The country does not appear to be in a cyclical down-turn. Of course, the PM and his Finance Minister are desperately praying that all we have been experiencing is just a typical "business cycle", and once interest rates come down things will turn. However, the evidence points more to a long-lasting slow-down, which attracts the name "secular stagnation" in economics.
Truth is, a large part of the stagnation of New Zealand's economy, which has turned it into one of worst performing in the world, remains unaccounted for. The "experts" quoted in the mainstream media, who work for the Big Banks and NZX 50 firms, don't have a clue, though not the modesty to admit it. They shy away from explanations that have any hint of being "anti-woke"; which may create a stir. As such, their commentary has little to do with truth, but everything about marketing their Big Bank, or other business. So let's look at three explanations for NZ's secular stagnation that the big media outlets refuse to blame.
First, the vast number of New Zealanders who now "work" from home. Yes, NZ may be stagnating simply because the nation is only pretending to work. An article published in the National Bureau of Economic Research is being quoted world-wide which estimates falls in productivity of around 18% once a person works from home. It has attracted interest since it is written by economists at MIT and has a great deal of credibility, due to its randomized control trial methodology. Given NZ had amongst the longest, most severe lock-downs of any nation, whereby a huge chunk of our work-force now considers it a right to work-from-home, its entirely plausible that this change accounts for a significant chunk of our economic stagnation. Few folks in NZ, especially in Wellington, physically go into work on Monday and Friday. This outbreak of collective laziness is more than able to explain why the country has stagnated. Amazingly, Wellington was the only city in NZ that was in favor of extending the lock-downs. Why? The City didn't want to work.
Second, many of the Board members and CEOs of our largest corporations are nothing short of useless. Many are accountants & lawyers who know little about the core business. A vast proportion have got their jobs through their networks. The higher echelons of NZ corporates have descended into an inbred club of status-seeking social climbers who aren't the real deal. Furthermore, unlike in other nations where there has been a backlash against Diversity-Equity-Inclusion & Affirmative-Action policies to the extent they've led to hiring people who can't do the job & have displaced merit, NZ has ramped up efforts to embrace them even more, doubling down on the who-you-know & equity agendas. Efficiency is barely an aim now. Again, it is entirely plausible that this factor accounts for a chunk of our stagnation. I was asked last week to give a Keynote to a Human Resources conference, and told them my theme would be meritocracy. They told me it wouldn't be appreciated, so I resigned and told them to find someone else to do it.
Third, our national energy has been increasingly sucked up by Treaty debates. Why would anyone want to invest in NZ? Why would rising-star young Kiwis want to stay in a country that spends its entire time looking backwards? That is not to diminish the Treaty - and it is not to take sides. We have no interest in doing so on this Blog. It is to make the point that the debate has become endless, spawning industries of academics, lawyers, politicians and media types who do nothing productive, other than argue with one another. The "debate" certainly has exposed that NZ has no agreed constitution, no consensus about the meaning of a founding document, and is unsure of the status of its parliament. It has emerged that property rights, the fundamental driver of economic growth, are thereby insecure in NZ, making it a terrible place to keep your money and invest.
To summarize, no-one knows for sure what's behind the secular stagnation that NZ has been experiencing these past years. We do know the cause is not partisan. It has been happening under both National & Labour. That being so, it is entirely plausible that the vast numbers of Kiwis who are now pretending to work from home, hiring and promotion policies not based on merit, but on who one knows & pursuit of genetic based social engineering, along with endless going-nowhere Treaty debates which have consumed the energy of the country, together may account for all of our economic stagnation.
First, the vast number of New Zealanders who now "work" from home. Yes, NZ may be stagnating simply because the nation is only pretending to work. An article published in the National Bureau of Economic Research is being quoted world-wide which estimates falls in productivity of around 18% once a person works from home. It has attracted interest since it is written by economists at MIT and has a great deal of credibility, due to its randomized control trial methodology. Given NZ had amongst the longest, most severe lock-downs of any nation, whereby a huge chunk of our work-force now considers it a right to work-from-home, its entirely plausible that this change accounts for a significant chunk of our economic stagnation. Few folks in NZ, especially in Wellington, physically go into work on Monday and Friday. This outbreak of collective laziness is more than able to explain why the country has stagnated. Amazingly, Wellington was the only city in NZ that was in favor of extending the lock-downs. Why? The City didn't want to work.
