Category Archives: Society

Old Industries Are The Pits

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Railways, coal mining and industrial scale manufacturing were all economic activities that had their origins in the 19th Century. This week has not been a good one for anyone employed in those businesses in New Zealand, with widespread redundancies having been announced. The reasons for the collapse of these industries differ, but they share the historical hallmarks of “creative destruction” as expounded by Austrian economist Schumpeter.

Schumpeter was remarkably prescient for a man of his time. Drawing upon the political organisational theories of both Marx and Weber he concluded that innovation was the primary driver of economic change and that every industry was subject to a cycle of emergence, ascendance and decay. He controversially proposed that democracy could never truly empower the ordinary citizen because the electorate were largely ill-informed or ignorant. His predictions that social democratic governments would emerge in the West (rather than socialist revolution) have largely come true.

None of this will be of any consolation to our miners, factory workers and railway engineers. But it does underline precisely why we need to be moving up the value chain through exporting our knowledge rather than relying upon filthy, dangerous and extractive commodity based industries. After more than a decade talking about it, the penny has finally dropped and the government is now attempting to reorganise commercialisation of publicly funded research and has been increasing the investment in research, science and technology. Bullish talk by government ministers about opening up more public land for mineral exploitation also seems to have faded for the time being. That’s why I spend a lot of my time promoting and supporting knowledge based entrepreneurship and emerging technologies and industries.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

Mega Takedown

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The Coatesville police raid and subsequent removal of the MegaUpload site should serve as a reminder to us all about how powerful governments and corporations now intend to exercise increasing control of the wild west known as the Internet, through both new legislation and legal prosecutions. It would also be foolish to continue assuming that tiny, remote New Zealand is immune from the growing American political appetite for punishing the alleged purveyors (and consumers) of pirated material.

Irrespective of what you think about Mr Dotcom and the legitimacy of his business, it’s important that the matter be given due process through the Courts and that we do not prejudge the outcome or bow unthinkingly to the will of foreign governments. There are powerful forces at work as witnessed recently with the U.S. senate coming under heavy lobbying pressure from the entertainment industry.

It’s clear that our government want to be cooperative, especially with increasingly frequent connections being made between favourable trade outcomes and the protection of intellectual property rights for American companies. What better place to exercise a show of force than in a small, compliant island state in the south-west Pacific. Why else would such an over-the-top para-military style operation be permitted in the Prime Minister’s own electorate on an individual who had recently received approval for New Zealand residency? It’s astounding.

The SOPA debate and the moral panic around piracy in the United States has largely arisen because of the ongoing failure of the media and entertainment industry to innovate its distribution channels rapidly enough. The rise of file sharing and related sites is simply a symptom of that failure in the marketplace. Without question, creative individuals deserve to be fairly remunerated for their efforts and creative industries should be allowed to make a profit, but not at the expense of Internet freedom.

Police raids and draconian legislation are ultimately more likely to inflame than to discourage. An intolerant approach towards content sharing enterprises in general may also have unintended consequences for “law abiding” users caught up in crackdowns. Perhaps the hackers and hosters should be invited to provide a technological solution to the digital creative sector that everyone can live with?

 

The Day After

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On Sunday we woke up to – well pretty much the same flavour of government we had the day before, thanks to voter apathy and one or two quirks of fate. Although Prime Minister Key has predictably adopted the position of “business as usual”, the next three years look anything but usual.

Saturday’s election outcome was fairly consistent with what the polls had been predicting in the week prior. But the returning National government will need to tread warily and not drift too far right. With 48% backing from two thirds of the enrolled electorate meaning only 32% of the adult population has their support. If parties on the Left can better galvanise voters in 2014, the outcome may be very different.

There was some good news in that potentially disruptive, extremist political parties ACT and Mana had their support base obliterated. The one exception was Epsom where greed and stupidity seems to have prevailed. Even the Labour voters in that electorate wasted the opportunity to excise their controversial and divisive former mayor. It may be a moot point, with the ACT party imploding on election night and Banks set to become a National minister in all but name.

