for a variety of specious reasons).

    Um…Is that a “report” …or a threat?

    In short I consider this “report” a load of rot.

    Monopolies are unhealthy for the proper functioning of the current system we have, so isn’t it about time that Multi-National Corporations were seen for the monopolies that they are? Stamp their monopolistic behaviour out and let us get on with it, I say.

    Additionally I agree with Bill @5’s comments.

    • fatty 6.1

      Um…Is that a “report” …or a threat?

      A report from the World Bank is always a threat

      • blue leopard 6.1.1

        …Well perhaps they should be labelled “a terrorist” and treated accordingly then…
        (heh)

        …I mean, don’t they know that making complaints to Governments is becoming illegal…?

        …Oh sorry, I forgot, that is only when common citizens make complaints and criticisms….not large organizations; they can say what they want, and it doesn’t even have to make any real sense(in the normal sense of the term “sense”)…..clearly; this “report” is illustrative of that.

  7. GeoffC 7

    500million spent by the consumer etc on coca cola products…what a waste of money.
    Perhaps time we calc amount of wasteful spending each year and in a social sense what that total collectively we could have done.
    Together we stand divided we are slaves.

    • xtasy 7.2

      GeoffC

      One must be a bit discerning though, you will perhaps not know, that even Coca Cola Amatil have diversified substantially. You will buy carbonated water, still water, juices and a range of other beverages here in NZ, which are now made by Coca Cola.

      It is a fact, that they do not just produce the black and brown coloured carbonated drinks now.

      Yet the control of a large sector of the market is the worry, and this is where corporates tend to strive for dominance.

  8. infused 8

    What small business support? I haven’t seen it.

    God damm I feel like a coke now. Seriously, tastes so good in warm weather :D

    • karol 8.1

      What small business support?

      Ask John Banks, he’s the minister of small businesses. According to Banks, as reported in the O’Neill article my post links to:

      Banks said NZTE is focused on where it can have the greatest impact.

      “The agency works one-to-one with a core group of around 500 companies, including SMEs. As well as this core group, NZTE also engages less intensively with another group of about 1500 exporting businesses.

      “The focus of Government assistance is on providing the basic skills, information and advice that will give SMEs the best chance of harnessing their capabilities [in doing so increasing productivity] so that they are competitive once they start exporting.”

      It sounds like he’s reading from a pamphlet promoting his ministry – maybe like one of his pamphlets promoting Charter Schools? I wonder if he can actually explain the practical assistance to SME’s in his own words?

      • xtasy 8.1.1

        Small minds equal small business, or wannabe business. That is John Banks, the lone, memory lost, fighter for SMEs

    • xtasy 8.2

      Have your coke and choke, thanks best wishes.

    • Draco T Bastard 8.3

      Seriously, tastes so good in warm weather

      Only if you’ve become accustomed to it. I haven’t so it still tastes like crap to me.

  9. RedLogix 9

    As usual John Michael Greer nails it.

    As the costs of empire rise, the profits of empire dwindle, the national economy circles the drain, the burden of deferred maintenance on the nation’s infrastructure grows, and the impact of the limits to growth on industrial civilization worldwide becomes ever harder to evade, they face the unenviable choice between massive trouble now and even more massive trouble later; being human, they repeatedly choose the latter, and console themselves with the empty hope that something might turn up.

    http://thearchdruidreport.blogspot.co.nz/2013/01/the-road-down-from-empire.html

    Along with Chris Trotter, these two are about the only people I can be bothered reading with the very limited time I have available these days.

    • karol 9.1

      Meanwhile, the maintainers of, and profiters from, empires like the US, and the UK (some people there still haven’t accepted they no longer have an empire), try to continually extend it’s reach through their multinational companies. Often these companies, as Greer says, peddle stuff we don’t really need.

      • Colonial Viper 9.1.1

        Often these companies, as Greer says, peddle stuff we don’t really need.

        Or could do for ourselves.

      • Draco T Bastard 9.1.2

        and the UK (some people there still haven’t accepted they no longer have an empire),

        It’s probably more that they have realised/accepted that the British Empire was passed on to the US after WW1. The empire still exists and the UK still belongs to it but it’s as courtier to the US rather than the leading role it used to have.

  10. Macro 10

    Wow there are 5, that’s FIVE!, jobs being advertised by Coca Cola! These big multinationals really generate the jobs don’t they.

    http://www.cokecareers.co.nz/search

    • @ Macro

      …the job creation cited probably includes the healthcare workers required to deal with the consequences of their products and all the pill-makers being employed to keep people happy despite job conditions and wages degenerating. And lets not forget all the WINZ staff to process all the unemployment monopolies-I-mean-Multinationals create….

  11. KJT 11

    Can’t anyone see the logical fallacy of the idea that every country is going to get onto a trade surplus and export their way to prosperity.prosperity.
    Not going to happen. Especially for the ones with the least market power.

    • Draco T Bastard 11.1

      And that is the second biggest delusion of the entire market economy theory. The simple fact is that every country is perfectly capable of producing everything that it needs thoroughly undermines the possibility of exporting to prosperity.

      The biggest delusion is the idea that resources are unlimited and that we can export as much as we like without ever running out.

  12. So in other words, be a bigger corporate slut; even though it didn’t work in the 1980s-1990s?

  13. xtasy 13

    I know very few countries, that are like NZ, that are so “hospitable” and welcoming to international corporations!!!

    This stuff.co article belongs in the stuffed dust bin, for real.

    There are all the large US based retail fast food and “coffee” chains here, dominating the take-away business. There are numerous other retail and manufacturing companies, here, e.g. Coca Cola, who produce products for the local and even overseas markets.

    We have had a suburb of Wellington welcome a large tobacco corporation, to establish a production facility there to produce cigarettes, largely for export to Australia, using cheaper labour, while NZ governments are pretending to fight smoking.

    Most NZ banks are owned by Australian corporates.

    We have corporations invest in water supplies, electricity supplies, healthcare, transport and the works, and here we have some jerk complaining to stuff.co about NZ being not inviting enough of such self-serving “investors”.

    Get a bloody reality check, please.

    That is such a load of damned garbage, what else does the NZ crap media come up with next???

  14. Foreign Waka 14

    Considering that these companies pay neither tax here nor there, it should read “Think big and embrace the rort”

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