Earlier this week the Prime Minister announced $2.5 million for tourism advertising in Australia. New Zealand is not alone in trying to increase tourism as a solution to the recession. Australia is trying to get tourists from here and other countries with wall-to-wall TV advertising on the back of that great flop of a movie Australia. The same day as Key’s announcement, the British High Commission put out a press release extolling Kiwis to head to the UK where tourism is cheaper thanks to the falling pound. So NZ is trying to get more tourists from Australia, the UK is trying to get more tourists from NZ, and Australia is trying to get more tourists from everyone. Countries all over the world are trying the same thing – calling out to people in other countries ‘don’t spend your money at home, come and spend it in our economy’.
Money an Aussie spends here is money they would have otherwise spent in Australia, if our economy benefits it is only at a cost to the Australian one. It’s a zero-sum game*. Clearly, that’s not a sustainable model for economic growth. We can’t all get richer by encouraging each other to come over for a visit.
Countries looking to tourism to save themselves from the pain of recession amounts to nothing more than vampire economics. The life-force is ebbing out of the world’s economies so they are desperately trying to suck some life out of each other to get as much as they can of what’s left for themselves.
Ultimately, wealth isn’t generated by gimmicks and quick tricks like advertising campaigns. It takes real effort, hard work, and innovation. If we want our economy to grow, that’s where we need to be putting our resources.
– the mathemagican
*Neoclassical economics (the mainstream of economics these days) would say there’s got to be some gain in net utility, because it presupposes that people are utility maximising. If they’re spending money as tourists that must create more utility for them than if they had stayed at home and spent the money there. It also presupposes, however, that people have perfect information and are perfectly rational, in which case advertising campaigns wouldn’t affect their decisions anyway. You’ve always got to take anything neoclassical economics says with a grain of salt when it’s talking about individuals’ decisions because it presupposes a number of things that are not only dumb but have been proven incorrect with experiments. The whole ideology is based on a cartoonishly simple and idealised view of humans that was created so that the maths is easier and is imbued with premises to the politically correct conclusions.