Is New Zealand’s The Best Little Economy In The World?

Written By: - Date published: 7:23 am, January 26th, 2021 - 53 comments
Categories: business, Economy, economy, grant robertson, jacinda ardern, uncategorized - Tags:

This little video doing the Youtube rounds claims that New Zealand is the best-managed country in the world. And currently has one of the best economies.

Move aside Sweden. New Zealand is a safe, stable, consistent, peaceful place to live with your family, the easiest place in the world to set up a business,  currently one of the best-recovered economically from the 2020 downturn, and has managed all of this on a pretty small resource base and massive distance from markets. It’s a confidence-inspiring place that the world wants to come to and currently admires more than it has in a while.

The 17 minute video asks:

  • What are the primary drivers of New Zealand’s economic prosperity?
  • How has the nation made these factors work?
  • What are the challenges the nation will face?

Disclaimer: the video contain advertorial for a financial services company. I don’t have anything to disclose.

It’s absolutely reasonable for us all to question government policy, and to demand more of what we want. I sure do.

But there’s also another voice analysing the relative strengths of Australia and New Zealand, and holds the balance currently strongly in New Zealand’s favour. If you’re in Unity Books or other bookstores with half a brain, you’ll see this set of essays by Laura Tingle illustrating why it’s time for Australia to acknowledge the many things New Zealand does better than Australia.

For a country that could have gone through a far, far deeper crisis just last year than it actually did, stepping back and appreciating the views of foreigners who look at us with fresh eyes is frankly encouraging.

The video analysis certainly doesn’t hold back on some of the challenges, notably housing.

Nor does it discourage critics from analysing and where required shouting about what ought to be done better.

But there are few countries like us, and we are being told we are in world-standard good shape.

53 comments on “Is New Zealand’s The Best Little Economy In The World? ”

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  1. Nic the NZer 1
    26 January 2021 at 8:24 am

    First graph here shows the size of discretionary stimulus during 2020. New Zealand ranked first here (relative to size) explains a lot of this economic outcome.

    http://bilbo.economicoutlook.net/blog/?p=46654

  2. Sabine 2
    26 January 2021 at 8:29 am

    ask the poor if the economy is good, if it is for them, than chances are it is, if the economy is not good for them, or worse even does not include them at all we can accept that the economy is as always very good for a few someones and shitty for a whole lot of people.

    Also does rent and house prices factor in the math that is used to call the economy good?

  3. Stuart Munro 3
    26 January 2021 at 9:09 am

    I'm afraid it smacks of the same groundless optimism that typifies financial reporting, and that was a driving irritation for Blomkvist, not to mention panegyrics that Enron generated prior to its collapse. Of course, if one is looking for new, inexperienced small investor customers, a breezy optimism is better for business than the cold scepticism objective analysis requires.

    Useful to rebut the incessant unfounded attacks of the Right, but tending to confirm economists in their errors instead of monitoring and correcting the operating assumptions that are not borne out in reality.

  4. Tricledrown 4
    26 January 2021 at 9:49 am

    The NZ economy is getting by at the present but inflation is running at nearly 4% if you include house prices which were removed from the CPI in 2003 as part of the coalition deal with Winston Peter's.

    We haven't yet endured the full effects of the world economic slow down with shipping costs and availability that will surely increase inflation and decrease economic output.

    Housing needs a brave govt to step up and spend real money not a larger bandaid than Nationals very small bandaid.Labour needs to get brave ie like MJS and the Social Credit govt of 1935 and print QE whatever , Invest $30 billion plus to fix the housing crisis it won't happen overnight but its fixing the very expensive longterm downstream consequences of longterm poverty.The housing crisis has been exasperated by printing money and giving it to property speculators unintentionally as the banks did need a capital injection but any further printing QE needs to go directly to where its needed the already well off NZers don't need food on the table or a roof over their heads a free doctor's visit.The increase in poverty needs addressing pronto kids not going to school living out of cars going hungry needs fixing now.

    Just because we are doing better than most doesn't mean we can't do a lot better.

    Fixing the housing crisis which has got seriously worse under the Winston first/Labour coalition should not be a problem for a Labour govt that doesn't have Winston the handbrake to contend with. In the recent flooding of hawkes bay and the Canterbury earthquakes temporary porticom type housing was able to be put in place within a few weeks why can't we do this now?

    There is no reason QE is what's kept our economy afloat so long as it is directed at fixing productivity and not funneled into speculative investment it will work as it did in 1935 onwards.

    • Tiger Mountain 4.1
      26 January 2021 at 10:31 am

      Well put Tricledrown. We certainly do have one of the “best little housing crises”!

