Thursday, 2 May 2013

Economic stupidity? Yes ..... by the Greens

From TV3 we learn,
The Green Party is criticising the latest sale of land to foreign investors, calling it "economic stupidity".

Yesterday the Overseas Investment Office approved the sale of more than 14,000 hectares of prime forestry land, previously owned by the New Zealand Superannuation Fund, to a company owned by the Chinese government.

The blocks of land are located in Kaipara, Coromandel, Waikato, Rotorua, Gisborne and Wairarapa.

Speaking on Firstline this morning, Green MP Steffan Browning said the sale would send profits offshore, and make it harder for Kiwis to own New Zealand land.

"Every time we sell off some land to foreign interests, we are stopping New Zealanders being able to do that purchase," says Mr Browning.

"It automatically cranks the price up that New Zealanders would have to pay, and for New Zealanders to be able to stay on the land whether they be foresters or farmers."
As to the money goes overseas bit I have said this before but let me say it again: Let us assume for a moment that evil foreigners make a NZ$1 profit which, in an effort to piss-off Steffan Browning, they wish to take it back to, say, China. How do they do it? Clearly a New Zealand dollar isn't worth anything in China so the Chinese holder of NZ currency will have to sell their NZ$1 to buy Yuan. But why would anyone want to buy said NZ$1? The only use for a NZ$s is to buy something made in NZ. Thus the buyer of the NZ$s must want it to buy a NZ export of some kind. What is Steffan Browning's problem with this? The NZ$1 doesn't go overseas in any meaningful way, it gets spent on New Zealand produced goods and services no matter who gets the profits from the ownership of local firms. If a New Zealander gets the profits they spend them on New Zealand made goods and services, if a foreigners gets the profits they sell the NZ$s to someone who wants to buy New Zealand made goods and services.

Also to the bit about "it automatically cranks the price up that New Zealanders would have to pay", that is exactly the point, the New Zealand Superannuation Fund sold the land to the Chinese company because they got a better price. If we had stopped foreigners from being able to buy land the New Zealand Superannuation Fund would have gotten a lower price. How does that help the fund and the New Zealanders who rely on it for an income in old age?

You have to ask, Why do people sell assets to the highest bidder? One reason is that it allocates those assets to whoever thinks they can utilise them most productivity. You pay a higher price for an asset than another bidder because you think you can use that asset in a way which in more productive than the other bidder. Your knowledge and skills are such that you can produce more at a given cost or produce a given amount of output at a lower cost. Methods of production and asset utilisation that are highly productive are what makes a country "rich" and thus exactly what New Zealand needs. So let us sell land to those most likely to use it most productively, no matter where they come from.

I do have to ask, Just who are the Green's economic advisors and why do they think that xenophobic scaremongering is a reasonable basis for making good economic policy?


Horace the Grump said...

I think the problem with your final question is the combination of 'the Greens' and 'good economic policy' in the same sentence... clearly that is an oxymoron....

THe Green's 'economic policy' in the sense that they actually have a coherent set of policy is to complain about everything and demand state intervention at every turn... because as we all know - the Greens know best...

Iainrobert said...

Anti-Dismal is one of very few sane voices in the economic views peddled by Kiwi's on the net. The Greens and Labours economic views are more about gaining votes than about sensible economic policy.

These people must be void of any sense of responsibility as they peddle this line of thinking which is populist but plain wrong and will be repeating the mistakes of the past that will eventually lead NZ back to the brink of economic catastrophe as per 1984 followed by the need for painful remedies again!!! But they just cannot see it!!!!!!!

Anonymous said...

Well we know which economic advisers the Greens consult and we think that we know that practically no one else consults them. If you want justification for a wacky idea - yes that's where you go. In one of many conversations with Stefan he was berating the increase in the price of oil and saying that the rest of us were now facing our come-uppance. I said that I thought that they would welcome the price increase because it would reduce demand (then supply). I don't think that he got it.