Gareth Morgan, Director of Gareth Morgan Investments
NZ has 0.6 practising accountants per 1000 people, Australia 0.5, Britain 0.4, the US 0.2, France and Germany, 0.1, while Taiwan has 0.01. If we excelled in creating wealth to the same extent we excel in measuring it, our high rate of investment in training accountants may have yielded fruit. With almost as many lawyers in training as there are practicing, one wonders whether we have produced a suite of industries that are indeed capable of providing the income growth necessary to eradicate unemployment.
NZ’s growth is dependant upon the activities of wealth creators – a group which doesn’t exclude accountants, but for which tertiary level accounting skills aren’t a prerequisite. With the persistance of high unemployment, the role which the country’s entrepreneurial cohort must play is increasingly critical to relieving that burden upon society.
Wealth creation is an attribute invariably due to competitive advantage in the resource of human capital. Technical skills are definitely a vital part of that capital base but alone are insufficient to ensure an economy adequate to employ all. Entrepreneurial spirit also needs to be encouraged. The educational establishment must equip people with technical skills but not at the cost of depriving them of an appetite for risk, self reliance, and innovation. Training so many to be competent managers and administrators of existing business structures may well be depriving the economy of the human capital required to secure economic growth as opposed to maintain the economic status quo. Whether our present education institutions are capable of promoting more urgently the skills necessary for economic growth, should be examined.
With the onslaught of automation upon the services industries, many of the functions performed by legal and accounting shops will require less labour input. For example increasing numbers of small businesses are running their own accounts using public domain software, leaving the accountant to provide value added tasks rather than basic bookkeeping. In the US there is afoot a trend towards automating mortgage application processes. Rather than being swamped by screeds of legal documentation, standardisation and use of computer terminals enables one lawyer to administer far more applications per day. The emergence of these types of productivity changes in service businesses which have previously provided very strong employment growth, will diminish the demand for economic administrators.
Again the issue arises whether our investment in human capital is sufficiently skewed towards wealth creators whose enterprises will absorb labour displaced by the automation of services. Reliance on the price system – wherein the price of unemployed labour simply falls until it is cheap enough to employ, isn’t a panacea if the demand for such inappropriate labour is zero. Yet the market for skilled labour – that with entrepreneurial capability – is a far more diverse beast where there aren’t obvious purchasers, rather entrepreneurs create their own demand through their innovations. Developing a culture where self reliance and entrepreneurial skills are recognised as valuable attributes, and the education system promotes their pursuit as well as the acquisition of academic and technical skill, would serve NZ well.
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