http://nzinitiative.org.nz/site/nzinitiative/images/Issue%2013%20Graph.jpg

Same goes for FDI general investment.. about the fourth most restrictive.. just behind more liberal countries like China, Japan and Saudi Arabia.

Who has the least FDI component in their exports.. NZ.

Which NZ firms generally pay the best salaries.. those that are foreign owned.. and I wouldn’t mind betting they are at the top of the R&D tree as well.

What was our exchange rate when we were one of the richest nations on Earth?.. in 1960 we relied on sheep and beef exports and the exchange rate was $1.40 to the USD.

Like Brian Fallows says.. there’s a bit more to manufacturing woes than the exchange rate.. and our economists tell us that our current high exchange rate reflects imbalances in our economy.. like too much government.

Incidentally, at least one group of businesses (and Govt) is pleased no one is looking at them and thats the importers.. they are buying cheap from overseas and selling the product to us at the same prices they charged when the dollar was at 70 cents.. thats where the real scandal lies.

JC

Sorry, Brian.

I follow Brian’s column and I was wrong to make such an ad hominem jest merely because I disagree with him on one issue, albeit an important one.

Hammering politicians and fellow blog posters is one thing, picking on a serious journalist like Brian is another.

I still think he’s wrong about NZ currency strategy, however.

…I’m getting so sick of hearing the centre-left parties constantly whinge about the high dollar.

C’mon, National’s solidly in the Centre-Left!

The banks etc are trying to make currency strategy a Left v Right issue. That would mean solidly enterprising Hong Kong, Singapore, Israel, Switzerland have to be classified as Leftist. That, of course, is bullshit.

productive farmland in a country with a stable currency is about the best hedge he could possibly have against the demise of the US dollar.

Stable? Stable? We are running continual balance of payments deficits over decades without commensurate high growth. A correction is inevitable,but sadly that will likely be after most of our exporting industries have been devastated.

Swiss francs, yuan,Swedish krona, platinum, perhaps gold, would be better hedges for Americans.

Stephenson is right that the NZ dollar is, with Australia’s and Canada’s currencies, regarded as a commodity currency. But there is more at play than the price of milk. The NZ dollar is a favourite of international speculators.

And even the strong role in our currency of our lead exports, dairy products, must come under long-term threat. China is rapidly expanding its own dairy industry (evidence the thousands of dairy cows it is buying in NZ), and problems loom from the likely return of solid farm subsidies as the European Community fades away. There is also big potential for dairying in East Europe, the Ukraine and big areas of South America.

Fonterra and the Government are putting something of a spin on our dairy exports in Asia. Infant dairy products from other Western countries are also becoming well known in China and Hong Kong, and a big Western backed infant formula plant has been built in southern China. Also the NZ fertiliser problem has received more coverage in the Chinese-language press than Fonterra has acknowledged.

The point is we haven’t got this market to ourselves, and if I were an American investor I would be careful about buying land in NZ high in the land price cycle.

And as our economy is in “less worse” condition than many others ,it makes trading in the NZ dollar very attractive.

If you are in one of these sectors you must be wondering if your bank is one of those also pushing this line and maintaining our high exchange rate is okay.

I don’t understand why National is painting itself into a corner with its intransigence on currency strategy.

Willtruth: How will a capital gains tax affect the currency?
House prices are high in Auckland because of steady population pressure and limited land (the law of supply and demand – if demand is high and supply is low, then prices will rise. It staggers me that so many people don’t get this iron law of economics). A CGT will do precisely nothing to affect that supply and demand except to raise the price by the amount of the tax. I am baffled at how a CGT would affect the currency. A CGT was introduced into Australia, and it has made zero difference to house prices or the Aussie currency.

I think that it should be written into the Reserve Bank Act that the Reserve Bank should influence the dollar more than it is at present. The Act could say that they must try to keep it in a band of (say) US70-75 cents or so.

The present *uncertainty* as to how high the dollar will go wouldn’t help either. If the Reserve Bank tried to keep it in a given range, that would at least help manufacturers in their planning.

I don’t believe that policy like this would be a major change. It’s a small tweak in the scheme of things. The RB tries to keep inflation within a “band” – why not the exchange rate too?

In effect our dollar is commodity-backed, only we’re on the Milk Standard rather than the Gold one. The reason that James Cameron has bought most of the Wairarapa isn’t because NZ is pretty, or that Weta do good film effects, it’s because productive farmland in a country with a stable currency is about the best hedge he could possibly have against the demise of the US dollar.