Technology and the New Zealand Economy

Looking back over the last 150 years of New Zealand development it's that noticeable that the country has prospered as new forms of technology have become available.

The Vogel boom of the 1870s was possible because of advances in railways, shipping, and communications. In the 1890s refrigeration provided the cornerstone of the prosperous Liberal Era (1891-1911). Top dressing, Land Rovers, and the Green Revolution allowed New Zealand to become one of the world’s most affluent countries in the 1950s and 1960s. During the 1990s, cheap air travel and advances in irrigation and uses for dairy products led to significant growth in tourism and dairy farming.

During these periods the country had a wide of governments with a wide range of economic policies. The Vogel government was classically liberal; the Liberal government - progressive populist; the government’s of the 1950s and 1960s - Keynesian, while the National government of the 1990s was neo-liberal.

Hence, there is little evidence that economic success is dependent on a particular set of policies, suitable for all situations, as lobby groups such as the Business Roundtable suggest.

British writer John Gray argues that technology, rather than ideology, is the cornerstone of economic success. Given that technological advances have always preceded economic growth in New Zealand’s history, I am inclined to agree with him.

The experiences of Japan and Sweden provide further evidence in favour of Gray’s argument. For over 30 years economic libertarians have been predicting the economic decline of overtaxed Sweden yet it is still one of the West’s strongest economies. Sweden invests heavily in scientific research and does remarkably well in hi-tech industry for a country with just nine million people. Similarly, Japan, a bastion of old school protectionism and limited immigration, thrashes the English-speaking world in large-scale manufacturing.

At present New Zealand has one of the lowest rates of productivity growth in the developed world. This suggests that we are going through a serious technological trough. However, what research is the Maxim Institute or the Business Roundtable doing into new technology that could turn things around – nothing.

Economic libertarians in New Zealand seem to be fixated on the economic mirage that is immigration based economic growth. They seem to think that large numbers of immigrants ‘carefully screened’ for western values will suddenly come to our rescue. Ayn Rand once said that as an economic libertarian she considered herself to be a romantic realist.

Economic libertarians are certainly romantics but I fail to see in what sense they are realists.