Monday 3 September 2007
Gloom-o-rama
Today's Herald has some marvellous gloom-oriented reporting. The key body text:
Billions of unexpected dollars are being pumped into the New Zealand economy from record payouts to Fonterra shareholders from a combination of spectacular increases in global dairy prices and growth in demand - further boosted by the removal of European Union farmer subsidies.
The headline: Fonterra's big payout a challenge for economy.
It's tough to put negative spin on an unexpected export income windfall, but the New Zealand pundits rise to the challenge. Reliance on the primary sector apparently makes our economy "cyclical and fragile". Anyone notice that the much-coveted Silicon Valley high-tech industry is also "cyclical and fragile" in a big way? The extra incoming cash will "keep pressure on the kiwi [dollar]" --- i.e. we all become too rich relative to the rest of the world. And it will "fuel labour shortages" --- i.e. unemployment will be too low. Horrors!
It seems obvious to me that high-end agriculture is a great business to be in for the long term. The number of people who can afford good quality food is increasing rapidly, and the land available to produce it is decreasing. New Zealand is in a great position to benefit from this. I'm all for growing high-tech industry here --- I'm working hard on that myself --- but there is no need to be embarrassed by our agricultural base. Sometimes I wonder if economists quoted in the press are the equivalent of the moronic "analysts" that plague coverage of the computer industry, regurgitating outdated wisdom until the new reality is blindingly obvious.