The other piece of good news was that the Greens achieved their goal of topping 10% in party votes. An astounding effort after intelligently repositioning themselves over the previous 18 months since the departure of some of their looney fringe elements. The Greens deserved these gains and I hope Key will continue the relationship which has already seen the adoption of some of their more sensible policies. The Greens were also the party that proposed a clean technology fund for New Zealand companies in their manifesto and who have made a commitment to clean up our cow shit infected waterways.

It’s clear that Europe isn’t out of the economic woods yet and China may be on the verge of deflating. A steady hand will be needed on the tiller in the medium term. National would do well to form an inclusive government that sets a cooperative tone for the challenges that lie ahead.

Where Are We Going?

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I’ve been trying to make sense lately of an avalanche of economic news and social data that has overtaken us and in particular has implications for the young and disenfranchised worldwide.

On the one hand bankers, politicians and media magnates in suits have got away with crimes that seem only to empower the apparatus of what is looking like an increasingly discredited and ailing economic system. On the other hand looters are venting their anger by targeting the very consumer goods produced by that system. It’s hard to separate the looming economic collapse from the steady erosion of morality across society in general, yet the traditional media at first seem reluctant to make that connection. Perhaps because they are entirely complicit.

Phone tapping and gross invasion of personal privacy were the hallmark of Murdoch’s now discredited tabloids. Perhaps the tattle tale gossip was a tonic aimed squarely at deflecting attention by the masses from the really big issues facing the world? At first glance there may seem to be no connection between double-dipping politicians, eavesdropping media and riots. But England is clearly a nation in crisis on many levels at present and where England goes others in the Eurozone are sure to follow. That has implications for global sentiment, which impacts on small trading nations such as ours.

Now Prime Minister John Key is promoting a poor card for young beneficiaries in an effort to curb welfare dependency and the misappropriation of state funds. Isn’t this precisely the kind of misdirected, pandering politics that brought England to its knees? More importantly, where is the leadership vision that will drive meaningful economic growth, promote education and create jobs for young people instead? There was one good news story however. According to a recent report on the economic cost of failing to invest in early childhood, it turns out we beat Turkey and Mexico in an OECD ranking of social spending in this area. That is simply embarrassing.

Where are we going?

Parting Of The Waters

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Matt McCarten’s piece in the Herald last weekend once again laments the passing of waterfront unionism and 1950s style welfare. But it teaches us nothing at all about the real reasons why the exodus to Australia continues unabated, nor about the real challenge that lies ahead.

Our kids aren’t leaving because welfare got dismantled, nor even because silly old men say dumb things in public sometimes. They are leaving because successive governments of all hues have consistently failed to create and pursue an overriding grand vision that diversifies the NZ economy away from relatively low value agricultural commodities and tourism towards applied science, technology and value added services. They are also leaving because we live in a much more open and global society than the one he longs for.

I agree with McCarten that concerted attempts to lower wages for youth are misguided. We actually need to increase per capita income – across the board. That means creating more opportunities to generate wealth and it means cultivating a highly educated workforce that thrives on such opportunity and has a sense of purpose. We can’t compete on size, so we must compete with our brains and our wit instead.

I believe New Zealand is already at a cross roads. Whilst on the one hand we have recently suffered the worst recession and most devastating natural disaster of our lifetimes, we also exist at a time in history when two huge global economic powerhouses are emerging on our doorstep. Instead of lamenting the loss of skills to Australia, we should be working in close partnership with our western cousins to build global companies that are capable of taking our talent into these developing markets. Parting the waters of the Tasman Sea need not be a negative.

Our children have become the first generation of global citizens that have been digitally connected since birth. It may not matter that they reside in Sydney but commute to an office in Auckland or Shanghai. What matters is that we instill a deep desire to build something that creates value for New Zealand. Kiwis should not be discouraged from going global, they should be emboldened. Next week I’m heading to the Ice Ideas conference. I’m looking forward to being inspired by fellow entrepreneurs who have done exactly that.


Wrong Thinking From Right

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This week it was reported that our Deputy Prime Minister and Finance Minister gave a speech to a select group of Australian and New Zealand business and governmental leaders. The tone of his presentation made me realise he’s finally thrown in the towel. The government’s astounding vision for New Zealand now apparently involves us becoming the Mexico of the South Pacific, by which our undervalued labour force and weak currency are to be re-branded as “competitive advantages”.

