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Saturday, February 18, 2023

How Aotearoa-NZ should be working to catch up with the world.

 Brilliant column from Josie Pagani

Josie Pagani is a commentator on current affairs and a regular contributor to Stuff. She works in geopolitics, aid and development, and governance.

OPINION: I was in Hawke’s Bay the night the cyclone hit. No-one slept.

Daylight revealed no electricity, wi-fi, cellphone towers, even water. The stuff we rely on to live our lives.

We’ve known for years that the road to Gisborne needs upgrading. Flooding was a risk. Storm pipes were too old. Power cables needed to move underground to protect against the next storm.

This web of pipes and cables is much the same as it was 50 years ago. Like the old ships we send across the Cook Strait, still breaking down like it’s 1968.

As I write this, the traffic into Wellington is at a standstill. Trains aren’t running. It’s only raining.

We’re not just falling behind in infrastructure. We are falling behind in the politics of sorting it out. The world is changing around us, and we’re not keeping up.

Elsewhere, governments are putting more emphasis on making things work, less on making things at the lowest cost.

There’s a greater focus on resilience in most of the countries we do business with.

China did belt and road. President Biden announced major investment in ‘infrastructure’. He wants private providers to invest, provoking a race between the US and Europe to hand out the biggest subsidies to attract investment into development.

It’s easy to see storms when they hit. Harder to see epochal shifts when they are underway, but the world is in the middle of one, and New Zealand is still playing the old tunes.

A bipolar world, with China in one corner, the US in the other, has us straddling both as they move further apart.

Globalisation is in retreat, bilateral and regional trade deals are on the rise.

Economics and trade are no longer decoupled from domestic politics or values.

There’s less appetite to trade with the bad guys.

There’s a turn to protecting your own manufacturing. That’s why Joe Biden argues that buying stuff closer to home reduces risk and creates local jobs.

He knows that people expect growth to deliver jobs where they live, or what’s the point? Free markets didn't lift all boats. Some sank. No-one in any town anywhere said: “Well, I lost my job, but at least aggregate incomes have gone up.

”The US is creating a domestic economy that makes its own semiconductors and food, and buys stuff only when it needs to, and preferably from its friends.

US Treasury Secretary Janet Yellen calls it 'friend-shoring'. It’s about “bringing together partners” committed to “a set of core values and principles”.

On the face of it, none of this is good for New Zealand. We make our living selling milk and wood to some people who are not good friends.

We have been systematically deconstructing our manufacturing base and replacing it with low-wage ‘tourism’ jobs making lattes and beds. Of our remaining heavy industries: steel, timber, paper, aluminium, methanol, fertiliser - all could follow the Marsden Point refinery and Norse Skog paper plant out the door in the next decade, taking well-paid skilled jobs in regional communities.

We can't even make our own beer since our CO2 production was slashed when the refinery closed.

The age of globalisation is over. We have spent the higher incomes that came with it on paying more for houses instead of on the power, pipes and services we needed.

As we rebuild after this cyclone, we have to be better prepared for all the ‘storms’ heading our way.

That means a muscular industrial plan to build better roads, power stations and communications networks.

Stop thinking in terms of ‘cycleways versus roads’. Look instead to resilient whole communities, in which cycles, cars, ferries and buses all keep working when it rains.

The rest of the world is going local. We need to plan for 'place-based' economics too, where good jobs happen where people live.

A new era of protectionism is scary for us. But it’s a wake-up call to look at our own manufacturing.

China, Germany and Japan have shown that promoting manufacturing leads to more knowledge-based innovation, R&D, skills and training.

Our future wealth needs to come from being stronger, instead of cheaper.

We need to do our own ‘friend-shoring’.

Our existing major partners, Australia, China, the UK and the US are heading slowly in other directions where our role is difficult. We should look to Pacific friends Japan, South Korea, Singapore and Canada. They are like-minded countries that play by the rules and, like us, have no interest in taking sides in a superpower rivalry between the US and China. We should draw closer to them.

The climate is changing. Political and economic winds are threatening. Our resilience is being tested, and found wanting.

Around the world, the focus is turning back to people and the strength of the things we rely on in a storm, from pipes to neighbours. It’s time for us to catch up.

1 comment:

Seymour Hamilton said...

Good advice. Here in Canada, we should take note as well!