a. The economic fallout will be real and severe;
b. the Reserve Bank can come up with billions of dollars through quantitative easing (printing more money), “helicopter” (ie free) money; and possibly, yes, taxing savings.( Oldies beware!)
c. Don’t expect economic life to return to pre-Covid19 levels
Friday, May 1, 2020
Henry Armstrong: Post-Covid19 Era Presents Unbelievable Economic OpportunitiesLabels: Henry Armstrong, Post-COVID19 Rebuild
Where are the so-called “experts” from the business sector and especially the university business schools, concerning our post-Covid19 economic and social futures, for both are inextricably enjoined?
The little that has appeared in the media so far is extremely shallow and spectacularly lacking in real, innovative and profitable opportunities. Perhaps these” experts” are hesitant to express their views for fear of being exposed for the shallowness of their ideas?
It is patently obvious that the coalition government is devoid of real-life business experience, relying on “experts” as their chosen path. But all we have heard so far is:
So, where are the experts who are capable of developing scenarios which will turn the Covid 19 disaster into a spectacular entrepreneurial opportunity for our wider economy?
Strangely, they are muted or silent.
Even a cursory review of the innovative opportunities available to us post-Covid19 reveal a huge array of possibilities:
If you believe the government and it’s sychophantic media, tourism is stuffed. No overseas visitors; airline shutdowns; rental vehicles piling up in yards; and so on. But, around 50% of our tourism industry already relies on domestic tourists. This can be substantially increased because domestic tourist will be (hopefully) virus-free. We are blessed to live in a country with some of the best tourist-attractions in the world-scenery; wines; places of interest; a clean environment, in spite of what the Greens keep telling us; relatively cheap accommodation; and service staff who really do know what they are doing - if 4 million overseas visitors a year is an indication. Increasing our domestic tourism via “specials”, etc is a no-brainer! In doing so, they will in turn require transport, accommodation, food, entertainment; and so on.
Has government not realised that we already have a world-class tourism infrastructure? We do not have to invent it from scratch. And 50% of the pre-Covid19 market is already here, so let’s use it.
2. International Education
In spite of some academics bemoaning the loss of international students, the future of education lies in online programmes. The Open University in the UK, and some US universities such as MIT already offer really good quality programmes online, and to a much lesser extent, Massey University in NZ. If I were engaged in our universities, I would be recruiting hundreds of staff to design and deliver quality, online programmes for a market which is world-wide. All NZ universities score well on international ratings.
Students do not need to physically come here. Regional tutors, tutorials and examinations can easily be managed off-shore. What is the problem?
3. Primary Industries
There is an old and well-worn term called “value-added processing” which holds that most of our exports from New Zealand could be pre-processed for export. Research in one of our largest dairy factories revealed that the 20kg blocks of cheese we export go through some 10 further processes off-shore, before ending up on dinner tables in Japan.
Then there is forestry. Apparently some of our timber exported in log form is pre-processed in Asia then re-exported back to New Zealand for use in building and construction! Further processing is clearly possible here, as is furniture making, pulp and paper production, and so on.
It goes without saying that with a looming world food shortage, probably exacerbated by Covid19, New Zealand needs to considerably up it’s game with more production, more pre- processing and new food products. Let’s recognise, applaud and encourage our exporter heroes, rather than dump on them, as the Greens would have us do.
4. Secondary Industries
In the 1970s and 80s, New Zealand produced a very wide range of consumer and industrial products ranging from clothing and footwear, through whiteware and electrical appliances, to engineered products, tanneries, textiles, packaging, furniture and a whole host of assembly industries including motor vehicles. Whilst many( not all by any means) components were imported, the assembly and distribution sectors were large and vibrant. In more recent times, we have seen virtually everything we purchase today, anywhere, is made in China. Unbelievably, many food products we see in our supermarkets are also imported-canned fruit, specialty condiments, cheeses, fish products and so on. The only person to recognise our ability to do much more for ourselves, is the NZ First leader who, whilst busy scoring political points from the pandemic, is at least consistent in saying if we can grow it here (in NZ) or make it here, we should. A widespread revival of secondary industry would solve most of our economic problems in a very short space of time. But it seems the Labour Party is intent on fostering international – pre-Covid19 trade deals instead.
5. Extractive Industries
Another no-brainer, where, with suitable investment (and in spite of the Greens ideological opposition), many of our natural resources could and should be processed further, here in New Zealand. If necessary, take ownership of such industries as smelting, oil and gas, mining, ironsands; expansion of re-cycling; waste processing; and so on.
6. Small and Medium Enterprises
This sector provides most personal and household services, most of the innovation and most of the new jobs. We are at least seeing some evidence now not only of their importance but also how many might adapt their businesses to online versions. Most are capable of operating within the Covid19 health and safety guidelines of social distancing and contactless delivery-even the local fish and chip shop can operate by combining shop-front, hole-in-the-wall service and home deliveries-as can most other local small businesses. Restaurants and bars could easily construct self-contained booths to ensure social distancing, etc. And, how many builders, for example, engage more than one or two tradies on the job at any one time? I doubt they would stand around holding hands! And the lawn-mowing contractor? House painter? Window cleaner?. Not under Alert Level 4.
At least under Alert Level 3, some can now return to work.
If we do not support and encourage small businesses to get moving and to develop new ways of doing business, our economy will collapse. And this does not account for the jobs, other necessary services and above all, the taxes the government is going to need to ensure we have a future.
Governments cannot distribute or re-distribute wealth unless it has first been created-and I am talking about real wealth, not printed money or money delivered by “helicopter”, which reminds us of the “cargo-cult” mentality of some third world countries.
Yes, our government (with the possible exception of various individuals such as the Health Minister of all people) has acted responsibly in attempting to combat Covid19 and full marks for doing so, but let us not be distracted by all the hype and melodrama of the daily Covid19 briefings. We are entitled to expect a protective response from our government, regardless of whatever particular political party or person is fronting this crisis. It is the very least they should be doing, rather than pitching their response as some sort of miraculous or divine intervention. A clear balance is needed between ongoing public health issues, not just Covid19, and the economic well-being of all New Zealanders. The economic opportunities post Covid19 are endless - if we seek to take them - but we should not expect nor allow the state to do it for us.
Henry Armstrong is retired, follows politics, and writes.
at 9:41 AM