Friday, February 14, 2020

Socialism (5) Management

If sufficient resources are available, and there is clear demand for the output, the difference between a successful project and a failure is the quality of the managers. This is true whether the project is free-market or socialist. Some socialist projects attract really good managers. That is the situation with the health care system in my city. It was true of the government department of works that built the hydro-electric schemes in the South Island.

Many projects end up with poor management teams. That happens for many socialist projects, but it happens just as often for free-market projects. Identifying good managers is not easy and the owners of a business often get it wrong. Fonterra is a large dairy cooperative owned by New Zealand dairy farmers that processes much of the milk produced in New Zealand. In the last few years, it has been managed really badly and had to write off several large investments, because the CEO was not up to the task, despite being recruited from overseas with free-market experience and paid a huge salary.

Another example is the large Australian construction company, which has messed up the construction of a new hospital in Christchurch.

Good management is not as common as we would hope, and bad management is ubiquitous. That happens regardless of whether the project is free market or socialist.

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