There is a skill governments attract: pitching a case just the right way to download some taxpayer money.
Governments don’t set out to foster the skill but it happens under all of them. Fill a bucket with money and schemers suss the criteria and build a case to fit — all by the book.
We’ve seen examples of that in the past couple of weeks: a hip-hip study, a personal degree, Maori and Pacific island lesbians’ and gays’ access to sport and culture — all in the name of social entrepreneurship. Entrepreneurial, all right, but not very social.
The real social entrepreneur is someone who generates an activity that benefits a social community. That is not the same as charity or good works, bestowing beneficence. The social entrepreneur, like the genuine business entrepreneur (not fancy financiers or one-person traders like plumbers), is building something new, creating something out of ideas and energy that would not otherwise happen.
Business entrepreneurs create economic wealth; social entrepreneurs create social connections or improvements — social wealth, you might call it, or social capital, a much overused term meaning different things to different people, though all versions imply that the more there is of it (whatever it is), the better the society will be and, some also argue, the more productive will be the economy.
Social entrepreneurs are not numerous, as real business entrepreneurs are not. They are unpredictable, idiosyncratic, as herdable as cats and can’t read rulebooks They are polar opposites from the risk-averse public servants who dole them cash. Some are even public servant escapers from the rule book.
They are attractive to cash-constrained modern governments because they extend governments’ reach, are more effective than lumbering, rule-bound state agencies and are, or can be, value for money.
Australian Labour leader Mark Latham, who had talks with senior businesspeople and Helen Clark, Michael Cullen, Trevor Mallard and Ruth Dyson on Friday, is an enthusiast. He reckons they are making a difference in some of the poor suburbs he represents.
Welfare and Employment Minister Steve Maharey likes the idea, too, He has read some of the same, mainly British, books, academic papers and government initiatives on “social enterprises” as Latham. In 2001 he launched a programme to back social entrepreneurs.
Maharey’s National counterpart, Katherine Rich, too, generally approves the notion. In fact, National under Roger Sowry was heading towards this track in the 1990s, though without Maharey’s “third way” fervour.
Rich does not base her support on “choice” grounds, as her leader might, or an ideological enthusiasm for community (and individual) self-help or even a special National party love of entrepreneurs. Her focus is on what works.
She is critical of some to whom Maharey has doled money who are not entrepreneurs and/or who don’t bring real benefit to the community. Hence the fuss in Parliament and Clark’s speedy shut-it-down reaction. She is not keen on leeches.
The test is taxpayer tolerance. If asked, taxpayers would likely say they want the general social benefit to outweigh the financial cost and public benefit to outweigh the entrepreneur’s private gain — probably substantially in both cases.
There are two problems. One is measurement, weighing hard cash against hard-to-quantify social benefit. Different taxpayers make different judgments. Wrong numbers make political red faces.
The second is the form of government help. Often not much is needed. But whatever is needed has to be fine-tuned to avoid a lolly-scramble.
Operational grants turn entrepreneurs into agents for the state, the antithesis of entrepreneurship.
Maharey went for grants for people to research and new skills for their enterprises, which risks a “moral hazard” of smart individuals milking the state to boost their personal human capital.
Latham wants a bevy of social venture capital funds, an idea discussed at the 2001 Knowledge Wave conference here, to give social entrepreneurs a capital base and so become self-sustaining. This sounds good but the analogy is stretched: business venture capitalists accept failures or low returns on much of their investment but do expect some impressive successes; social entrepreneurs’ successes are social, not an income return on capital.
Two things are sure.
One is that top social entrepreneurs are valuable people, deserving wider backing, from the state if not available privately. Ngahau Davis, who turned around decaying Moerewa, is a good example.
The second is that there will be failures. That is inseparable from entrepreneurship. But it is politically tough. Has the government got the grit?
� I erred last week in saying only Steve Maharey among ministers had met Australian Labour leader Mark Latham. David Cunliffe, a minister outside the cabinet, says he has read all Latham’s books and has met him. Trevor Mallard apparently met him before he was an MP.