      Full housing could be restored, with incremental price drops over time, as state rental numbers increased–if there was the political will by the Labour Caucus, but there is not at this stage. National certainly show no signs of deserting the 36 year long Parliamentary neo liberal Consensus either.

      In Northland iwi members particularly are just getting on with Papakainga projects, the He Korowai Trust has made little villages of recycled houses, like the old style pensioner flat precincts, for people the state agencies won’t touch, and a mid North project plonks portacoms for homeless on rural sections (usually of relatives) with already connected services, residents are required to pay a small amount regularly and can even purchase after several years. It can be done even with meagre resources, on a local scale.

      It really is time for entry and occupation by homeless of selected empty buildings and homes, to publicly put the heat on NZ Labour.

    • Clive Macann 4.2
      26 January 2021 at 11:25 am

      "Just because we are doing better than most doesn't mean we can't do a lot better."

      I think you will find, that little statement would refer to just about anything done on this planet at any time, Pandemic or not.

  5. Gosman 5
    26 January 2021 at 12:18 pm

    None of the policies promoted by the government really gets to the heart of the economic problems the country faces. 8000 additional State houses is really not going to make a blind bit of difference to the housing supply problem.

    • Ad 5.1
      26 January 2021 at 12:46 pm

      It will house 8,000 families who are on the Kainga Ora waiting list. That will make quite a bit of difference to those 8,000 families.

      And no, it will not add to the problem of supplying houses for sale into the private home owner market, because that's a different problem.

    • Stuart Munro 5.2
      26 January 2021 at 4:03 pm

      8000 housed is a non-trivial step in our population – and a significant step up from previous housing efforts. It won't quit them of the responsibility, but it will look a lot less like the truancy of National's Clayton's response.

      • Gosman 5.2.1
        26 January 2021 at 4:07 pm

        It is trivial and it is not just I who thinks this

        "The most effective way to lower house prices is to increase supply. 100,000 Kiwibuild homes would have done that. Eight thousand new state homes will improve the living standards of our more vulnerable families, but won't make the slightest difference to house prices."

        https://www.newsroom.co.nz/the-brutal-truth-there-are-votes-to-be-won-in-a-broken-housing-market

        • Sabine 5.2.1.1
          26 January 2021 at 4:35 pm

          so it does not matter what gets done or what not, what matters is what gets votes?

          that is the epitome of empty meaningless politics and the beige suits responsible for the 'doing nothing much' and if that is what you support – winning the contests only, who cares about governing (cause you can not then govern – lest you lose the vote of those that profit from high house prices and homelessness ) then we may as well just go back to a feudal society where the landowners owned everyone else.

          Whom would you be Gosman? Landowner or owned?

          • Gosman 5.2.1.1.1
            26 January 2021 at 4:45 pm

            I would want to allow people to build houses or apartments without too many restrictions and costs imposed by other parties.

            • Sabine 5.2.1.1.1.1
              26 January 2021 at 5:53 pm

              like turkey? were after every earthquake many people are dead or injured?

              no real regulations for the hight of the building, the concrete, the steal used, and every time the earth shakes you just pray that its the other house that falls down?

              what restrictions and costs would you remove? building permits? certain types of building materials? OSH?

              What? And, do you want to be Landlord of such a building? Do you want to be the tenant of such a building? Would you want to build next to these 'not too many restrictions and costs imposed by' buildings?

              Like the Favelas? Or the Manila slums? Or any of the African Shanty towns? they are all 'houses and apartments' builds without too many restrictions and costs imposed by other parties? _ btw, who are these 'other' parties?

              • Gosman …
                26 January 2021 at 9:23 pm

                Building restrictions are far more than just safety regulations. There are huge amounts of rules in place which serve little purpose such as minimum size restrictions.

                • McFlock …
                  26 January 2021 at 10:17 pm

                  You don't see what minimum dwelling/room sizes have to do with stopping prospective slumlords? Seriously?

                  • Gosman …
                    27 January 2021 at 8:09 am

                    Many people are very keen to purchase and live in Tiny houses. Why do you want to stop these people doing what they want? It is both less impactful on the environment and will allow more people to live on the same amount of land.

                    • McFlock …
                      27 January 2021 at 1:47 pm

                      Did you not understand the question, or did you not wish to answer it?

                    • Gosman …
                      27 January 2021 at 1:55 pm

                      I understood your question. You want to stop landlords forcing people in to houses that are too small for them however I have pointed out by doing that you deny people the right to choose to live in a Tiny house. Why do you want to make it difficult for people to choose a style of living that would help resolve the housing crisis?

                    • McFlock …
                      27 January 2021 at 2:07 pm

                      So you do actually see what minimum sizes have to do with stopping prospective slumlords, but you feel that slums are an acceptable price to pay for some people to get a fingertip into the property market.

