Pathetic authoritarian backwater
In the most basic sense, a country becomes wealthy by setting capital to work. The more capital that can be put to work, the more productive labour is, and the wealthier workers and investors become. The primary source of capital in New Zealand comes from overseas by means of foreign investment -- people with money to invest who look at what New Zealand has to offer and decide its worth investing it here.
Too many New Zealanders don't like foreigners, however (or investment, for that matter). We think we might catch nasty diseases from them -- things like hard work and being enterprising.
On behalf of all those xenophobic pygmies, many of whom seem to believe that foreigners buying local property will be shipping large swathes of local land offshore, Michael Cullen has just announced that foreign investment in assets he considers strategic will now be squashed, and local shareholders will have their property rights trampled on. He's essentially telling local investors they can't do what they wish with their own property, and sending a message to foreign investors considering investing in Zealand along the lines of this: "Don't bother." The widely read Bloomberg News service has already got the message.
You may judge from that how foreign investors are likely to view this pathetic authoritarian backwater, and what chance New Zealand has of ever seriously lifting its wealth game, or of arresting our slide down the OECD's gurgler.
UPDATE 1 [4:20pm]: In a similar reaction to the announced nationalisation of Telecom's lines, which immediately shaved about a dollar of Telecom's share price, shareholders in Auckland's airport saw their shares drop from 2.48 down to 1.99 after Cullen's announcement of the 'We Hate Foreign Money' legislation (a drop of about twenty percent)before coming back to 2.20, where it is at present.
UPDATE 2: Any chance is there, do you think, of National promising to repeal this 'We Hate Foreign Money' legislation? Is there hell.
Labels: Property Rights