Triple threat seen to private enterprise

Press, 29 April 1982, Page 5

Triple threat seen to private enterprise

A triple squeeze on the private sector threatens to throttle completely private enterprise and the niarket economy in several countries by the end of this century, said a visiting expert on international economic relations. Dr J. C. Ramaer. in Christchurch. Dr Ramaer is the director of the Bureau of Internationa] Ecomomic Relations for Philips International. based in the Netherlands and was a guest speaker at the national convention of the New Zealand Employers' Federation. Sweden. Norway. Denmark. and the Netherlands — once leaders in the concept of a social welfare State, as was New Zealand — all were threatened with losing their private sector and market economy in 15 years if the triple squeeze continued. Dr Ramaer said. “The most dangerous trend we are worried about is investment being discouraged by the tax regimes and by over-regulation." said Dr Ramaer. The next serious problem was the growth of the public sector — in the last 20 years, the public sector increased its share of gross national product in the Netherlands and Sweden from 30 per cent

to 70 per cent, and was still rising.

The third problem was a profit squeeze caused by unions and ' politicians demanding higher wages and social security benefits. Now 98 per cent of the Netherlands' national income went in wages and salaries while only 2 per cent remained for rents and profit.

"The burden of the public sector is becoming too great to shoulder and something must be done about it." said Dr Ramaer. "'But it requires great political courage and that is a verv scarce item."

Ideally, the public sector should take only 30 per cent of the G.N.P. The private sector would then get 70 per cent. The profit squeeze must be loosened so that only 80 per cent of national income went for wages and salaries, leaving a healthy 20 per cent for rents and profits to encourage new investment. "In many Europeaan countries governments' are already realising that they must make change because of pressure coming from business and the community." said Dr Ramaer. The ability of business lobbies to prompt a change in trends of government intervention and public sector spending would be helped' by the widespread disenchant-

ment with government, he said.

This distrust 10 years ago was directed at multinational corporations, but was now being turned on government. Government should deregulate to the level of the 1950 s when business judgments were based on market demand, profit, and risk, instead of hosts of environmental and social criteria. "There is always a certain percentage of 'idiots who want to deregulate all society." said Dr Ramaer. Consumer protection would be ensured by restrictions imposed by companies themselves for good business practice and also the law and governments, .which could prevent abuses of business freedoms. The common sense of citizens' on what to buy would also control business practices.

Similarly, private enterprise must compete with the public sector in fields such as information, education, refuse collection, fire-fight-ing. maintenance, health care and child care, administration. and personal safety.

New technology and computer software were the ideal tools to enable this sort of competition and to streamline the huge government bureaucracies and make them more efficient. "Parliament, which is nowoverwhelmed by problems and documents, may be capable of spending its time in a much more rational way on the really important issues." said Dr Ramaer.

Deregulation and increased private enterprise might prompt fears of business arrogance, price-fixing cartels, and monopolies on consumer items.

"I refuse to accept the idea of a businessman being less moral than a normal citizen just becuase he is a businessman." said Dr Ramaer.

"But what I do recognise is that people in big and powerful organisations, whether they are unions, governments ' or businesses.

are open to misuse of power." Dr Ramaer said that another big threat to the market economy, particularly in Europe, was the rise of what he called "scientific socialism. “It spreads indifference and negativism by comparing the imperfections of today’s world with the promises of a Utopian future — promises that can never be kept." he said. Many people, even in business. did not realise the hold socialism was taking on movements and individuals who were not outright communists. In addition, the necessary foil for employers — the trade unions —‘ were themselves becoming hamstrung by the emerging conflict between two objectives. “The basic task of the trade union, and this is the difference between unions in the United States and Europe, is simply to represent the direct interests of its members to employers." In Europe, trade unions or groups within unions were interested in changing society, mainly to ( promote socialism. “Right now in the Netherlands union officials are in a very tough position sorting out these two conflicting objectives." he said. "In order to maintain jobs for their members, unions want to show restraint in wage demands and showgenera! restraint in increasing the cost of labour. On the other hand, extreme wings are planning for changes to society which almost inevitably entail costs. , "Maybe that is one of the reasons why union membership is falling in Europe: it is a tough problem. "It comes down to what each group's role is." Employers were planning to take a more active interest in wider issues, and even get directly into politics, but only openly and in areas which directly reflected on business interests.

■‘Employers should not become shadow governments." he said. “This is equally valid for unions."