Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before he travelled to the UK to complete a PhD in Economics at Oxford University.
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 per cent 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, it’s 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 and 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 and Affirmative-Action policies to the extent they’ve led to hiring people who can’t do the job and have displaced merit, NZ has ramped up efforts to embrace them even more, doubling down on the who-you-know and 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 and 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 and 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.
This article was originally published by Down to Earth Kiwi.
