Doug Henwood wrote > >New Zealand politics is very conscious (perhaps hyper- > >conscious) of the ability of financial dealers to > >manipulate the economy, and it has been used as a scare > >tactic frequently during recent elections. > > And since it's used as a scare tactic, that makes it especially important > to understand the mechanisms of damage. > > Maybe Krieger did NZ a favor: growth was 0.6% in 1986, 0.7% in 1987, and > 2.3% in 1988. Maybe we need him again: Goldman Sachs (among many others) reckon our currency is overvalued by about 15% meaning exporters are going out of business or moving their operations overseas. But seriously, is that the way to run an economy in the interests of its people? The threat is something like - each devaluation increases New Zealand's foreign debt (in March 1996 79.1% of GDP and recently increased again) - it will be more difficult to renew debt, or higher interest rates will be paid, and political prices will be (attempted to be) exacted - implications for the Balance of Payments (mitigated by improved export competitiveness) - therefore threat of company closures and job losses etc In present circumstances some devaluation would probably be a net improvement; however if devaluation continued because of deliberate action by investors, the company closures are a real threat. > > As for the globalization issue. A small country like NZ, or even Canada, > has no choice but to trade extensively with the outside world. NZ couldn't > maintain a First World standard of living on the basis of internal demand > alone. So the question isn't really "globalization" vs. its > still-unspecified opposite, but the terms on which the country engages with > the outside world. Which is yet another reason I'd like to see a moratorium > on the term globalization: it's a mystifying term best left to publicists, > whose business is mystification. Yes we must trade, but that isn't the same as submitting to globalisation. New Zealand traded at the same level in 1960 as it does now (exports/GDP) but was higher in the international standard of living ranks than it is now. It has fallen in the ranks as the economy has been opened to imports and foreign investment - i.e. more exposed to the "global" economy. So the distinction between then and now is the degree to which a capitalist economy can filter out the bad effects of the world economy while still allowing the beneficial ones to come through. The filters were never perfect, but it appears that now they are not possible to maintain. But it is indeed the fact that we must trade, and the fact that the major industrialised nations are the main source of capital and so don't have the same problems associated with foreign debt and investment, that distinguishes the fate of smaller industrialised countries. Bill Rosenberg