Mind you, I have to credit John English for using the current round of budget cuts as an excuse to quietly terminate Don Brash’s ridiculous 2025 Taskforce on “closing the gap” with Australia. The gap is already wide enough to comfortably sail a small fleet of supertankers through it, so the only sensible thing to do now is work closely with Australia to jointly develop high added value products and services for burgeoning Asian markets. Attempting to compete with or catch up to Australia is so completely the opposite of the approach we should be taking that I barely know where to begin.

Grappling with what is quite possibly the worst economic crisis of our lifetimes; standing amidst the quicksand of quake wreckage and floundering financial institutions, one could perhaps be forgiven for acts of desperation. But within the same spirit of collegiality shown by our cousins from the West Island, who mucked in and helped in Christchurch, now is precisely the time to talk more about regional associations and tighter cooperation and not how we can under-value ourselves in order to steal a few crumbs off our neighbours’ table.

Shaken and Stirred

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Politicians and dignitaries emerged in a sombre mood from the meeting house at Waitangi earlier this month, after a local kaumatua stood up and pronounced that a major city would soon be destroyed by an earthquake. This week New Zealand experienced its worst natural disaster of modern times when Christchurch, our second largest city, was badly damaged by a devastating quake. After a tough year in 2010, this event is likely to have severe repercussions for the entire nation both in economic terms and for morale in general.

It was bad enough that Christchurch took a hit in September, but this event is much worse. Officials are already talking about the possibility of a final death toll in the hundreds and over $6 billion in repairs being needed for the stricken city. Residents must be shocked at how their lives have been turned upside down. For the rest of us, the situation seems surreal and we feel powerless to assist. But this is the scenario we’ve been taught to prepare for all our lives. We just never expected it to happen in the garden city.

Seismic and volcanic upheavals are a fact of life in a country like ours; we sit astride two very active tectonic plates. The forces that built this land can also destroy it. In the short term, the remainder of the nation will need to step up to support our southern cousins. That could mean some form of additional taxation. It will almost certainly mean a dent in our fragile economic recovery. Apart from the pure financial cost, it is hard to focus on productive work when friends and family are suffering and horrifying images of destruction are being broadcast into our homes. If we are to help Christchurch rebuild, we must ensure economic growth continues throughout New Zealand.

* We’ve compiled a list of web-based resources on the iWantMyName NZ blog, for anyone who is worried about missing persons or is keen to help in some way.

Bank You Very Much!

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Over the last year or two I’ve learnt a lot about banks and especially the ways in which they don’t serve their customers. When are we going to build a technology that solves this pain?

Managing an online e-commerce platform means you simply cannot avoid the bureaucracy that is the global banking system. You have to fill out endless forms, pay extortionate fees and generally play their silly game or get cut off. After two years of trading we took the step of opening a foreign currency account for iWantMyName. Six weeks down the track we are finally in a position to accept our first U.S. dollar transfer from our payment gateway. That’s not all. It turns out that I have to actually go into a branch each week to physically transfer money. There is no online banking facility (at least not for small businesses or individuals). It shouldn’t be that hard!

Economists and business commentators have been urging us to participate in the “weightless economy” and go global. Banks on the other hand have no interest in uploading risk by dealing with more small companies. Banks and financial institutions have a vested interest in the status quo and are reluctant to allow a frictionless flow of capital across international borders. Of course if you are a large enterprise, the banks will bend over backwards for you. I’m sure the financial controller at Fonterra doesn’t have to pop down to his local branch to sign a form to transfer a few million Euros in proceeds from the latest global milk auction.

Amazon, PayPal and even TradeMe gave us a taste of what a universal payment system might look like; but these services remain heavily dependent upon the existing banking system because your credit card or bank account is involved at some point. But it’s a starting point at least. Notably, there are increasingly vocal calls for a completely new value system involving the Internet that enables easier payments and that excludes banks altogether. For example, with some services you can perform virtual tasks to earn bartering credits. But that won’t pay my rent or buy me dinner – at least not yet.

Money is a deeply ingrained social institution around which economic commerce has conveniently been constructed. It has no inherent value in itself yet leads to huge inequity in society. Creating a safe, universal online payment system that not only circumvents the banks, but also engenders trust is possibly the greatest challenge facing developers and entrepreneurs today. Let’s do it!

