Thursday, November 04, 2010


Another interesting little titbit from that government presentation on the economy. The government identifies the high-tech manufacturing and services sectors as potential growth areas, but identifies lack of capital to help them grow as a significant barrier to that growth. Their proposed solution?

Pursue an aggressive strategy of co-investing with the private sector in this industry, for example through equity investment that grows firms in return for anchoring them in New Zealand.
This is a sensible, pragmatic solution, which solves an identified failure of the market and which if done well could see both the government and the wider economy profit. OTOH, it also has a name: nationalising the means of production. Sure, they're not taking stuff by fiat, but if pursued, it would see large sectors of the economy being government-owned. I don't have a problem with that - but its not the sort of suggestion I would ever have expected to see from National.

And OTOH, they haven't actually done it. I have heard that much of the advice in this paper relating to a more interventionist stance in the economy was ignored by NeoLiberal ideologues within the government. If so, its a shame. This is a sensible solution. Government has shown, contra the NeoLiberals, that it can make good investment decisions - just look at the results of the New Zealand Superannuation Fund. It can make them at arm's length, without politicising them. The government's ideological refusal to consider such options and take an active role in growing the economy in a smart direction is a recipe which dooms us to failure.