Once upon a time New Zealand was the most prosperous country in the world, living on the sheep’s back. But that was when its population was only two million. The fruits of a raw commodity export sector now have to be spread over more than four million. We could provide decent jobs and income for all by processing these commodities in New Zealand.
All this was anticipated in a 1953 article by John Cox called ‘The Next Million‘ in which he proposed a regional inventory and the development of industries that would add value to our commodity exports.
The tragedy of New Zealand’s economic history for the next sixty years is that this was not done. Instead, we got into real estate, into ‘wealth creation’ by borrowing money overseas and investing it, not in industry, but in real estate speculation, as an online New Zealand Herald graphic succinctly puts it.
More recently, Coriolis Research have argued that New Zealand could still climb the value chain in food processing, but that this would by now require “deep pockets … Massive capital investment … Willingness to accept losses for long periods”. See here and here. In practice this means a government that is prepared to back such investment and at the same time curbs the real estate market in order to channel capital into development, in the same way that successful European and East Asian economies have generally done.
If there is no political will to do that, then we seriously have to look at our population policy, because if we remain a raw commodity exporter, where will the jobs for the next million come from? As Cox said,
“Shall we take [initiative] or shall we drift on dully, without objective, from crisis to crisis, constantly surprised at the results of our own mistakes and lack of foresight. If we do, the increased export of one commodity is certain—our native brains and initiative.”
Ironically, that is what’s happened, so Cox’s next million could be regarded as the million Kiwis already living overseas. If they weren’t, things might be even worse.
– ChrisH
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