Only Their Purpose is Mad - The Money Men Take Over New Zealand
Reviewed by Keith Wignall.
Note: This article was published in the Christchurch Press in May 1999
To explain the title of his latest book, Jesson refers to Herman Melville's Moby Dick. In that story, Captain Ahab directs the resources at his disposal (his ship and its crew) in pursuit of the object of his obsession, the eponymous whale. His methods are rational and efficient - only his purpose is mad, and inexorably leads to disaster. Jesson argues that today's managers use their resources (the markets for financial instruments such as shares, bonds and foreign currency) in pursuit of profit. Their methods are rational and efficient, but their purpose results in the destruction of the productive economy and the people who work in it.
Jesson's depth of knowledge of political and economic history is evident in this book. He examines New Zealand's colonial past in order to understand how and why our current institutions evolved. His explanations of complex financial processes are lucid, but not always accurate. For example, he defines monetarism as the belief that inflation is the greatest economic evil and therefore the most important target for monetary policy, whereas monetarism is actually the belief that inflation is the only economic outcome that monetary policy can affect in the long run.
An irritating feature of the book - one which does its author no credit - is its tendency to dismiss, rather than address, opposing arguments. To those who suggest that the undesirable features of our current situation are due not to what was done but to what was left undone, Jesson replies "excuses, excuses". He describes economists' distinction between public and private goods, which is central to the user-pays debate, as "relatively arcane economic theory"; in fact, it is simple enough that it is taught in high schools.
Jesson also takes many of his arguments only half way: he asserts that X is bad because it causes Z, but just assumes that we will agree that Z is bad. For example, he cites increased inequality of wealth distribution as an outcome of the financial transformation, but it is not at all obvious to me that it is better to be equally poor than unequally rich. He accuses money of destroying any sense of intrinsic worth, causing pornography to be worth more than Shakespeare; a great many people would prefer to watch pornography rather than Shakespeare, and to say that they are wrong is a kind of intellectual fascism.
The fundamental thesis of the book is that, since 1984, New Zealand firms have been pursuing the wrong objective, that of maximising profit for their shareholders. Jesson waits until his final chapter to propose alternative objectives, and then does so in extremely vague terms with no indication as to how firms would be required to pursue them. He acknowledges that those opponents of current policy who do produce detailed alternatives are often eccentric, which is a polite word for crazy. One is left with the impression that he made his prescription deliberately nebulous in order to avoid being tarred with the same brush.
Note: This article was published in the Christchurch Press in May 1999
To explain the title of his latest book, Jesson refers to Herman Melville's Moby Dick. In that story, Captain Ahab directs the resources at his disposal (his ship and its crew) in pursuit of the object of his obsession, the eponymous whale. His methods are rational and efficient - only his purpose is mad, and inexorably leads to disaster. Jesson argues that today's managers use their resources (the markets for financial instruments such as shares, bonds and foreign currency) in pursuit of profit. Their methods are rational and efficient, but their purpose results in the destruction of the productive economy and the people who work in it.
Jesson's depth of knowledge of political and economic history is evident in this book. He examines New Zealand's colonial past in order to understand how and why our current institutions evolved. His explanations of complex financial processes are lucid, but not always accurate. For example, he defines monetarism as the belief that inflation is the greatest economic evil and therefore the most important target for monetary policy, whereas monetarism is actually the belief that inflation is the only economic outcome that monetary policy can affect in the long run.
An irritating feature of the book - one which does its author no credit - is its tendency to dismiss, rather than address, opposing arguments. To those who suggest that the undesirable features of our current situation are due not to what was done but to what was left undone, Jesson replies "excuses, excuses". He describes economists' distinction between public and private goods, which is central to the user-pays debate, as "relatively arcane economic theory"; in fact, it is simple enough that it is taught in high schools.
Jesson also takes many of his arguments only half way: he asserts that X is bad because it causes Z, but just assumes that we will agree that Z is bad. For example, he cites increased inequality of wealth distribution as an outcome of the financial transformation, but it is not at all obvious to me that it is better to be equally poor than unequally rich. He accuses money of destroying any sense of intrinsic worth, causing pornography to be worth more than Shakespeare; a great many people would prefer to watch pornography rather than Shakespeare, and to say that they are wrong is a kind of intellectual fascism.
The fundamental thesis of the book is that, since 1984, New Zealand firms have been pursuing the wrong objective, that of maximising profit for their shareholders. Jesson waits until his final chapter to propose alternative objectives, and then does so in extremely vague terms with no indication as to how firms would be required to pursue them. He acknowledges that those opponents of current policy who do produce detailed alternatives are often eccentric, which is a polite word for crazy. One is left with the impression that he made his prescription deliberately nebulous in order to avoid being tarred with the same brush.