                      Do you see what minimum dwelling sizes might have to do with overcrowding?

                    • Gosman …
                      28 January 2021 at 2:59 pm

                      We have overcrowding already with minimum size restrictions in place. Families are living in garages in houses that they share with other family members.

                    • McFlock …
                      28 January 2021 at 5:07 pm

                      Is the cause of this that the rooms are too big so there is a shortage of structures on the available land, or just a shortage of suitable structures actually being used as dwellings rather than airB&B or vacant investment properties?

            • woodart 5.2.1.1.1.2
              26 January 2021 at 8:02 pm

              I cant still remember prebble on parliament steps, burning useless(he claimed ) building laws, not long before he, as an actoid ,voted in favour of national derugulating building laws. result? billions wasted in fixing poorly designed and built leaky houses, a direct link to our current unaffordable housing crisis.

        • Stuart Munro 5.2.1.2
          26 January 2021 at 9:43 pm

          It is not trivial because it means a substantial but likely achievable increase in building capacity. We certainly want 100 000 or more – but short of buying prefabs from China, we're not presently up to building them – just another of those capacity losses we got as part of the Rogergnomic gross incompetence package.

    • Macro 5.3
      26 January 2021 at 4:19 pm

      None of the policies promoted by the government really gets to the heart of the economic problems the country faces.

      And what, in your opinion, is the heart of the economic problems the country faces?

      • Gosman 5.3.1
        26 January 2021 at 4:33 pm

        Capacity constraints in infrastructure and housing and low productivity growth.

        • RedBaronCV 5.3.1.1
          26 January 2021 at 11:28 pm

          Ah yes – capacity constraints on housing and infrastructure and low productivity growth = Nats unrestrained low quality immigration programme where taxpayers will be footing the bill for years yet.

          • Gosman 5.3.1.1.1
            27 January 2021 at 7:53 am

            Most migrants move to a couple of locations the housing and infrastructure constraints are nationwide.

  6. Castro 6
    26 January 2021 at 1:47 pm

    Is that you, Jong Kee?

  7. The Al1en 7
    26 January 2021 at 2:07 pm

    Janet Yellen has been confirmed as the first ever female US treasury secretary in a Senate vote.

    At her confirmation hearing on 19 January, Ms Yellen urged Congress to approve trillions more in pandemic relief and economic stimulus, saying that lawmakers should "act big" without worrying about national debt.

    In response, Republican senators warned the former Federal Reserve head this was not the time for "a laundry list" of liberal reforms.

    Ms Yellen disagreed, highlighting the fact that many families whose incomes have fallen were not reached by jobless programmes. She argued that plans to raise taxes must be seen in the context of financing bigger investments necessary to make the US economy competitive.

    "The focus now is not on tax increases. It is on programmes to help us get through the pandemic," she stressed.

    Come on Grunt – Where's my $2000 stimulus cheque?

    • Ad 7.1
      26 January 2021 at 4:54 pm

      Instead of a cheque, most through direct employer subsidies simply got to keep their job – I know which I'd prefer.

      • The Al1en 7.1.1
        26 January 2021 at 5:52 pm

        Yeah, that was great to maybe keep 80% of our wages for 3 months, now that's all goneski, where's my stimulus money?

      • Sabine 7.1.2
        26 January 2021 at 6:16 pm

        Never mind all those that have lost their jobs, will lose their jobs as Covid is still here and will not be gone for a while, and all those that have nothing to change too easily jobwise – also thanks to Covid. They have the very generous Pre – Covid benefit rates to look forward too, and surely that is economic stimulation enough and no increase or extra payments are needed to make up for any shortfalls, not even for Christmas.

        But some got to keep their jobs – and that is all that matters. Right? The one that get to keep their stuff, buy their houses, drive the electric car, right?

        • Ad 7.1.2.1
          26 January 2021 at 6:45 pm

          The full set of measures the government has undertaken so far are here:

          https://www.treasury.govt.nz/information-and-services/new-zealand-economy/covid-19-economic-response/measures

          There's a further $14 billion unallocated in case there's a further lockdown.

          The last economic update on how this set of policies has been effective is from December last year:

          https://www.treasury.govt.nz/system/files/2020-12/weu-18dec20.pdf

          I sure ain't going to knock anyone who is unemployed; it would be devastating if it happened to me. And there's always some different set of policies somewhere else to compare our government's response to. And yes we sure are in a crisis.

          But this government has done the biggest set of interventions into the economy than anyone else per capita. So far we are holding up better than anyone else other than maybe Australia.

