Wonka champions little capitalists

This summer’s hit movie Wonka inspires a generation to do something exceptional: start their own business. More importantly, it teaches them how to fight for it.

Willy’s Mum knows this to be true, telling him, ‘Every good thing in this world started with a dream. So, you hold on to yours.’ Along the way, Wonka has lessons about monopolies, contract law, and human nature.

We know that starting a business is not easy. Holding on to it is even harder, with most failing within three years. Wonka does not sugarcoat this. It is central to the plot, with two sets of villains.

The first is the aptly named Chocolate Cartel. Behind their buffoonish appearance, they exhibit classic cartel behaviour. They have agreed in secret to collude together instead of competing with one another. That allows them to keep consumer prices higher and their profits inflated.

The greatest threat to a cartel is an outside competitor, particularly one that offers a superior product. Who wouldn’t want a giraffe milk macaron? Keeping competition out is aided by the support of government officials. In Wonka, the Chief of Police is easily bribed into service because of his love of chocolate.

The second set of villains are an unscrupulous couple named Bleacher and Mrs Scrubbit. It is here that Wonka teaches us about contract law. Willy knows a little about contracts, but not enough.

Desperate for a room and too trusting of strangers, Willy ignores Noodle’s plea to ‘Read the small print’. The terms and conditions are extensive and immoral, binding him to contractual slavery. To the delight of Mrs Scrubbit, Willy signs anyway.

With the villains established and our budding entrepreneur in a slump, the plot turns to his fightback. A crafty Oompa-Loompa gives a separate lesson in restitution, but offers this advice to Willy, ‘You should stand up to those bullies. Give ‘em the ol’ one-two.’

I won’t spoil what happens next, but how do we give the ‘ol’ one-two’ to free market bullies in Australia? The short answer is we do okay. Anti-cartel laws and unfair contract terms are enforced by the Australian Competition & Consumer Commission. The long answer is we still have work to do.

From airlines to banks to supermarkets, Australia has one of the most concentrated markets in the world. Barriers to entry are significant. This has led to higher prices, poorer service, greater inequality, and reduced productivity.

It is one of the reasons the House Economics Committee, that I am a member of, has conducted an inquiry into dynamism, competition, and business formation. This brings us back to the most important lesson from Wonka: harnessing human nature as it is, not as we wish it to be.

Proponents of free enterprise have a strong claim to its superiority. Capitalism better reflects the fundamental characteristics of humans to act in their own interests. Socialism, on the other hand, holds to a fantasy that dooms it to failure.

But we know that humans are complicated, and greed is not always good. It is the vice that drives the Chocolate Cartel, the Chief of Police, and Mrs Scrubbit. Willy, on the other hand, is motivated by the love of his mother and a dream to make the world’s most magical chocolates.

Wonka teaches us that government has a role to play in setting and enforcing the rules of a free market. Done well, those rules should empower the aspirations of outsiders and risk-takers. Conversely, we should be suspicious of insiders, easily identified by their market power and capacity for rent-seeking.

But Wonka also teaches us that government should do no more than necessary. In the end, a free market with fair competition is the best check on excessive greed. For fans of the 1971 film Willy Wonka & The Chocolate Factory, we know it is consumers voting with their wallets that help his small dream becomes a big one.

The dreams of young Australians matter to all of us. Starting your own business can be one of them. We must set the conditions for innovators and dreamers to compete. If we do that, we will give hope to our own Wonkas. More than that, we will help drive our nation forward.