Who’s Crying Now?

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Gareth Morgan, Director of Gareth Morgan Investments

It’s been a bad month for Fletcher Challenge shareholders. Owners of New Zealand’s largest corporate have been hit by a once in millennium financial disaster – share price meltdown. Collectively they’ve lost around $1.5 bn since the disaster struck. It makes the premature freezing of South Island sheep in July’s snow seem like loose change. So where’s the TV coverage of investor tears, the disaster relief as ordinary New Zealanders’ respond to another business investment failure, the moving film footage of ruined Grandma and Grandad shareholders, and the standard public gesture from Mr Birch of free labour to assist.

FCL shareholders must be disorganised. Otherwise they’d take a leaf out of the farmers book, run to the media with their stories of despair and ruin, and whip up public sympathy. The farmers in July gave a lesson to all businesses. Making an investment and being prepared to bear the cost of your own investment risks is unnecessarily foolhardy. It still pays to establish a number of peripheral public propaganda activities, which in times of trouble can be used to pass losses on to others.

First, establish a Union to give you representation in Wellington where the freebies from government are dished out. Appoint a professional whinger to head your lobby, someone well used to treading the beggars track to Ministerial offices, someone who can disguise, however thinly your sector’s self interest as national interest, someone who can react with shrill indignation should your bleating for assistance be criticised as disguised self-promotion. Federated Farmers, the Life offices Association, or any of the assorted rabble of Wellington lobbyists are a rich source of such “marketing” personnel.

Don’t forget to establish a ginger group which can whip up some TV coverage of the victims in your industry, for example a convincing boo hoo hoo brigade sobbing over their worthless share scrip. Finally, ensure you have the ear of the most interventionist Cabinet Minister you can find so that in your hour of need he’ll mobilise beneficiaries to chop your firewood, or feed your pets, while you concentrate on the disaster at hand.

With this suite of non-core propaganda activities you guarantee maximum media coverage for any business misfortune. The public can be whipped up to respond to your bleating, chip in and donate hot soup and scones to see you through your sharemarket blues. So come on FCL shareholders don’t sit there and take your $1.5 bn loss privately, work up some tears for the reporters, call the meltdown an act of God, and press your MP’s for national disaster relief.

Lobby politics remains the antithesis of competitive efficiency, sheltering losers from the cost of their folly, trading off long term national economic benefit for the short term benefit of vested interests. It remains a most effective way for the economically feeble but politically zealous to graft themselves a dividend from the welfarist culture ordinary taxpayers have underwritten.

Who’s Crying Now? was last modified: December 15th, 2015 by Gareth Morgan
About the Author
Gareth Morgan

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.