Second, many of the Board members and CEOs of our largest corporations are nothing short of useless. Many are accountants & lawyers who know little about the core business. A vast proportion have got their jobs through their networks. The higher echelons of NZ corporates have descended into an inbred club of status-seeking social climbers who aren't the real deal. Furthermore, unlike in other nations where there has been a backlash against Diversity-Equity-Inclusion & Affirmative-Action policies to the extent they've led to hiring people who can't do the job & have displaced merit, NZ has ramped up efforts to embrace them even more, doubling down on the who-you-know & equity agendas. Efficiency is barely an aim now. Again, it is entirely plausible that this factor accounts for a chunk of our stagnation. I was asked last week to give a Keynote to a Human Resources conference, and told them my theme would be meritocracy. They told me it wouldn't be appreciated, so I resigned and told them to find someone else to do it.
Third, our national energy has been increasingly sucked up by Treaty debates. Why would anyone want to invest in NZ? Why would rising-star young Kiwis want to stay in a country that spends its entire time looking backwards? That is not to diminish the Treaty - and it is not to take sides. We have no interest in doing so on this Blog. It is to make the point that the debate has become endless, spawning industries of academics, lawyers, politicians and media types who do nothing productive, other than argue with one another. The "debate" certainly has exposed that NZ has no agreed constitution, no consensus about the meaning of a founding document, and is unsure of the status of its parliament. It has emerged that property rights, the fundamental driver of economic growth, are thereby insecure in NZ, making it a terrible place to keep your money and invest.
To summarize, no-one knows for sure what's behind the secular stagnation that NZ has been experiencing these past years. We do know the cause is not partisan. It has been happening under both National & Labour. That being so, it is entirely plausible that the vast numbers of Kiwis who are now pretending to work from home, hiring and promotion policies not based on merit, but on who one knows & pursuit of genetic based social engineering, along with endless going-nowhere Treaty debates which have consumed the energy of the country, together may account for all of our economic stagnation.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
4 comments:
I'm probably twice as productive working from home, where colleagues and others don't bother me. Productivity data really depend on the job and work environment.
I would suggest a truly staggering amount of resource is consume by matters associated with Maori issues. One only has to read the BV weekly update of the latter to gain some small appreciation of the non-productive activity and re-allocation of resources that now permeates almost every sphere of activity within NZ. Until this is sorted and our fixation with pointless (and very expensive) climate change virtue signals, real economic growth and prosperity will evade us. Meanwhile, the invertebrate in charge will turn a blind eye and continue with his existing rhetoric - being, in practice, a country mile from his election claim of getting us 'back on track.'
If the country wants economic success and prosperity for all, we need him gone.
Don't forget the road cones.
Beats me why so many think NZ can or should be other than a third rate country. We depend on dried milk, pine logs and coarse sawdust. And tourists. Any pine disease would be a disaster. We are far removed from markets and tourist's homes and will be very susceptible when CO2 is taken seriously. We add relentlessly to the population then wonder why they not net productive.We have a portion of the population who consider themselves privileged of right and not universally noted for intellectual ability, education, concerted application to work, or personal ambition through the same, and meanwhile racing to multiply to democratic majority and to gain control of the nation. When we draw back or cancel the dead end stone age hobby language te reo industry it will represent a further drop in GDP. In the present employmwnt climate it is hard to believe that workers from home slacken. However many are out of touch with reality and do not realise how fragile many or all jobs now are. (Which general ignorance factor, along with fear of cancellation, explains the common acceptance of the pro maori movement.) Our GDP is not only low but made up of much make work; ie cone shepherding. A secure employment in NZ at present seems to be the wrecking and taking to landfill of perfectly liveable houses, in many cases because they have, after 50 or more years and generations of occupants suddenly been declared to need insulation, heat pumps , vast scaffolding for repairs, floor moisture barriers and other uneconomic lobbyist induced frills.
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