Mainzeal and the mad men who drive the economy

HIDESIGHT

Mainzeal Property & Construction’s collapse generated the usual and expected kneejerk bewailing and bemoaning.  

It’s as if it should never have happened. We had this big company yesterday. We should still have it today. It should go on forever.

And because it should never have happened, something must have gone wrong. And so someone is to blame.  

The fault is invariably greed or business ignorance or both. The fingers predictably point to directors and the company’s owners. And to the government.

The business failure is reported as an economic calamity. And a sign that all is not well within the wider New Zealand economy.

It’s all nonsense, of course. The business collapse shows we have an economy that is working. We would be better off with more.

It is traumatic and upsetting for those involved. But so, too, is life. The trauma and upset doesn’t make life less worthwhile or desirable. It’s simply a part, and a very necessary part, of living.

Business collapse is part and parcel of a successful economy. It’s simply not possible to sit back and design once and for all the perfect business and business structure.

Even if we could, it wouldn’t work for all time. The world is simply too dynamic a place.

And so we have instead a system that is constantly turning over ideas and business practice. Businesses are continually coming and going. There’s continual innovation and entrepreneurial success – and failure. It’s what gives an economy its dynamism.

We have had economies in which businesses never failed. The economies were sclerotic. The end result wasn’t business failure but the failure of the entire economy.

It’s the turnover of businesses – as traumatic as it is – that makes an economy strong, robust and, ultimately, successful.  

There should be no surprise in any of this. The strongest and most resilient systems are underpinned by a continual turnover and evolution.

The obvious example is life itself and the extraordinary strength and wondrous diversity produced through trial and error. The English language, science and common law are other examples.

Esperanto is a cleverly designed language. But it lacks the evolutionary adaptive power of English. No one designed the English language. No one controls it but it works.

Business start-ups, mergers, takeovers and collapses are tweaks and hacks to the economy, making it better and stronger. They are the neologisms and, ultimately, obsolete words of yesteryear.

The economy is an organic, growing, evolving system. Business ideas are tested and tested through trial and error. It’s messy and it’s difficult. It’s not a clock that’s been engineered but a living, growing, evolving thing.

But there is a driver. A driver on which the entire system depends. A driver that generates the very things that we need to sustain ourselves. That driver is entrepreneurship.

Entrepreneurs are the rarest of people. The madness. The hubris. The focus. The drive. The wild, misplaced optimism.

These are the souls that make the difference between an economy that ticks along and one that flies. Do they get it wrong? More often than not. Do they make mistakes? More in a day than commentators make in a lifetime. Are they mad? Of course.

When they succeed, lesser folks regard them as excessively wealthy and rapacious. When they fail, they’re greedy fools.

We should be gentle on entrepreneurs, both when they succeed and when they fail. Not for their sakes. They have personality types that don’t much care. But for ours. There’s enough ignorance and negativity in the world without adding to it.