100% Puree

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The recent media clamour criticising Tourism New Zealand’s new campaign threw up some intriguing responses from a seemingly random selection of  “marketing experts” who had been canvassed for their views, but who completely missed the real problem with the new approach.

With New Zealand already ranking as third strongest “country brand” for tourism last year, you would think that Tourism New Zealand might think twice about giving up on their successful twelve year old promotional style that focuses on New Zealand’s natural attributes such as landscapes, flora and fauna. 100% Pure New Zealand has evolved into 100% Pure You. I’m not sure if that is a reflection on our increasingly tenuous environmental credentials or the fact that the next generation of global travellers are more self-absorbed. Perhaps both.

The new campaign is obviously a response to the Aussie battle cry “where the bloody hell are you?”. All of the actors in the video clips are youthful, white, middle class, which not only belies the multicultural nature of Australian society to which it is targeted, but also politely ignores the fact that the fastest growing inbound tourist sources are in fact other places like China and India. The new campaign strengthens the message that New Zealand is all about hedonism and short term gratification – a message that resonates with young backpackers.

Unfortunately backpackers have the lowest per diem spend of any segment in the market. Shouldn’t we be focussing on attracting more of the upper end of the market? Don’t get me wrong. I’ve backpacked all over the world myself and it was character building and great fun at the time. I’m not for one minute suggesting we limit access on the basis of disposable income. I’m simply suggesting we revisit where our tax dollars might best be spent for greatest return.

Tourism is a huge part of the New Zealand economy, but it has a considerable environmental footprint and creates little ongoing value. It’s all about extracting short term gains from renting as many seats as possible. Jobs in the tourism service sector are generally amongst the least well paid. Perhaps we need fewer “freedom campers” pooping on our roadsides and more doctors and their families from Bangalore enjoying our sparsely populated geographic beauty. Dare I suggest it, but maybe we could also get them thinking about investing in New Zealand, whilst we have their undivided attention.

2010 Rocked Us, Roll On 2011

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To say that 2010 was a year full challenges and opportunities is somewhat of an understatement. For many people in business it was a case of  hanging in there as a recessionary economy misfired and struggled to get up off its knees. But much worse than this, New Zealand (and in particular the south) was stricken by the triple tragedies of a huge investment business failure, a destructive earthquake and a terrible mine disaster. Whilst these events provided a much-needed distraction for the government, they were devastating for the people directly affected and shocked all of us.

When national morale takes a hit, I’ve noticed the economy tends to suffer as well. Good spirits lead to more spending which in turn leads to more optimism. It’s a virtuous circle. On the plus side, we have been sheltered a little from the storm by high global dairy prices and the fact that our banks are stable and government debt not completely out of control like elsewhere. But there’s still lots more work to be done on diversifying the economy and I don’t think we should rely entirely on the Thugby World Cup to reignite our passions in 2011. We can’t afford to sleepwalk through another year.

The government needs to be looking at providing a more aspirational science and innovation framework that goes well beyond moving the deck chairs around with yet another departmental restructuring. In the lead up to the election, we also need to start thinking about reforming our entire legal system. When a senior judge thinks it’s ok to preside over a court case involving a business partner and peeping toms get longer prison sentences than drunk drivers who kill and maim, we know we’ve got a serious problem.

On a personal level I had the immense satisfaction of working with two great teams. The first was the crew at ideegeo from whom I learn something new every day. We headed into our third year of domain renewals this month at iWantMyName and grew revenue at over 200% during the year. We also addressed some growing pains by improving our platform technology as well as our management systems as we position for the next chapter. The most exciting aspect of going global with the technology was that we secured a core following of early adopters amongst the developer community worldwide that may open some interesting doors for us in 2011. Watch this space.

My other team are the good folks at the Unlimited Potential committee who help bring the coolest events to the ICT community here in Wellington. We had a very busy year with a strong focus on promoting technology entrepreneurship through a number of well supported events. We also completed our wonderful new website. All of this was achieved in a very tough funding environment. Because of UP activities, teams got built, tech businesses were started and people found jobs. Real life social networking is important. Thanks to the supporters who made it happen and let us know if you’d like to get involved as an event partner or committee member in 2011.

Best wishes for a safe and happy holiday season and a prosperous 2011.