          • Sabine 7.1.2.1.1
            26 January 2021 at 7:47 pm

            and non of that has anything to do witht he fact that increases for benefits which would be an economic stimulus were outright rejected by the PM for god knows how long.

            non of that has to do with the fact that many of the jobs that have been lost will be lost and we have nary a realistic discussion about whom is actually carrying the brunt of the unemployment and how to deal with that specific set of needs.

            non of that has anything to do with OZ or Europe or anything really, as we are in a very different position than landlocked Europe with its thousands of kms of borders, or the US and the UK who let the pandemic gallop out of control on purpose it seems.

            All it has to do with is that our beneficiaries that already did not make it before covid are now even further screwed, and that includes every houshold that has lost an income with nothing to replace it.

            The economy is as good as is the ability of the poorest of us to pay rent, and bugger it Ad, a great many only pay rent because the Tax payer via Winz picks up the tap under the guise of the Accom Benefit, Hardship Benefit or others. So Yeah, nah, nah, our economy is not good. It is however excellent for people who are cashed up, asseted up, and can take that low low credit line up and buy some more assets to fleece the poor a bit more. After all these house prices need to go up, right? .

            The 14 Billion for a future lockdown should be spend right now on people who had fuck all all year long last year, got fuck all from Santa, and have exactly that to look forward to, Fuck all.

            Or are we to bail out jobs again for businesses who may or may not even survive a second lockdown or worse even, don’t need it, abuse it, and then hand out dividends to the share holder.

            • Nic the NZer 7.1.2.1.1.1
              26 January 2021 at 8:26 pm

              So the point of maintaining employment is to keep as many people as feasible in employment and receiving their wage/salary and contact with an employer (rather than the lesser benefit payment).

              This is significantly preferable to the US situation where the cheques are not yet in the mail and many have already lost their jobs.

              Looking ahead the resulting employment continuity will have a significant positive impact on their future career prospects. It will also have a measurably better social and mental health outcomes for them and their families over a similar benefit income.

              So if I was considering the allocation of more funds I would be looking for ways to maintain or increase employment with those and only look at benefit rates in terms of fairness secondarily.

              In summary I think the governments economic priorities were pretty sound.

    • McFlock 7.2
      26 January 2021 at 5:37 pm

      aka one hundred Tubmans. Jackson's being replaced. Again.

      • The Al1en 7.2.1
        26 January 2021 at 5:53 pm

        Can't wait to see the yankee nazis getting a fist full of her dollars in their wage packets.

        Q. Will they do overtime for a few dollars more?

    • Adrian Thornton 7.3
      27 January 2021 at 6:29 pm

      Perfect fit for Biden's administration….welcome back Obama's Wall St swamp monsters…but hey it's a woman (monster).

      "The incoming US Treasury secretary, Janet Yellen, has been paid at least $7m (£5.1m) for speaking engagements at government-regulated banks, consultancies and hedge funds over the past two years, according to newly disclosed documents.

      The former Federal Reserve chair disclosed a list of more than 50 paid speaking events for financial firms that included $67,500 from Goldman Sachs, $54,000 from an event at Barclays and $292,500 from a single speech for hedge fund Citadel."

      https://www.theguardian.com/business/2021/jan/01/janet-yellen-speaking-fees-us-treasury-secretary

      As head of the Fed…

      Janet Yellen To Jobless African-Americans: You're On Your Own

      “It is indicative of the Fed’s continued emphasis on inflation even in the face of nonexistent inflation,” Haedtler said. “They are myopically focused on one portion of their dual mandate while ignoring another. If the Fed is saying that the economy is on enough of a positive trajectory to raise rates, they are saying they are OK with 9.5 percent black unemployment.”

      https://www.populardemocracy.org/news-and-publications/janet-yellen-jobless-african-americans-youre-your-own

      • The Al1en 7.3.1
        27 January 2021 at 6:34 pm

        You should complain to someone and get her sacked.

        https://www.bloombergquint.com/global-economics/yellen-at-treasury-ticks-enough-boxes-for-left-leaning-democrats

        “Democrats on the party’s left, who could make trouble for Biden appointments, have been pushing back against some contenders seen as having too-close ties with the financial world. Yellen doesn’t fall into that category, judging by the rapid approval she got from one of the leading progressives on Monday.”

        “Janet Yellen would be an outstanding choice for Treasury Secretary,” Senator Elizabeth Warren said on Twitter Monday. “She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks.”

        lol

        • Adrian Thornton 7.3.1.1
          27 January 2021 at 6:51 pm

          It's funny (not funny ha ha) how these days people in power can do and say one thing…and we can even easily search their history to confirm those things, but if the media you trust tells you something that doesn't align with those facts, many people, your good self included, will just yep, sounds good to me…very strange and quite disconcerting must say.

  8. sumsuch 8
    26 January 2021 at 11:19 pm

    Can you imagine how much better a social-democratic economy would be?